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Developments Disrupting Traditional Business Models in The Beauty Industry

Traditionally, when thinking about shopping in the beauty sector, most people either have an image of a large retail store with numerous individual counters, a beauty salon or, since it’s now the 21st century, a glossy website brimming with a hundred and one different sub-categories and beautiful, satin-like lipstick. However, beauty and the way customers consume beauty are constantly changing. This means that there are always new developments with innovative business models that are helping the customer finds products, and get their products, more efficiently. This disrupts traditional business models and, furthermore, does so without necessarily creating something that is wildly innovative or futuristic. Instead, a lot of new developments focus on removing any issues with the current customer shopping experience.

1) Subscription-based services

It’s essentially impossible to use the internet without being advertised some sort of subscription based service promising to bring the products you need straight to your home. Everything from flowers to biodegradable laundry capsules are now available by subscription, and the beauty and cosmetics industry is highly invested in this trend. Notable examples include companies like Birchbox or Beauty Pie which send a package of items they’ve picked out for their customers, the standard timeframe for doing so being once a month. This model of linking up with customers is only going to grow in the upcoming years, allowing brands to further expand what they can offer their customers. It’s also worth noting that subscription-based cosmetics and beauty businesses have tended to adapt very fast to online and mobile based retail developments, meaning they can grow very quickly, and have the benefit of a registered client base. You could even call it a captive client base.

2) Crowd-led innovation

More than ever before, customers want transparency from the brands they buy from, whether that’s transparency of provenance and produce, or simply information about the ethos and people behind the brands. This disrupts traditional business models in a number of ways. Allowing for crowd-led feedback, whether that is via a dedicated platform or reaching out to consumers across social media, means there can be a constant feedback-loop between customers and retailers or brands. This use of crowd-led feedback to gather information is particularly interesting for startups that don’t have the budget or renown of large, established corporate brands, who would be able to pay for long-term research into market fluctuations and consumer desires. This is also a model that can help drive customer loyalty, as the customer really feels they are being listened to. the added benefit for the brand being that they can create and develop products in a scalable manner, making those products more affordable. An example of a company currently doing this is Volition Beauty, which was founded in 2015 and was designed as an entirely crowdsourced beauty brand. It caters to those consumers who would like to conceive their own cosmetics, and has a voting system where every visitor to their website can vote on the products they’d like to see realised.

3) Incubating disruptors

The internet has entirely changed the way that the consumer relates to brands and retailers, disrupting traditional business models. Gone are the days when in-store retail presence and TV or print advertising allowed larger brands to govern the market. Nowadays, large corporate brands are having to deal with a large, and growing, competition and with fresh, new D2C beauty brands. The success of many of these D2C beauty brands and their effect on the beauty market means that older, established brands are put under pressure to create their own new disruptors. However, it then often becomes much easier and cheaper to simply incubate or accelerate these new disruptive companies, which could later serve as partners or even be outright bought, instead of going to the trouble of researching and developing in-house brands. Unilever is doing this now with a hairline too.

4) Personalisation-based services

As more and more customers cry out for easy, friendly shopping experiences and products that suit their needs and their desires, beauty personalisation is an increasingly big deal. Personalisation disrupts traditional business models that haven’t adapted to it. Because beauty personalisation is a fast-growing trend, and one that is much desired and appreciated by customers, those brands and retailers who go without can end up being frozen out by customers who don’t feel they’ve had the best customer shopping experience, and can access the products they need and desire more easily elsewhere. AI-powered beauty personalisation tech means that customers can access a personalised profile, and get personalised recommendations tailored to their needs and preferences.

If you would like to know about how you can use BME's beauty personalisation technology to help improve customer experience with your beauty brand or retail store, contact us for a demo.


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