By NOLA L. SARKISIAN

Staff Reporter

Once prone to raising a well-tweezed eyebrow at the mention of the Internet, the cosmetics industry is starting to take e-commerce more seriously. And that has prompted local businesses to hop into the fray.

In April, Murad Inc., which for the past 10 years has sold its wares solely in salons and spas, quietly began selling its products online. The El Segundo-based company is even slipping its Web address into print ads in such magazines as Vogue and Elle.

Woodland Hills-based Sebastian International, which has been online for three years, plans to sell its products to distributors through the Web in a pilot program by the end of the year. The company has seen steady interest in its site, logging about 900 questions a month on product information and beauty tips.

For upscale cosmetics companies like these, creating a new distribution outlet is a sensitive matter. Ever protective of their image, these companies carefully avoid distributing their products in low-end retail outlets that might damage their highbrow reputation.

In fact, the Web is so new that cosmetics companies aren't sure whether being an e-tailer is an upscale or downscale thing to do.

Major suppliers of cosmetics also are wary of damaging longstanding relationships with salons and some department stores by creating their own distribution outlets.

"Distributors are the foundation of the industry, yet with the Internet, there is risk of cutting them out," said Michael Spano, executive director of the Beauty and Barber Supply Institute, which represents 700 manufacturers. "Historically, the distributor has added value to the channel by providing information and sales expertise."

"It's a fine line we walk," said Hilarie Murad, director of consumer sales and marketing with Murad Inc. and daughter of founder Howard Murad. "But there are salons that don't carry our product and many people don't go into salons to buy skincare (products)."

The temptation to launch cosmetics Web sites is too great for the established companies to avoid much longer, especially because newer upstarts are already making a killing on the Internet.

"The market, which is one of the few untapped consumer industries, is exploding," said Blaine Mathieu, an analyst at Dataquest in San Jose.

Internet marketing experts expect the virtual shelves to be bursting with cosmetics products in the coming months. By Thanksgiving alone, a dozen or so companies will have launched virtual shops, with Web addresses such as Gloss.com, Beauty.com, Beautyjungle.com, iBeauty.com, Beautyscene.com and Ionbeauty.com.

Close to home, Beverly Hills-based Luxelle International Ltd., the licenser to market cosmetics by Parisian couture designer Pierre Balmain, started its high-end cosmetic company by launching a web site in June and has built up a strong presence for its pbcosmetics.com site through links with search engines like Yahoo! and ads in newspapers and fashion magazines.

Online sales of health and beauty products will rise from $509 million in 1999 to $10.4 billion in 2004, when they will account for 5 percent of the total U.S. health and beauty product market, according to Forrester Research in Cambridge, Mass. The increase is buoyed by better technologies and color-mapping that allows people to input their own skin tones, hair color, etc. and come up with an appropriate cosmetics choice.

"It makes sense for cosmetic companies to go online and provide products that customers can examine and compare within minutes rather than spending hours in department stores," said Suzanne Grayson, president of Grayson Associates, a market consulting firm in San Juan Capistrano.

At Murad's site, customers can register for a free skin consultation and then pose questions to Dr. Murad about skin care. Hilarie Murad said the site has grown quickly, now doing about $30,000 in sales a month.

"We're happy that people are purchasing our product and we feel that our customers are appreciative that we're offering this service," she said.

At Pierre Balmain's Web site, customers can purchase a fairly expensive line of cosmetics such as lipstick that sells for $16 though most customers still buy through the company's multilevel marketing system, said Isabelle Eager, senior vice president of sales for Luxelle. About 40 percent of the company's sales, most of which are reorders, come through the Internet. Next month, the site will debut an interactive segment that will review customer hair, eye and coloring needs.

"We've started with advertising and word of mouth, and we're growing," Eager said. "The challenge is to keep finding flexible forms of shopping and information for our customers."

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