Estee Lauder buys Gloss.com

Estee Lauder today said it acquired beauty e-tailer Gloss.com and plans to launch a new multibrand site to sell its cosmetics lines.

Under the deal, Gloss.com will be folded into ELC Online, Estee Lauder's Internet division. Terms of the deal were not disclosed.

The strategy is one of the first signs of a shakeout in the highly competitive online cosmetics business. Last year, a flock of beauty retailers emerged on the Web to compete for dominance in the estimated $6 billion business. Since then, online pharmacy Drugstore.com has purchased Beauty.com to expand into the market, in a stock deal worth $42 million.

Estee Lauder said it plans build a site for each of product lines--including Estee Lauder, Clinique, Prescriptives, Origins, Bobbi Brown, Tommy Hilfiger and Donna Karan, among others--along with launching the new multibrand site. The new site, which the company expects to debut in early 2001, will sell Estee Lauder's brands exclusively, along with other manufacturers' brands.

Select department store sites such as Macy's will also be able to link to "microsites" of the company's brands, such as Clinique and Origins, which are already in operation. The microsites are much like cosmetic counters in a department store that reflect a brand's image.

"Our specially designed modules and sites--the only authorized outlets for our brands on the Internet--will maintain the strong brand equity we have built over the years," Fred H. Langhammer, chief executive of Estee Lauder, said in a statement.

The company has more than 1 million registered users online on all of its current sites. The company said that it plans to integrate its online and offline distribution system and use the Web site to market its brands.