How has Digitization Helped in the Evolution of the Beauty Industry

It is no wonder that more than 50-60 percent of new customers are now coming from smaller towns and rural areas.
How has Digitization Helped in the Evolution of the Beauty Industry

In the last decade or so, digitization has changed the fabric of almost every industry globally. This evolution has impacted the beauty industry as well in many ways – whether it be by creating a greater connection between brands and customers, or by reducing entry barriers to innovations by new brands in serving hitherto unfeasible niche customer cohorts. 

Spotting trends, creating a concept, getting access to best-in-class formulations from across the globe as well as reaching the brand’s message to a large customer cohort – what used to be a 2-year innovation cycle is compressed to less than 4 months! 

It’s never been a better time to be a beauty customer since the explosion in choice and accessibility is creating new habits, many inspired by oriental/ occidental trends but many also from the homegrown Ayurvedic universe. 

It’s never been a better time to be a beauty brand, as the large Indian population still has one of the lowest per-capita beauty consumption globally and is rapidly consuming content for inspiration and education, and eagerly leveraging digital platforms to not just learn but also fulfill their newly learned needs through ordering their brands with a single click! 

It is no wonder that more than 50-60 percent of new customers are now coming from smaller towns and rural areas – it is truly ‘day 1’ in the beauty and personal care space in India.

Digital Transformation is Leading the Way 

According to a Deloitte report ‘Disruptions in Retail through Digital Transformation’, “The advent of digitization has streamlined the beauty industry and made its working more efficient with the convergence of traditional boundaries that were set between sectors. We now look at a multidisciplinary view of functioning that weaves in analytical and creative capabilities. 

Mass customization of communication, ultra-niche cohort targeting, and rapid ‘no-regrets' innovation funnels are capabilities that are no longer ‘new’ but becoming mainstream.

The process has been further accelerated as big data makes it possible to analyze shopping behavior in detail and provide a personalized experience, based on individual requirements. It has also paved the path for improving the reach of brands as customers are now better exposed to innovations by various brands, helping them make informed decisions during their purchase through easy comparison between products from different brands under the same price point. 

Consumers also help in co-creating the value proposition of brands, basis their willingness to provide feedback, which helps brands in real-time. In fact, some of the most successful new-age brands have leveraged this ‘reverse flow’ of customer feedback very actively and created a lot of value apart from a sizeable and fast-growing consumer franchise.

Shift Towards Online Consumption in Tier II & III Cities

Earlier, a beauty store would cater to a limited captive audience, primarily to those who resided near it. Now, connecting users across locations is much easier because of progressive leaps in technology - connecting billions of users at once. Such advancements have commoditized technology in a manner that has never been witnessed before. 

Digitization has been a blessing for the beauty industry to explore what remained untouched. From having 2-3 brands in a store, customers now have a choice of ordering from thousands of brands, and choose whether they want it cheap, fast, different – or all of these! 

India is a diverse physical market – creating a ‘retail experience’ at scale is capital and time-intensive – and it still runs the risk of not finding ‘critical mass’ as one goes deeper in the population strata. 

Customers in smaller towns are however no longer satisfied with what was once the only available choice, they are using a plethora of social platforms and want the same brands, follow the same trends as their metro counterparts. Comfort with digital payments is an added dimension fueling trials on digital shopping platforms. As a result of this, the divide between metros and tier II-III cities has been bridged to an extent or at least continues to trend lower by the day. 

Technological Interventions have Changed the Way We Experience Beauty 

Traditional business models stand disrupted with the new market reality as the intervention of Augmented Reality and Virtual Reality has enhanced the experience of beauty for customers globally. E-commerce platforms embrace such technological realities with ease: the platforms have provided solutions to customers that are as good as an in-store customer experience and in some cases even better. 

The boom on the internet reaches through low-cost data, increasing smartphone penetration which can support sophisticated mobile applications, allows customers to get the capability of choice within the comfort of their homes, often not realizing the powerful machine learning and automation algorithms ticking behind, enabling them to browse millions of products.

A key part of beauty experience in the past has been the ‘experience and advisory’ – standing at a beauty counter, trying out shades on one’s skin to match/ visually compare and ask a question or two to the ‘beauty advisor’. However, this is limited to a few million customers who are in the vicinity of and frequent such retail destinations. For millions of customers, the beauty counter is now their mobile screen! 

For instance, Amazon Beauty has recently rolled out a new feature called ‘Virtual Try On’ (VTO), where customers can virtually try on color cosmetics. The feature allows customers to either use a photograph stored in their phones or one of the pre-loaded model faces or even their own live camera feed (Android only at present) to use this feature. The visual nature of this feature allows the user to test color cosmetics and see how it will look on their skin virtually, bridging the gap between the offline and online buying experience. For advisory, millions of customers have already provided reviews, and influencers can fill in the ‘inspiration’ bit through visually rich advisory content, which is increasingly a part of the convoluted shopping journey of the beauty aficionado.

Besides this, to help customers discover new and eclectic brands, products, and trends, Amazon Beauty has launched topical storefronts like The Wanderlust Store, The Professional Beauty Store, The Korean Beauty Store, and many more, further offering them easy navigation according to their specific needs. The stores offer a plethora of options to choose from, further improving their experience. While the marketplace brings an immersive and interactive experience, customers can now select their preferred language as well, from a wide range that currently includes English, Hindi, Tamil, Telugu, Kannada, and Marathi, with more to come.

As we see another COVID-19 wave batter an already tired populace, and curfews becoming the new normal, customers are increasingly approaching online platforms to purchase their beauty essentials to stay safe and fulfill their needs from the comfort and safety of their homes. This is a global trend, which is further fueling the adoption of e-commerce as a mainline shopping channel.

The Way Forward for the Beauty Industry 

As said by a very senior leader at Amazon – ‘Customers are divinely discontent’. What is a new feature or capability soon becomes their ‘normal’ and the next need emerges. In the Beauty and Personal Care space in India, we are in the midst of a transformational journey for both, beauty customers as well as sellers and brands. With inspiration from both the east and the west, we will see user habits rapidly evolve, as the next 100 million customers come online – and not just come online, but perhaps try a lipstick for the first time in their lives! There is much more to come – Augmented Reality, Voice-based shopping, new and exciting beauty formats. We are truly passionate about enabling this ecosystem and are humbled to be playing a small part in transforming how India buys and sells beauty.
 

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