Customization in beauty is on the rise, but its scalability is uncertain

February 16, 2018

It’s no longer enough to personalize beauty products with a shopper’s name or favorite color. Today’s consumers are seeking out brands that allow them to customize everything about a product, down to its formulation.

To satisfy this, a crop of brands across the cosmetics, hair-care and skin-care categories have popped up in the last few years to offer bespoke products, and the trend shows no signs of slowing down. A report last year from GlobalData found that a growing number of consumers, then at 61 percent, found the concept highly appealing.

“The push toward customization is linked closely to the beauty space’s desire to appeal to a diverse and global clientele,” said Maya Mikhailov, CMO and co-founder of retail app developer GPShopper. “Standards of beauty are shifting from traditional norms, and consumers are increasingly demanding beauty products that not only offer more choice, but also help them express their individuality.”

There’s money behind the phenomenon, too, which Mintel recently identified as one of the top beauty trends to watch in 2018.

prose-productProse custom hair-care products

Last year, the custom hair-care line Function of Beauty secured $9.5 million in a Series A round led by GGV Capital. Its competitor, Prose, raised $5.2 million this past December, in a round led by Forerunner Ventures, an early backer of Glossier. The old guard is paying attention, too: Shiseido acquired MatchCO, a custom foundation tech startup, last January for an undisclosed sum.

But many of these custom processes involve in-depth and time-consuming questionnaires, something many customers might bristle at in our fast-paced world. What’s more, the highly detailed and unique manufacturing processes required to create each product do not lend themselves to speed, calling the scalability of these brands into question.

The trend takes off
It began with makeup, a category that has long struggled to provide a wide-enough range of shades for diverse skin tones.

To remedy that, companies like Lancôme and Kevyn Aucoin began offering custom-blended foundations from select department stores like Neiman Marcus in 2015, and, last year, Covergirl partnered with ModiFace to create its Custom Blend app. The app relies on facial recognition technology and AI to mix and match the right foundation shade for every shopper.

But, rather than offer customization selectively or as an add-on, newer cosmetics brands have built customization into their DNA.

Bite Beauty, which was acquired by Kendo in 2014, allows shoppers to create their own lipsticks — its hero product — at its three “Lip Labs” in North America. The online-only brand Finding Ferdinand sells custom lipsticks and palettes through its website. Giella offers an even wider assortment — from lip gloss to foundation — on its website and through its roster of makeup artist reps, who can curate products for their clients.

downloadLoli Beauty custom skin care

A domino effect
Selecting from one-note product categories like straight, curly and wavy isn’t cutting it for hair-care shoppers, either. Brands like Function of Beauty and Prose rely on digital algorithms and consumer data to develop made-for-you shampoos and conditioners that address an endless list of hair concerns, from moisture loss to the thinning that can result from a vegan diet.

“Personalization has gone from being a nice-to-have to a must-have, especially in hair care where everyone’s hair has unique needs,” said Arnaud Plas, the founder of Prose who previously worked at L’Oréal. “Customers don’t want to have to choose between a conditioner that helps with curl definition and one that gives them more volume.”

To solve for this, Prose evaluates 85 data points provided by the customer online to determine which ingredients — and at what dosage — are needed, creating up to 50 billion combinations, the brand reports. For comparison, Function of Beauty claims to have an infinite number of combinations.

Companies like Loli Beauty and InsitU tackle skin care, with the former relying on all-natural blends created by the consumer and the latter deferring to a team of scientists who riff on the answers from a consumer questionnaire.

Tina Hedges, the founder of Loli Beauty who’s done stints at L’Oréal and Estée Lauder, was first inspired by The Filling Station at Chelsea Market in New York City, where customers can mix and match various ingredients for cooking, like oils and spices. “Why can’t there be an environment where we can choose ingredients like that for beauty?” she wondered.

BiteLipLabInside one of Bite Beauty’s lip labs

Hedges aims to fill that void herself. She officially re-launched Loli Beauty last week, after testing the brand for a little over a year. Although it offers “hundreds” of combinations with the products it sells online and at Story — the pop-up space where it’s currently holding a “blending bar” — Hedges realized that shoppers don’t always have the time to mix products themselves. Now, the brand sells “bases,” which Hedges compares to a white T-shirt — multi-tasking skin-care options for skin, hair and body that can work on their own or be further personalized with more ingredients, like hyluaronic acid for extra moisture.

Allowing consumers the option to blend products themselves, rather than behind-the-scenes in a lab or factory, like the other brands do, feels less “remote and impersonal,” said Hedges.

Problems of scale
But it might also just be smarter for reasons of scale.

Prose hair products, for instance, are currently handmade, and take three to five days to ship in the U.S. after an order is placed. According to Plas, the brand is working to fully automate the process, but it’s unclear how that will improve on production time, if at all. But this process improves a products efficacy, he argues.

“Since every product is made fresh only after the order is placed, the active ingredients used are in their prime,” he said. “We don’t have to worry about our products sitting in warehouses or on shelves for months at a time.”

Function of Beauty’s system is partially automated, but its products can still take a week to get to consumers. It, too, is working to improve on the turnaround time. “We have built everything so that it may scale, investing everything into advanced manufacturing and hiring the unique skill set necessary to become a technology-first beauty company,” said founder Zahir Dossa.

Another challenge brands like his are faced with, said Dossa, is the need to be 100 percent vertically-integrated.

function-of-beauty-customized-shampoo-reviewFunction of Beauty custom shampoo and conditioner

“We need to build everything from scratch since off-the-shelf machines and technology don’t exist,” he said, meaning that expanding production isn’t as easy as simply ordering more machines. The closest thing to store-bought machinery that Function of Beauty relies on, for example, are the paint spinners it entirely refurbishes to help mix its shampoo and conditioners.

Hedges compares Loli Beauty, on the other hand, to a chain like Sweetgreen or Juice Generation — where core items are available on the menu, à la Loli’s “bases,” but innumerable new combinations can also be made if a customer so choses.

“Look at how scalable they are!” she argued.

But, of course, neither of those restaurant chains require a ton of newfangled technology or data algorithms just for their products to come to life. Production of most custom beauty items also requires more time (from a few hours to a few days) and money, averaging between $30-$90 in the case of the brands listed here.

Those requirements are only the case with what Mikhailov calls “true customization.” There may be ways around these hurdles.

By using a pre-formulated base structure, for instance, as Loli does, brands can create slightly less specific products that still satisfy the larger craving for personalization, she said.

Still, convincing a large swath of consumers to mix those products together may be tricky, she said: “Customization may work for some consumers who are willing to put in the time and effort, but many just want the best solution for their particular needs without all the work.”