Companies that recommend beauty products from their own product range to match individual customer attributes.

Companies that recommend beauty products of chosen/partnered brands that are already available in the market to match individual customer attributes.

Companies that develop custom/tailor-made skin care products unique to each individual.

Companies that develop custom/tailor-made hair care products unique to each individual.

Companies that develop custom/tailor-made makeup products unique to each individual.

Companies that develop custom/tailor-made fragrances unique to each individual.

Companies that develop portable devices that provide personalized beauty routines, and/or allows the customer to make their own combination of beauty products.

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

Personalized Beauty Tech

Overview

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    Personalized beauty tech: combining technology and cosmetic science to deliver tailor made products
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    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. 
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    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.
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The US personalized beauty tech market could reach USD 3.6–6.8 billion by 2026

Market Sizing

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    Cosmetics sales in the US declined 22% YoY while skin care declined by 8% YoY in Q1 2020.
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    Nevertheless, positive dynamics provide optimism for growth in the personalized beauty market:
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        <b>Shift to online sales:</b>
         In the US, during Q1 2020, online sales of beauty products increased by 24% YoY and accounted for 48% of total beauty sales. 
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        <b>The skin care category: </b>
        Demand spiked for personalized products
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            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.
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            Proven Skincare’s sales grew by around 62% month over month in April 2020.
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            Atolla increased its monthly revenue by 5x during the first six months of 2020.
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            Hairstory’s revenue increased by 85% YoY in 2020.
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        <b>Accelerated pace of innovation:</b>
         Constraints on in-store visits prompted beauty brands to expand or introduce virtual try-on technology.
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            Consumer engagement for MAC’s try-on tools increased 3x during the 8 week period ending April 26. 
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            Ulta Beauty’s virtual try-on app saw engagement increase by 7x as of September 2020.
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COVID19-IMPACT

Market Mapping

<p>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.</p>

The Disruptors

<h3>Most startups operate online with limited physical presence; accuracy of the matching algorithm is a key success factor</h3><p>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.</p><p>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%.</p><p>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.</p>

Disruptor Funding History

The Incumbents

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    Partnerships with tech startups help incumbents catch up
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    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.
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    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.
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Personalized Beauty Tech

Personalized Beauty Tech

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