The descriptor “Game changer” has been used by many industries. Technology is contributing in making an industry game changer but cosmetics industry has completely altered the traditional form and has evolved as a revolutionary business model innovation.
In the fast moving consumer goods (FMCG) and retail sector, the cosmetics industry is evolving with trends and consumer behavior. Over the last few years, some trends have emerged to redefine the future of beauty.
Customized cosmetics being one of the many trends have been catching the eyes of many customers but the industry is in its nascent stage for entrepreneurs.
The customized cosmetics industry evolved by finding a connection between micro-trends and macro-consumer needs, which are readily shifting. So the real question here, is it justified to invest in something that has become popular due to trend. The industry is creating more micro-trends which are representing serious opportunities.
Here we present, the business model, revenue model, features, what industry leaders have to say about it and the future of the cosmetics.
USP– The business must mention the USP of their customized product on the website. Like some of the important USP, a customized business can showcase is paraben free, chemical free, etc.
Upselling– To increase average order value, custom cosmetics companies have to focus on upselling products. It is easier for them to upsell as when a customer buys a shampoo, he/she also wants to buy conditioner or serum.
Samples available with a minimum order– To increase sales and revenue of the business, custom cosmetics can provide samples or free products with a minimum order. For example: when a customer order for $300, they will receive free products with the order. This encourages customers to complete the $300 mark.
Consultation from experts– For most products, customers would know if it is suitable for their skin type or skin tone. The website can have an option where customers can fill in the details about their skin and experts advise them on which product to choose.
According to a market analysis, it was analyzed that the global cosmetic products market was valued at USD 532.43 billion in 2017 and is expected to reach a market value of USD 805.61 billion by 2023, registering a CAGR of 7.14% during 2018-2023. The scope of the report is limited to various products, like hair care, skin care, oral care, color cosmetics, fragrances, soaps and shower gels, and sun care products.
Advertisement– The entrepreneur can earn extra revenue by advertising non-competitive businesses on the website. If the website has advertisements for salon services, clothing website, and more, they can earn some extra revenue.
Subscription– As cosmetics is a consumable product, the customer would want to re-order after a set period of time. To earn continuous revenue, entrepreneurs can introduce a subscription model on their website. Know more on this topic by going through our blog post on subscription box for men & women.
The beauty industry has understood that they have to embrace personalization as no two faces are similar. Famous brands are recognizing this need and implementing personalization. With cosmetics, people are feeling a sense of paralysis and they have a lot of options to choose from. When given a lot of options they are less likely to purchase anything or be happy with the product they have bought. This is the reason beauty brands have started using personalization.
Last year, CoverGirl launched an app, Custom Blend, that analyzes people’s skin tone, intensity, and undertone, generating a numeric indicator that matches them with the right products. The whole experience is personalized, right down to the packaging. People can select fonts and label colors, and even include their name on the bottle.
Shiseido has a skincare system that can determine someone’s skin texture, pores and moisture content with a photo. It even takes into consideration variables such as temperature and humidity. From there, Optune transmits the data to its IoT-enabled machine, which dispenses the correct serum and moisturizer combination.
Visual Artist is a feature within the Sephora app, a feature that combines facial recognition and augmented reality. It allows consumers to “try on” different products. Skin tones have many subtle variations; so do cosmetics. And those differences don’t necessarily translate the way you think they will.
John Ellett, a contributor at Forbes, had an interview with Bridget Dolan, VP of Interactive media, Sephora. The interview’s main focus was on highly relevant personalized data helping the cosmetic industry.
Bridget Dolan: “Every decision that we make has our customer at the center. I think a lot of companies say that. But we really mean it. We think about, “How will this impact our customers?” “What’s the right thing for our customers?” Then we think, “OK. Hopefully, it’s also the right thing for us.” And in some cases, it’s not and we still do it anyway. A lot of what we’ve built, whether technology, social media or a lot of things that we’ve worked on in recent times, has been focused on the customer — whatever she needs to be able to make that purchase. We have not put technology for technology’s sake in our store just because we thought it would be cool.”
Loli Beauty newly launched in the beauty industry opinion about “micro-customization”.
Tina Hedges, founder Loli Beauty, says “The concept of a static skin or hair type is outdated and driven by the business requirements of big beauty companies, rather than the actual needs of the consumers. Nutrition, health, emotions and even geo-locations impact the state of your skin or hair. Micro-customization on-demand allows our consumers to personalize their products based on their daily needs.”
The future of the cosmetic industry has taken customization one step forward. First people had to fill in the details and preferences to customize their product. Now there are devices which will create the product for the customers at home. Using water and encapsulated raw materials, ranging from skincare to hygiene and hair products.
In the past few decades, the beauty industry has become bloated and there hasn’t been any change in the value chain either. With many newcomers in the online market, people can do much more by deciding what cosmetic they want to buy. Additionally, now they can customize every parameter of the product that suits them personally.
This is indicative of the fact that we have entered an age of e-retail where providing an easy online service isn’t enough anymore. It all finally revolves around providing the audience with an individualized experience.Given the fact that there are not many such startups in the cosmetic industry recently, a personalized beauty product service is indeed looking towards a bright future.
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