Entrepreneurship

Business Ideas To Make Money In The Beauty Industry

Cameron Fleming | 22 March 2022 | 2 years ago

Business ideas targeting the beauty industry

The future of the beauty industry is innovation!

Sounds inspiring, but this phrase holds true for almost every industry. Whether you are a small business or a large conglomerate, your ability to be ‘playing’ in the market in future will be highly dependent on innovation. Yes, the beauty industry has followed some anti-ageing scientific innovations, but “everyone” is offering that now. The key to innovation, therefore, will be in the uniqueness of the innovation ‒ and that’s why the future is looking quite exciting.

We have looked to the future and business ideas targeting the beauty industry. The word innovation, or its concept, has probably been bandied about since trade first started 300,000 years ago. However, as consumers become more bombarded with thousands of options, their fatigue drives them to ignore the noise and seek highly personalised experiences. They don’t want to be part of the mob. There is too much noise in malls, on the roads, in shops with music,  people, announcements, thousands of colours, textures, items, smells, signs, competing lighting and – bang – their senses are overloaded.

The recent global disruption

The global upheaval of 2020/2021 wiped out or grew some businesses, but generally, it hampered business. With a specific look at the beauty industry, it was retrospectively observed that there was a drop of about twenty to thirty per cent in turn-over ‒ not a wipeout but certainly a painful threat.

E-commerce statistics reported skyrocketing sales but, considering the tiny size of e-commerce in the beauty industry at that time, it was easy to have ‘skyrocketing’ figures. However, the total consumption was severely knocked down with the consumers’ loss of income, loss of confidence, and lack of need for makeup when working from home.

Recovery has been sporadic, which indicates consumer confidence and a change in lifestyle habits. Recovery will be slow but positive, and McKinsey project a USD463 billion dollar market size within the next five years. To achieve this, the market will have to focus on technology, digitisation, customer engagement and customisation.

Let’s look at some business ideas targeting the beauty industry and their innovative natures in order to satisfy, retain and grow their target market.

Ensure experiences are part of your business plan

While we are fatigued mainly by discussions or mentions of the “C” word (Covid-19) or the pandemic, the markets are still navigating the waves of changes that swept across all industries to this global experience.

The effect wasn’t necessarily a change to the face of business methodologies, but it certainly accelerated the expected changes and intensely highlighted consumer needs. It also gave a swift kick to the derriere of any businesses that were doubting the need for getting on board the digital boat.

The global disruption benefits

The events of 2020/2021 have shown businesses that there are digital ways to get in touch effectively with consumers as well as nurture relationships. Touchpoints do not have to be sales floor assistants but could be customised algorithm-driven digital destinations.

The need for dissolving boundaries between digital, social media, mainstream media and brick and mortar has been amplified, and successful brands have leveraged this multifaceted opportunity.

The focus of marketing has been correctly adjusted to achieving engagement of customers, not ‘telling’ and ‘parading’.

The online experience has been invigorated and elevated in importance, while the latitudinous growth of customer service parameters has been positively disruptive. The “emergency” innovations that sprang up in response to the global medical and political mandates were impressive, but there were greater benefits to the market.

The playing fields have been levelled so that brand wealth has not determined the market leaders. Instead, customer knowledge, dynamic use of this data, innovation, speed to market and speed of tweaking innovations or replacement innovations have been the deciding factors.

Legacy marketing habits have been blown out of the water and listening to the customer is no longer a nice-to-have but a critical success factor. To this end, consumers are seeking customisation and personalisation. One of the top areas within which they seek this is what used to be called customer sales and customer service. It is now called Customer Experience, and it starts earlier and ends later along the customer journey than ever before.

The customer experience

The customer experience must be innovative and personalised; it must reduce stress and increase the feeling of individual service. In theory, anything ‘individualised’ or ‘personalised’ can cost a company a huge amount of money, hence the massive price tags on ‘by appointment only’ brands. With the advancement of technology, a heavy price tag is not always needed to make the concept viable.

Data collection by your SEO service provider and strategic, automated data processing can greatly assist brands with personalising a customer journey. This means that you can’t personalise the experience immediately, but you can put steps in place that:

  • Tells a new visitor that your brand is dedicated to personalising their experience.
  • Asks the new visitor if they wouldn’t mind answering some questions so that they are only served up what is relevant to their likes or dislikes.
  • Have interested/not interested buttons and feedback fields on as many items, steps or phases as possible in the customer journey. This instant feedback is gold and, if used well, will set you apart from competitors who are using a shotgun approach.
Above all else, research and be creative as possible. Fail fast and correct fast rather than trying to force-feed the consumer with what you think they should like and should appreciate.

Today’s empowered, technology-savvy consumers will actively look for brands that are leveraging technology and making an effort to personalise their experience.

Customisation of products

Another area of customisation that is receiving a lot of market pressure is the customisation of products. Consumers are now highly aware of and vocal about the products they use and the manner in which “they have to” utilise them. Historically, customisation would have sent prices soaring and would have been inaccessible to the majority of society.

The beauty industry leaders have accepted this challenge and certain brands, like Max, are already beta testing innovative customisation in certain flagship locations via 3D printing customised makeup selections by consumers. Another brand takes customised lipstick orders and is shipping directly to clients. Only a few brands have been able to action this thus far, but it is still exciting to see hardware and product responses to this market demand.

Returning to the basics

Focusing on the quality of life, simplicity, lack of stress and the enhancement of peace and convenience in each individual’s life rose quickly to the top of the consumer’s agenda from 2020 onwards.

Lifestyles have been reassessed, and surplus is no longer seen as a buffer but as worthless excess that hinders your ability to move or adjust quickly. The worthless factor has come about due to tens of thousands of people trying to sell off second-hand items to bridge their pandemic-related loss of income and, thereby, discovering what was already known by the previously small number of participators in the second-hand market: The second-hand market has cut-throat pricing. Loads of physical assets do not equal loads of capital but do equal loads of maintenance, insurance and the consumption of other resources.

What ‘the basics’ means to consumers

Experiences, health, quality of life, wellness of self and the planet rose up the priority list. Simplicity in achieving these also increased. So, for example, luxurious, big-ticket holidays to ‘relax’ in spa destinations, which required months of overtime, fell off the list.

Food type, sources and quality, fairtrade, supply chain visibility, sleep quality, exercise, the truth behind products we put in or on our bodies and mental health have escalated in importance. The convenience around these and the simplicity of use has also escalated in importance.

Pre-2020, a seven-product skincare regime for morning and night was considered luxurious. Post-2020, it is seen as wasting time, unnecessarily inconvenient and affecting the prioritising of other life-enhancing things. Less-is-more, a staple of Japanese culture for thousands of years, is hugely prevalent in today’s market. Less does not mean lower quality or less care; it means less inconvenience, less time-wasting, and fewer assets that are life hampering.

For the beauty industry, this means creating products or solutions that:

  • Promise to (and DO) deliver the same results as previously but without seven to thirteen steps.
  • Don’t have seven to thirteen different bottles/containers.
  • Are more honest about their ingredients.
  • Don’t have ingredients that actually damage the skin or health.
  • Don’t have excessive packaging.
  • Don’t use child labour mining for mica, etc.
  • Don’t use sweat factories.
  • Don’t harm the planet.
  • Deliver a personalised solution for each individual.
  • Are fairly priced.

Sooner-than-later trader innovation

As mentioned earlier, the changes brought to the beauty industry, and all industry sectors, generally are not out of the blue. The changes were on the horizon, some were motoring along, and some were having problems with their rudder. The 2020 events clipped a turbocharged engine onto each innovation and gave a megaphone to the market’s demands.

Consumers were waving warning flags already, yearning for tailored products that were not only available to Mr and Mrs JZ. From vitamins, minerals and health foods specific to their body types to customised skincare and makeup.

The beauty industry has started shifting sales dependence on brick and mortar to more direct-to-consumer (DTC) methodologies. Marketing with celebrities started changing, or arguably including, marketing with influencers, legacy advertising broadened to digital marketing, SEO, remarketing and virtual imaging.

Customer engagements were enhanced with algorithms and chatbots, making it easier for the small players to compete with the Goliaths.

Post-2020 success

The beauty industry trading players can’t throw an ‘innovation net’ across their entire business as that is not sustainable. It would be prudent rather to assess how your business dovetails with the future market needs and only innovate in the areas that make a difference. The assessment could reveal that there is an 80/20 split of innovation need in operations versus products or vice versa.

An important component of this will be retail innovation. Brick and mortar sectors suffered during  2020/2021 but are bouncing back, albeit with a different priority and, sometimes, purpose. One of the big aspects of beauty products is that consumers need to test a product if they are new to it or it is new to the market. Factors like Google reviews might reduce the need to test, but this will be a smaller component of the bigger picture. The brands that are getting the testing aspect innovated increase their chances of being a market leader. For example, there are shoe, clothing and lighting brands that deliver items or samples for trying, touch and feel and colour selection before the final order is placed. The service is charged for and “discounted” against the final order, and the consumers are using it because it “costs” the consumer less than driving to a mall, parking, accessing the mall, dealing with sales assistants who might or might not be well trained, testing the product, paying for parking (potentially) and making their way back home or to work.

Finding a balance between digital and brick and mortar is a key success factor for beauty industry retailers.

Product development

Cross-contamination, health, safety, germs and bacteria are buzzwords in the market ESPECIALLY relating to hands and faces, which are high priority areas for the beauty industry!

Some of the first innovations have seen spray application and stick-style products which limit the user touching their face with potentially infectious fingers.

The ingredients within beauty industry products have also been under scrutiny. There is a huge demand for non-toxic ingredients as the skin is the largest organ in (or on) the body. The ‘deciphering’ of labels or the clarity of ingredient lists through layman-speak is a big requirement for today’s consumers. The eco-friendly rating or reputation of the product is also of growing importance. The ‘clean beauty’ industry saw a growth of over 10% in 2020, whilst mainstream beauty brands felt a 20-30% drop.

Product developments that support simplicity, the environment and humans will soar.

  • It is estimated that over 50% of the millennial market segment has prioritised simplicity in their skin wellness regime. Combo products, fewer steps, same result.
  • Less packaging, less environmental impact ‒ same product results still needed.
  • More care and more honesty around the impact on humans. Non-toxic, fairtrade, no slave labour, no child labour ‒ same product results still needed.
  • Technology involvement to minimise carbon footprint NOT for technologies sake.
  • Innovative e-commerce benefits with a personalised online experience that reduces the need for brick and mortar interactions.
    • This will reduce the consumers’ carbon footprint and the brands’ environmental impact, e.g. VR app for the application of digital samples by customers.

Ethical brand values

The beauty industry often sources vast amounts of materials from countries where there are ethical questions to be asked regarding the source of the raw materials plus other factors such as the use of child labour. As such, ethical sourcing is a key consideration for beauty brands.

A Mintel survey found that nearly 8% of respondents stated that they seek brands with proven ethical values. The respondents also stated that that they experience difficulties finding out which brand is and isn’t ethical.

This means that if you have your business ethics sorted, then spread the word, say it loud and proud and say it digitally! Say it everywhere ‒ on your website, on your labels, in your e-store, in your brick-and-mortar store, in interviews, etc.

And watch the current and up-and-coming consumers follow and engage with your brand, leaving your competitors behind with their outdated business plans.

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