The Beauty Industry and the Digital Transformation

February 13, 2019

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Digital transformation is an interesting time for many categories, with comings, goings and new innovations galore. We look into what the future looks like for the cosmetics industry


The Future is Beautiful


The beauty industry is growing at record-breaking speeds.  The global cosmetics market is estimated to reach $675 billion by 2020, with recent surveys suggesting that the average woman spends around $313 a month on her appearance, with men spending up to $244. But in such a massive industry, with thousands of brands, stores, and websites to buy from, how can a company stand out from the crowd?


Social Media Drives Earnings

One example of a recently launched makeup brand that stands out is Fenty. Fenty is as an inclusive brand started by Rihanna, to accommodate women color, who have traditionally been under-served. The brand earned $72 million in its first month alone, and it is growing rapidly. Rihanna uses her personal Instagram, which has 66 million followers, to promote the product. Other influencers, who have used their extensive Instagram followers to promote upstart beauty brands are the Kardashians. Kylie Jenner, who has 121 million followers, has used Instagram to turn her fledgling brand, Kylie Cosmetics, into a household name. In 2018, Forbes valued the company at $900 million, and in an interview with Forbes, Kylie Jenner attributed social media marketing to the brand’s success, crediting it for giving her easy access to fans and converting them into customers.

Disruptor lip care brand eos, meanwhile, has made big waves through influencer marketing, with huge names like Kim Kardashian, Miley Cyrus, and others building eos’ customer base through in-video product placements and social media posts. Such social strategies have lead to massive growth for eos, and represent a flawless execution of influencer marketing strategies.

Instagram has already proven itself as a fantastic platform to promote products. It is reported to receive up to 1 billion visitors monthly, and Media Marketing has named it the most influential social network in marketing. Instagram launched shoppable posts in 2018, allowing brands to tag their products to create an exciting, interactive shopping experience. According to Marketing Week, Instagram’s new feature will allow users to immediately click on a post to see the name of the product, price, similar items and other posts from the brand, without the need visit a retailer’s website. If they like what they see, the user can tap a ‘Shop Now’ link which will take them directly to the product’s purchase page. This new feature takes out the stress of opening multiple windows to view the product descriptions, removing stressful and unnecessary steps in the path to purchase.

Falcon has reported that companies are already seeing results from shoppable IG posts, noting that some companies have had increases of up to 40% in traffic, and 8% increases in revenue. With the introduction of shoppable posts, it is clear that the gap between ecommerce and social media is rapidly closing. Even apps like Spotify, have begun to experiment with shoppable video. What started with artists selling their merchandise to fans through the app has expanded to a wide range of products, including make-up and other beauty items. Pat McGrath Labs was the first ever beauty brand to sell their products through Spotify, through a collaboration with singer-songwriter Maggie Lindemann.


A New Reality for Cosmetics


Traditionally, the beauty industry has relied on direct means of marketing, like the in-store promotions you see whenever you walk into a department store. An expectation of ‘try before you buy’ is entrenched in the beauty industry, and people can be reluctant to buy online. However, augmented reality has shown the potential to upend the dominance of in-store marketing. What is augmented reality? Think of Snapchat or Pokemon Go superimposing a filter onto your screen. The beauty industry is now beginning to see its potential to drive growth in the cosmetics industry.

One of the leading brands using augmented reality apps to sell beauty products is Sephora. Using the Sephora app, customers can instantly see products on their own faces, or try out interactive tutorials for applying cosmetics. They can then instantly add products that suit them to their basket and head to the checkout, without worrying that what looked great on Beyonce won’t suit them. Mintel has reported that 66% of women in the UK aged 16-24 feel that the best way to learn new beauty techniques is from the internet, so consumers are clearly ready to unleash the potential of these new tools. Tech Republic reported that since launching, Sephora’s Visual Artist app has acquired over 8.5 million users, and revenues for their organic label have grown by 11%. The executive vice president of Omni Retail at Sephora, Mary Beth Laughton, says that she believes the reason behind the app’s success is that it ‘is a really good example of [responding to] where there was a real customer need.’ Sephora and other cosmetics brands are using this new technology to close eCommerce’s much-maligned convenience gap.

Other popular cosmetic brands have followed Sephora’s lead with the use of augmented reality. YouCam Makeup, in partnership with L’Oreal, not only use the technology for makeup but also to give customers a skin analysis. YouCam Makeup and YouCam Perfect have recently been named an editors’ choice app by Google play, and collectively they have had over 470 million global downloads. Another beauty brand benefiting from AR is Benefit, through their ‘Brow Try-On’ feature. A download is not even required for their technology, customers simply go on their website, try out different shapes, sizes, and colors on their brows, and then get a personalized recommendation for products to buy. Olay, meanwhile, doubled sales conversion rates with the implementation of their AI-powered “skin advisor” application recently (although with smoother shoppability options, those conversion rates could’ve been even higher).

Retail Drive believes that many more retailers and brands will soon follow in the footsteps of Sephora, and expand their websites to include AR technology. But whilst many brands have adopted the lure of AR, most of their apps still fall at the final hurdle - actually making the looks they sell shoppable.  


Adopting a new approach

the beauty industry and the digital transformation

While traditional methods of buying cosmetics probably won’t disappear in the near future, technological breakthroughs have enabled beauty retailers to reach more customers instantly and have allowed those customers to sample and purchase more products with a minimum of effort and inconvenience.

With shoppable ads, augmented reality and influencers giving customers far greater access to innovative beauty products, we expect industry adoption of these technologies to grow exponentially in the coming months and years. At Adimo, we’re convinced that if you’re not convenient, shoppable, and ready to exploit the potential of digital channels and the tech that makes those channels work, you’re about to be left behind.


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