Germany boasts the largest population of Internet users in Western Europe, according to L2 Think Tank. About 61% of Germans engage in e-commerce—the highest percentage in any nation. But the beauty industry lags behind in digital sales, where in 2012 sales of color items were 6.9% or $96 million, skin care was 5% or $122 million and fragrance was 3.7% sales or $80 million, according to Euromonitor.

Independent pharmacies and drugstores lead in beauty retail distribution in Germany, with an estimated $1.38 billion in sales of the top three beauty categories. And, only 44% of prestige beauty brands engage in direct-to-consumer e-commerce in Germany versus 80% in the U.S.

Interestingly, grocery retailers are the largest retail distribution channel for skin care with $762 million in sales, while drugstore and pharmacies are the most key channel for color cosmetics at $657 million in sales, and sales of fragrance led in beauty specialist retailers with $404 million generated for 2012, according to Euromonitor.

Nearly half of German female beauty consumers research beauty and personal care brands online, second only to drug store brochures and catalogues.

L2 said that beauty companies across the board are behind regarding their digital offerings, with 61% of brands categorized as challenged or feeble in their Digital IQ ranking.

The top ranked beauty brands in terms of Digital IQ include Clarins, which is ranked as genius, followed by Nivea, the country’s leading skin care brand having mastered cross platform campaigns online. The brand is also experimenting with direct-to-consumer e-commerce. The Estée Lauder portfolio registered an average IQ of 128 across its five brands, while the Estée Lauder brand ranks third with a genius rating. The L’Oréal portfolio continues video domination with four of the five most-watched YouTube channels. And, P&G caters to German moms with the online extension of its For Me catalogue, which registered about 650,000 visitors in the past 30 days. Gifted brands include Bobbi Brown, Lancome, Clinique, Yves Rocher and L’Oréal Paris. Feeble brands in the region include Decleor, Carita and Rimmel.

The top online beauty and personal destinations are Amazon.de, followed by yvesrocher.de, eBay.de and Douglas.de. Just 37% of beauty brands have a mobile optimized German site.

To access the full report, Digital IQ Index Beauty Germany contact membership@L2ThinkTank.com.