In the late ’90s, US consumers seeking prestige beauty products headed to department store counters to, say, spritz Clinique Happy perfume or swatch Bobbi Brown lipsticks. That was until a French retailer called Sephora shook up the beauty industry, first with its open-sell concept retail stores in 1998, and then, with something even more groundbreaking—its own e-commerce website—at the turn of the century.
As the LVMH-owned beauty retailer worked to grow its US presence after opening its first store stateside in New York City, Sephora.com debuted its e-commerce transaction abilities in the US on October 14, 1999. At the time, e-commerce was “a new frontier,” Howard Meitiner, Sephora USA’s then-president and CEO, told Retail Brew. “Nobody really knew what the future was going to be.”
Sources told WWD at the time that the site was anticipated to garner $20 million in sales in year one. Flash forward a quarter-century, and Sephora.com has become Sephora’s largest North American store, it says, offering 340 brands and 45,000 products, and generating $3.3 billion in revenue in 2023, per ECDB, while the US online beauty industry has surpassed $30 billion in sales.
“What [Sephora.com] did is it validated that this new thing called e-commerce was a perfect vehicle for beauty products,” Meitiner said. We’re looking back at the site’s early days—and where it’s going next.
Brush with the past: E-commerce sites made up just 0.9% of US total retail sales in 2000, per the US Department of Commerce, but LVMH believed they were “here to stay,” Meitiner said. He noted e-commerce businesses then needed belief, capital, and patience—and LVMH offered those, which he credits as the reason for Sephora.com’s success.
In preparation for the launch, coinciding with a store opening in Rockefeller Center, the retailer debuted a $25 million marketing campaign around the slogan “Beauty is how you see it,” with an ad for the website noting it offered “virtually every” beauty product.
While many brands initially resisted selling at Sephora stores out of fear it would dilute their department store business, they were more open to the incremental business the website promised, Meitiner said.
Per the Internet Archive’s Wayback Machine, Sephora’s website in 2000 offered products across fragrance, color and makeup, and well-being, featuring around 200 brands, including current partners like Urban Decay, Nars, Philosophy, and Too Faced. Featured products on the home page included Benefit’s Benetint (still a cult classic) and the since-discontinued YSL Baby Doll fragrance.
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Building the e-commerce business was a “challenge” and often “two steps forward, one step back,” Meitiner said, as the company worked to “marry the entrepreneurial adventurism of the e-commerce space with practical business ideas.”
“It was literally trying to get product onto a site, making it look as attractive as possible, and trying to fulfill that demand,” he said.
Sephora had to determine the logistics of efficient delivery from distribution centers and, with demand largely unknown, how to merchandise these centers, Meitiner said. Though it shared the same centers as the in-store business, determining the inventory algorithm took time. Still, many of the issues it faced then weren’t dissimilar to those retailers are still dealing with, like returns management and customer acquisition and retention.
And while it kept an eye on potential competitors, “we were going to press forward, regardless of what other people did or didn’t do,” he said.
Primed for success: Since then, many competitors, from Ulta to Amazon, have emerged, but Sephora’s focus on personalization, along with its product assortment and beauty community—its Beauty Insider loyalty program, which debuted in 2007, has 40 million members—have helped set it apart, Nadine Graham, the current SVP and general manager of e-commerce at Sephora who joined the retailer in 2014, told Retail Brew.
“We’ve also evolved from a one-size-fits-all site to a highly personalized experience, leveraging explicit and implicit signals to put the customer at the center of everything we do,” she said.
Graham said Sephora’s digital business has found success by “adapting to and anticipating what our consumers are looking for,” collaborating with social and merchandising teams to keep up with and capitalize on viral trends. (It has a section for “hot on social,” a phrase that, well, didn’t exist in the early aughts). It also has an omnichannel presence with same-day delivery, BOPIS, auto-replenishment, and partnerships with Instacart and DoorDash.
Sephora has “many exciting new digital experiences” slated for 2025, Graham said, though unlike its game-changing e-commerce debut 25 years ago, not every change will be “a huge launch or reveal,” she said, focusing on “ease of shopping” and “convenience” for customers.
And just as those changes will play a small part in its success, Meitiner is glad he did, too.
“It’s nice to look back sometimes and remember one had a tiny role to play at the very beginning,” he said.
This is one of the stories of our Quarter Century Project, which highlights the various ways industry has changed over the last 25 years. Check back each month for new pieces in this series and explore our timeline featuring the ongoing series.
