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Personalized Beauty Tech

Delivering tailor-made beauty products to break through a crowded mass market.

Overview

Personalized beauty tech: combining technology and cosmetic science to deliver tailor made products

Personalized beauty tech refers to the use of technology to develop products that are unique to each individual customer based on their personal attributes such as skin or hair, taste preferences, genomics, and environmental conditions.

This industry is driven by consumer demand for greater diversity in beauty products. But as beauty brands began introducing more varieties, the proliferation of nearly identical products left consumers with a new problem—the paralysis-inducing paradox of choice. To break through the crowded market, companies have transitioned to personalized beauty to engineer products that are tailored to individual customer needs. And with a majority of the startups in the space featuring female founders, women are taking charge in the industry to convert their own experiences into a marketable product.

What's driving this industry?
Market Sizing

Personalized beauty products market size in the US could reach USD 1.8-3.7 billion by 2025

Conservative case

USD 1.8 Bn

Base case

USD 2.6 Bn

Expansion case

USD 3.7 Bn

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COVID-19 IMPACT

Cosmetics sales in the US declined 22% YoY while skin care declined by 8% YoY in Q1 2020.

Nevertheless, positive dynamics provide optimism for growth in the personalized beauty market:

  • Shift to online sales: In the US, during Q1 2020, online sales of beauty products increased by 24% YoY and accounted for 48% of total beauty sales. 

  • The skin care category: Demand spiked for personalized products .

    • Ipsy’s new customers grew by around 60% month-over-month (MoM) between mid-March and the end of July 2020. Sales also more than tripled over that period compared to Ipsy’s sales from January to mid-March 2020.

    • Proven Skincare’s sales grew by around 62% month over month in April 2020.

    • Atolla increased its monthly revenue by 5x during the first six months of 2020.

    • Hairstory’s revenue increased by 85% YoY in 2020.

  • Accelerated pace of innovation: Constraints on in-store visits prompted beauty brands to expand or introduce virtual try-on technology.

    • Consumer engagement for MAC’s try-on tools increased 3x during the 8 week period ending April 26. 

    • Ulta Beauty’s virtual try-on app saw engagement increase by 7x as of September 2020.

Market Mapping

Incumbents initially penetrated the market by providing personalized recommendations of their own products as an add-on service, but are now moving towards more high-tech personalization models such as developing custom products and do-it-yourself (DIY) devices. Nearly half of the disruptors offer tailor made products with the majority of them being in the early or growth stages. DIY products is an emerging segment, however still at a nascent stage of development with most of the startups at seed level.

Incumbents
Growth
Early
Seed
Pre-Seed
Own product recommendations
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Other brand recommendations
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Custom products — skin care
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Custom products — hair care
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Custom products — makeup
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Custom products — fragrance
?
Do-it-yourself devices
?
Amorepacific
Amorepacific
Amorepacific
Amorepacific
Amorepacific
Amorepacific
Amorepacific
L'oreal
Sephora
Procter and Gamble
Johnson and Johnson
Ulta Beauty
Estee Lauder
Unilever
Coty
Nu Skin
Amorepacific
Avon
Shiseido
Perfect Corp
Hairstory
Nutrafol
Adigica Health
NakedPoppy
Yours
Revieve
Voir
Lillycover
Amareta
Gemmist
Elsi Beauty
SkinIQ
Ulta Beauty
Ipsy
Heyday
My Beauty Matches
HelloAva
FaceCake Marketing Technologies
NakedPoppy
Jolimoi
The Beauty Marketplace
Plum Perfect
AlgoFace
EpigenCare
L'oreal
Amorepacific
Beiersdorf
Function of Beauty
Hawthorne
Skin Inc
Foreo
Proven Skincare
Atolla
Geologie
Sepai
The Buff
Skinshift
Pure Culture Beauty
AVE + EDAM
Y’OUR
Skin Dossier
Henkel
Function of Beauty
Hawthorne
eSalon
Prose
Strands
Cult Beauty
Preemadonna
Finding Ferdinand
Ellure
Coty
Hawthorne
Pinrose
Fragrance by Me
Waft
L'oreal
Procter and Gamble
Foreo
Preemadonna
Lillycover
HiMirror
Cutitronics
CareOS
Romy
Mink

The Disruptors

Most startups operate online with limited physical presence; accuracy of the matching algorithm is a key success factor

Unlike the incumbents, the majority of personalized beauty startups operate online and do not operate a physical store. The products are sold either on a one—time purchase basis or on a subscription basis. The most used subscription model is replenishment subscriptions which is mainly used by skin care, hair care, and fragrance companies. The product is replenished at pre—defined regular intervals and the subscription fee is typically discounted from the second purchase onwards.

The accuracy of a company’s matching algorithm is equally important as the product quality, which also sets them apart from competitors. Success will depend on the depth and breadth of the database of customer records available and how well this is analyzed to generate useful insights. Most of the disruptors have developed proprietary algorithms and companies such as Hawthorne and Lillycover claim to have been able to achieve accuracy levels of over 97%.

Companies such as Function of Beauty and Hawthorne operate in both the custom skin and custom haircare segments, but the majority of the startups covered in this hub specialize in just one segment.

Own product recommendations

?

Disruptors

?
Funding in USD Millions
Perfect Corp
75
Nutrafol
35
Hairstory
24
Adigica Health
13
Watchlist
?
NakedPoppy
Gemmist
Yours
Revieve
Elsi Beauty
Voir
Lillycover
SkinIQ
Amareta

Other brand recommendations

?

Disruptors

?
Funding in USD Millions
Ipsy
237
Heyday
33
EpigenCare
0
HelloAva
Unknown
FaceCake Marketing Technologies
Unknown
Watchlist
?
NakedPoppy
My Beauty Matches
Jolimoi
The Beauty Marketplace
Plum Perfect
AlgoFace

Custom products — skin care

?

Disruptors

?
Funding in USD Millions
Function of Beauty
248
Hawthorne
22
Proven Skincare
6
Atolla
4
Skin Inc
Unknown
Foreo
Unknown
Watchlist
?
Pure Culture Beauty
Geologie
AVE + EDAM
Y’OUR
Sepai
Skin Dossier
The Buff
Skinshift

Custom products — hair care

?

Disruptors

?
Funding in USD Millions
Function of Beauty
248
Prose
25
Hawthorne
22
Strands
3
eSalon
Unknown

Custom products — makeup

?
Watchlist
?
Preemadonna
Finding Ferdinand
Ellure

Custom products — fragrance

?

Disruptors

?
Funding in USD Millions
Hawthorne
22
Pinrose
4
Watchlist
?
Fragrance by Me
Waft

Do-it-yourself devices

?

Disruptors

?
Funding in USD Millions
Foreo
Unknown
Romy
Unknown
Mink
Unknown
Watchlist
?
Preemadonna
Cutitronics
Lillycover
HiMirror
CareOS

Perfect Corp

Taiwan-based Perfect Corp provides business-to-business (B2B) technology solutions for the beauty industry using artificial intelligence (AI), machine learning, augmented reality (AR), and facial recognition technologies. The company’s “YouCam” solution involves skin analysis, virtual try-ons and shade-finder functions which are available online as well as in-store. Perfect Corp has also introduced several supplementary products to YouCam, such as “YouCam Video” (introduced in January 2021) built on its patented AR based “AgileFace” tracking technology that allows users to edit videos by (virtually) applying makeup, and “YouCam Tutorial” (introduced in September 2021), a software-as-a-service (SaaS) tool that assists beauty brands and makeup artists carry out virtual makeup tutorials for customers. YouCam technology is used by major beauty brands such as L’Oreal, Lancome, Decorté, MAC Cosmetics , and Neutrogena as well as natural beauty brands such as 100% Pure Cosmetics. The company’s product portfolio also includes a contactless virtual try-on feature for face and nails, which was introduced in response to increasing demand for such solutions due to the Covid-19 pandemic. This solution uses voice recognition and gesture control to allow the customer to navigate using voice commands.

Further, in January 2021, the company raised USD 50 million in series C funding led by Goldman Sachs which the company expects to utilize to drive global expansion and to improve its beauty AI technology. As of September 2021, the app has been downloaded over 900 million times globally.

Segment:
Own product recommendations
Total funding:
USD 75.0 million
Competitors:
Voir, Revieve, FaceCake Marketing Technologies
Disruptor Funding History

Own product recommendations:

Perfect Corp
Nutrafol
Hairstory
Adigica Health
NakedPoppy
Gemmist
Yours
Revieve
Elsi Beauty
Voir
Lillycover

Other brand recommendations:

Ipsy
Heyday
EpigenCare
NakedPoppy
My Beauty Matches

Custom products — skin care:

The Incumbents

Partnerships with tech startups help incumbents catch up

Almost all incumbents in the personalized beauty space have teamed up with startups working on augmented reality (AR) and related technologies. Some, like L'oreal, Procter & Gamble, and Avon, have additionally developed proprietary technology in-house. And while still early, a few acquisitions have already taken place.

With the advantage of a retail footprint, many incumbents offer personalized experiences in-store as well as online. For example, L’oreal’s SkinCeuticals line offers a customizable face serum that is available in select retail locations. Other players such as Estee Lauder, MAC cosmetics, and Garnier also provide virtual try-on facilities in-store.

Acquisition

In-house Product Development

Partnership

Investment

company-logo-0L'oreal
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company-logo-1Sephora
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company-logo-2Procter and Gamble
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company-logo-3Johnson and Johnson
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company-logo-4Ulta Beauty
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company-logo-5Estee Lauder
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company-logo-6Unilever
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company-logo-7Coty
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company-logo-8Nu Skin
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company-logo-9Amorepacific
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company-logo-10Avon
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company-logo-11Shiseido
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company-logo-12Cult Beauty
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company-logo-13Beiersdorf
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company-logo-14Henkel
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L'oreal

Based in France, L’oreal is the world’s largest cosmetics manufacturer and retailer. The company provides a range of personalized products including makeup, haircare, and skincare using augmented reality (AR) technology and proprietary dispensing machines. In 2012, Loreal launched its “Technology Incubator” as a startup within its research and innovation division to develop new technologies for product personalization and customer experience.

Several new products have emerged from this incubator. For example, under the Color&Co brand, L’oreal sells a personalized at-home hair color kit for USD 20 (as of September 2020) that asks customers to answer online questions and conduct a 10 minute video conversation with a hair colorist. In January 2022, the company introduced two more custom hair color tools; Colorsonic, targeting end customers, and Coloright, targeting salon stylists (to be launched in early 2023. L’oreal’s brand, SkinCeuticals’ provides a “Custom D.O.S.E.” skin care serum that utilizes a patented skin diagnostic tool, only available in select physical stores, to evaluate the customer’s skin conditions and dispense a custom serum within 5 minutes following an in-person consultation. The company also provides virtual try-on facilities through its website, either over webcam or via photo upload, to preview multiple makeup products and hair colors. “Lancôme Le Teint Particulier”, another customized product under L’oreal, blends custom foundation using a color matching algorithm. This product is available in-store as well as on the website as virtual try-on. In 2018, L’oreal acquired ModiFace, a provider of AR and AI solutions for the beauty industry, to strengthen its AR virtual-try on offerings.

One of L’oreal’s latest innovations in the personalized beauty space is “Perso”, a three-in-one at-home skincare and cosmetics product dispenser expected to launch in 2021. The Perso device is linked to a mobile app to analyze the user’s skin along with local environmental conditions such as temperature, ultraviolet (UV) index, humidity, etc. Based on the analysis, the device can dispense personalized skincare products including lip color and foundation. The artificial intelligence (AI) powered device also utilizes a patented motorized system. In July 2021, L’oreal applied for a patent on a system that analyzes protein biomarkers to make personalized formulations or recommend existing products.

L’oreal’s mass-market subsidiary Garnier also provides virtual hair color try-ons on its website powered by Modiface AR technology.

Notable Investors

No investor data is available

Funding data are powered by Crunchbase
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