Ulta Beauty reported a 59.1% increase in ecommerce sales in the third quarter, even besting the impressive 56.3% growth in 2015. CEO Mary Dillon said in an earnings call that the strong growth was driven entirely by increased transactions.
“We continue to evolve and upgrade the guest experience while improving site performance,” said Dillon. “We made enhancements to our mobile app, including redesigning our product detail page to better display product options and information, integration of our briefly launched content platform called The Mix and the addition of our new salon appointment booking tool.”
Dillon said Ulta Beauty also launched a try-on feature called Glam Lab in November to allow guests to virtually test products and shades within its iPhone and Android apps by uploading a selfie or choosing a model with a similar complexion.
In terms of categories, cosmetics continue to lead Ulta Beauty’s growth, with new brands and new items from existing brands contributing to overall performance.
“Strength on the topline was broad-based as we gained market share across all major categories,” said Dillon.
With its significant investments in supply chain, focus on greater efficiency and expanded assortment, Ulta Beauty has found a way to make its ecommerce business not only grow fast but become more profitable in the last couple of years.
“(Ecommerce) will probably always be a somewhat lower profit margin than the bricks-and-mortar parts of the business just because of the shipping cost, but we are happy with it,” Dillon said.
On the operations side, Dillon said Ulta opened two new distribution centers in the past 18 months, which together are handling three-quarters of its ecommerce orders. One in Greenwood, IN, services 227 stores and is fulfilling 44% of ecommerce orders. The second, in Dallas, is ramping up on schedule and fulfilling 130 stores and 30% of ecommerce orders.