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How the Beauty Tech is revolutionizing the cosmetics industry?

Data, social networks, crowdsourcing, e-commerce, platforms, storytelling. The digital redefines the rules of the game in all the sectors and the beauty, inheritor of chemical industry, is no exception. The convergence of technological revolutions is changing the consumers relations with the brands and removing entry barriers for new players. What are the keys to their success and what do traditional players do to keep in pace with the fashion trends?

« People do not buy goods and services. They buy relationships, stories and magic. » This mantra by Seth Godin reflects the raison d’être and the know-how of new players who shake-up all the industries well begun in XXI century. The keys to success of new troublemakers are numerous and are often inseparable. These new players emerged on internet, are pure players. By sharing the same values as that of their customers, primarily Millennials and digital natives of generation Z, they address their concerns with a visceral attachment to the customer experience, comfort, commitment.

New values, new rules of the game

Unlike traditional brands, the story of pure players began with young consumers. Thus, they do not need to get adapted to the future, because they are the future. They share new societal values resulting from new technologies and new uses, but often they also have been imagined, created and directed by young entrepreneurs who are not satisfied with the offer which may rather seem plethoric. And especially: they know to get adapted to their consumers requirement, connected and informed as they have never been before, by offering them products of same quality or of superior quality than those of big brands, and all at the best price or with additional new services.

Pure players: conditions for success

The ingredients of pure players revenues are customization, disintermediation, e-commerce, new marketplaces, social networks, crowdsourcing, storytelling and, off course, data. Sometimes, an evidence of equality is put between the use of one of these ingredients and the disruption conveyed by new players. But is it so simple? No, because one ingredient is not enough. Thus, selling online is a part of their business model, but it is a distribution channel, not the core business. Their margins are significantly higher than those achieved in e-commerce. They do not compete with Amazon, but traditional brands.

Social networks, bloggers, vloggers and the Instagram stars are their best partners. The reputation of several « nouvelle génération » / (« new generation ») brands was built thanks to these new influencers. With a very niche positioning, these brands reflect the desire of their customers to be considered with all their singularities, their irregularities, and especially « pas comme les autres » / (“not like the others”). Being niche in XXI century is selling 25, 000 pieces of a makeup product in 20 minutes by partnering with a YouTube star and be out of stock after four hours.

Technology is always behind the magic: a powder that turns into serum and foam oil, your shampoo has your name and your mascara is delivered in less than an hour after a discussion with a chatbot… The technology provides the service to the customer who, seated in the comfort of his office or living room, receives his hairdresser or his products, like the aristocrats of a bygone era received their designers or their milliners.

Data: personality of each client as an analysis unit

At last, the pure players have unprecedented customer knowledge. The vertically integrated brands « nouvelle génération » / (« new integration ») address their public on the direct marketing method updated with current tastes and retains as analysis unit the personality of each individual customer. Guided by their attachment to the customer experience, they check their distribution online and offline, and all their transactions, interactions and storytelling are found « connectés » / (“connected”): a single brand, a single store, a single CRM. This data is the main asset of innovative companies which constantly use them to improve their products and the customer experience.

So, who are the new players who have managed to seize the opportunities neglected by the big ones? Which are these new digital brands that have acquired the technology to create new beauty products involving the IT, agility, e-commerce, social networks? Mentions Anastasia Beverly Hills, Dollar Shave Club, Glossier, Volition, Madison Reed, MatchCo, Romy Paris. The customization of their ADN, the responsibility is their slogan, comfort is their lifestyle.

New players are redesigning all the markets, be it agriculture, energy or beauty. They have been able to rethink the entire value chain end-to-end in their industry and are in the process of making today which will become standard tomorrow.

To learn more about digital transformation in the cosmetics industry, read Beauty Tech, Avanade’s new Strategic Note (here).

© 2018 - Premium Beauty News -
about Avanade

Majority owned by Accenture, Avanade was founded in 2000 by Accenture LLP and Microsoft Corporation. Avanade is the leading provider of innovative digital and cloud services, business solutions and design-led experiences delivered through the power of people and the Microsoft ecosystem. Our professionals bring bold, fresh thinking combined with technology, business and industry expertise to help fuel transformation and growth for our clients and their customers. Avanade has 30,000 digitally connected people across 23 countries, bringing clients the best thinking through a collaborative culture that honors diversity and reflects the communities in which we operate.



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