Technology has revolutionized countless industries over the past 50+ years. Where would modern manufacturing be today without the Internet of Things (IoT), artificial intelligence, and machine learning? These innovative technology advancements have made it possible to eliminate inefficiencies, speed up production lines, and reduce the risk of human error.

One industry that has experienced exponential transformation thanks to the advent of technology is e-commerce, or the buying and selling of goods or services using the internet. When you think of traditional e-commerce, you might envision scrolling through a website’s product pictures and clicking “Add To Cart,” then having to wait 3-5 business days for your new merchandise to ship through the mail. However, that process, too, has evolved in recent years to include a wide variety of shopping and delivery solutions.

A popular sector that’s truly taken advantage of technology’s enormous opportunity for e-commerce growth is BEAUTY.

Where Does The Beauty Industry Stand Today?

According to Statista, consumers have been spending higher levels of disposable income on cosmetics in recent years than they have in the past; in 2019 the industry pulled in a whopping 49.2 billion U.S. dollars. However, when COVID-19 hit in early 2020, the pandemic and its repercussions put a damper on the market’s growth. Shoppers have traditionally preferred to buy beauty supplies like skincare products, makeup, and fragrances in brick-and-mortar stores. According to a report by McKinsey, “in most major beauty-industry markets, in-store shopping accounted for up to 85% of beauty product purchases prior to the COVID-19 crisis.”

Thanks to the pandemic, approximately 30% of the beauty-industry market was shut down, and popular brands had to develop new ways to sell without negatively impacting the shopping experience. Enter, e-commerce innovations. As society slowly returns to some semblance of normalcy, experts predict that e-commerce will continue to expand, and that COVID-19 simply accelerated trends that were going to happen regardless. Digital channels like direct-to-consumer websites and social media platforms will prove to be indispensable as brands rely on technology to capture, convert, and retain the attention of new and existing customers.

At BDS, we’ve been active in the beauty industry for years, and we’re constantly discovering up-and-coming trends in our line of work. In this blog, we identify and explore the top SIX technology innovations and digital channels that have already changed the way that people shop for beauty products and provide concrete examples of brands that are leading the way.

1)    Augmented Reality & Virtual Reality

Augmented reality and virtual reality have been futuristic buzzwords on the lips of many industry experts for the past five years or so, but the concept initially seemed like a far-off one. Until it wasn’t. According to Digital Beauty, VR refers to digital experiences that make it possible to experience anything, anytime, anywhere, whereas AR is a computer tool that can detect live elements like the human face and add virtual effects in real-time. If you’ve ever used a Snapchat filter to superimpose glasses or freckles on your face, you’re already familiar with the technology. Within the beauty sector, AR and VR allows people to virtually “try on” things like foundation, lipstick, and eyeshadow, thus eliminating the need to shop in-store.

One major beauty brand that’s leading the AR/VR way is L’Oréal, which recently said its global mission is to evolve from a beauty to a beauty technology company. The brand claims that AR is becoming key for product and brand discovery and purchase in the beauty industry, but they also use it to improve the internal sales process. With its new “Beauty Lab,” L’Oréal encourages its family of 42 brands to “use the virtual reality room in order to drive efficiency and productivity when making decisions around product merchandising, packaging, and overall branding.” With the assistance of AR and VR solutions, the company can better visualize creative concepts and make informed decisions.

2)    DTC E-Commerce Sites

Although e-commerce isn’t a new concept, direct-to-consumer sites have become all the rage in recent years, and even more so during the COVID-19 pandemic. According to Glossy, brands have been rushing to increase the pace of their site developments to maintain customer loyalty, and “new features that have been accelerated this year include shoppable video content, product-finding tools, subscription services, and other interactive experiences to replace store visits.” To help consumers decide between various product options when they can’t physically compare them in-store, brands like Supergoop have even launched interactive product finder quizzes with questions that narrow down who you’re shopping for and why you’re shopping for them, in a tech-savvy attempt to personalize the sales process.

According to ScaleFast.com, the DTC shift was pioneered by new startups like Warby Parker who wanted to bypass major distribution centers, deliver e-commerce experiences unlike others, and essentially take control of the consumer journey from beginning to end. That said, the shift has ALSO been driven by shopper demand; the more people shop on DTC platforms, the more they fall in love with them. 55 percent of shoppers prefer to shop directly with brand manufacturers over retailers, and one of the reasons is that they enjoy “personally interacting with companies and establishing a connection.” That’s why having a user-friendly e-commerce website is more important than ever before in today’s shopper-centric environment.

3)    Social Shopping

Beyond DTC websites, social media is also empowering one-on-one relationships between beauty brands and buyers. 72 percent of shoppers say they’ve made fashion, beauty or style-related purchases after seeing something on Instagram, with the most-purchased categories being clothing, makeup, shoes, and jewelry, according to Retail Dive. Forrester Research predicts that 58% of U.S. retail trends will be digitally influenced by 2023, and the average internet user spends two hours and 22 minutes on social media per day. If the new goal of omnichannel brands is to always be where consumers are, it only makes sense for them to also be active and available on platforms like Facebook, Instagram, and TikTok.

Social media allows companies to connect directly with consumers, even when they’re casually scrolling through their feeds. One business that took advantage of that trend early on is Kylie Cosmetics, the mega-popular beauty brand founded by TV personality Kylie Jenner. By using Kylie Jenner’s massive social media following as its #1 marketing tool, the company secured almost $400 million in revenue in just 18 months. Another social media star is Glossier, which describes itself as a content-first company, and it features content from influencers and followers alike. According to Salsify, the brand “promotes the belief that communities are the core of an effective social media strategy,” and that social media can help brands listen to what consumers want and then respond accordingly.

4)    Influencers

You can’t talk about social media without specifically mentioning influencers, and in the beauty industry, influencers are in a league of their own. Global spending on influencer marketing has skyrocketed in recent years, rising from an estimated $2 billion in 2017 to about $8 billion in 2019 – by 2022, that number is expected to jump to a colossal $15 billion. People like to buy from other people, it’s as simple as that, and influencer marketing helps close the gap between brands and buyers. In other words, it puts a trustworthy face to an obscure name and humanizes companies in the most relatable way. According to BBC, “authenticity is at the core of the influencer trend, and influencers attract followers who feel connected to the person, rather than the brand.”

Beyond simply attracting followers, influencers actually boost a company’s bottom line since they don’t typically require the brands they work with to organize professional photo shoots staffed with various crew members. Instead, influencers (especially if they’re new to the industry) do all the styling, shooting, editing, and posting themselves. They even monitor and respond to social media comments in real-time. Whereas people used to turn to the glossy pages of Cosmopolitan to see how all the celebs are doing their makeup, now they simply need to open an app or watch a YouTube video; according to Forbes, that “shift is challenging for many longtime players in the beauty market,” and encouraging them to partner with more “regular people” vs. professional models to promote their products.

5)    Livestreams

In China, livestreams have proven ultra-successful when it comes to selling and buying beauty products, and the trend is starting to spread like wildfire in the states. According to NNGroup.com, “livestream e-commerce is a business model in which retailers, influencers, or celebrities sell products and services via online video streaming where the presenter demonstrates and discusses the offering and answers audience questions in real-time.” In China specifically, the industry is estimated to earn $60 billion annually, and about 37% of online shoppers made livestream purchases in 2019 alone. The most popular livestream platform is YouTube Live, which is home to approximately 2 billion monthly users from across the globe. After YouTube, Facebook Live and Instagram Live are the next go-to options.

One major event that catalyzed the livestream boom is the annual Single’s Day shopping extravaganza in China, which is an unofficial holiday that encourages single people to treat themselves to gifts as a form of self-care. Singles’ Day started in 1993 and has since become the world’s biggest 24-hour online sale, and livestreaming is a massive component of its overwhelming success. Livestreaming differs from traditional online shopping and video watching in that it’s actually an interactive, two-way experience for the person who’s livestreaming and their followers. During a livestream, beauty brand reps can have conversations with customers and answer all their questions in real-time, therefore strengthening the bond between brands and buyers.

6)    In-Store Technology

Before COVID-19, you could enter any brick-and-mortar beauty chain like Ulta or Sephora and get your makeup done by an in-store expert, or at the very least get color-matched for a new foundation or concealer shade. But in today’s contactless world, that type of close physical contact between two strangers is practically unheard of. However, one of the biggest reasons why people prefer to shop in-store for beauty products is because they like to see, feel, and test out products before purchase. Enter the next big craze in modern-day beauty buying: in-store technology that lets you “virtually” try on products and even connect with brand reps via the screen.

According to Kendu, some brands like Nivea and Johnson & Johnson were already ahead of this trend pre-pandemic; in 2019, they were “using touchscreen technology that automatically displays product information when a shopper touches an item displayed on a store shelf,” which resulted in an amazing 37% sales lift. Sephora is also using in-store technology to improve the shopping experience. At one of its digital-first stores, Sephora shoppers are greeted with a card that serves as a “virtual shopping basket.” With the card, shoppers can quickly scan products that catch their eye, and then purchase them online later. Another way that brands are bridging the gap between online and offline buying is with interactive displays that infuse brick-and-mortar stores with digital-first solutions. But since they innately rely on technology, many brands require assistance with their upkeep. At BDS, our dedicated Break Fix service can give retailers peace of mind that their in-store displays will always be running and ready to improve the sales process.

Technology In The Beauty Industry Is Here For Good: A Savvy Partner Can Help You Get Ahead

The beauty industry plays a significant role in everyday life, especially as the trend towards all things self-care continues to flourish. And truly, if something as intimate and innately physical as beauty products can succeed in the e-commerce space, ANYTHING can. However, it can be difficult for start-up companies and legacy brands alike to shift their normal operations to prioritize tech-savvy innovations like AR/VR, influencer programs, social selling, livestream events, and in-store technology that blends IRL with URL. That’s why it’s a good idea to partner with a third-party expert who’s done it all before, and who can help you get started with solutions that will actually impact your bottom line.

At BDSmktg, we’re experts on all things related to retail, and we – like many others – were challenged to change when COVID-19 hit. The result was a complete 180-degree shift in our priorities, and an all-out effort to develop digitally powered, connected commerce solutions to help our clients overcome today’s obstacles and train for tomorrow’s tests. StoryStreams™ is our answer to livestreaming; Tap-a-Tech™ is our virtual answer to the in-store demo; Brandfluencers™ is our answer to bringing authenticity to the world of social selling; and BrightShops™ is our answer to reinventing the dark store experience. We know retail looks different today than it did just one year ago, but we think that’s a GOOD thing. If you’re ready to get started crafting your digital-first retail or e-commerce strategy, contact our BDS Digital division today.