Cosmetics whitepaper

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Overview - Cosmetic Industry: AI, Big Data and Machine Learning

Major players in the cosmetics and skincare industry, along with a crop of emerging beauty startups, are already working on maximizing the potential of technology. AI and data analytics, often used in conjunction with AR (augmented reality) technology, is used to more effectively reach consumers online, and offer tailored recommendations and products. Recently, some of the biggest cosmetics companies have been investing heavily in technology by acquiring companies with AI and data analytics capabilities, such as L’Oréal's purchase of "leading beauty tech firm ModiFace" in March 2018, to join their new Digital Services Factory. The application of AI technology and data analytics can "solve the pain points of shopping for skincare and hair-care products", assisting consumers who may not understand which products are most suitable for them, via accessible, convenient platforms.
Below are the main applications of AI technology, machine learning and data analytics currently seen in the cosmetics industry today.

CHATBOTS

Chatbots are AI-powered programs which can converse with consumers, and can be found cropping up on corporate websites as well as on social media platforms. Cosmetics brands are using these as a tool to interact with consumers, with Facebook Messenger proving to be a popular platform. In 2017, Unilever launched a Facebook Messenger chatbot in the UK, "Bella the Bot", in conjunction with the drugstore chain Superdrug, for their brand of skincare products called Simple. The chatbot advises consumers on the Simple product range, with a range of knowledge that the average Superdrug shop assistant may not have about P&G's brand. Given that “83% of smartphone users...consult their mobile device while shopping”, this is a convenient and accessible means of reaching the consumer as well as providing “better measurement of consumer behavior”.
Chatbots are not just for drugstore brands-premium cosmetic brand, Dior, has also launched a Facebook Messenger-based beauty assistant chatbot, called Dior Insider. By interacting with the chatbot, consumers can find out about “the latest Dior news or...regarding a product”. While users must type to interact with Facebook Messenger chatbots, some are voice-enabled, such as Estée Lauder’s service launched in December 2017 which is accessed via Google Assistant. This chatbot gives “leverage to a personalized nighttime skincare routine” and the company has plans to expand on this year.
Augmented reality (AR) is another technology that is being heavily utilized by the cosmetics industry, as the ability to overlay digital images over photographs, video or real-time images via a smartphone camera is particularly useful in allowing consumers to virtually “try on” different make-up looks. Some chatbots combine both AI and AR technology. Estée Lauder rolled out a chatbot on Facebook Messenger that helps consumers choose a lipstick shade by allowing them to select from the available colors and virtually "try them" on, via an AR selfie. Sephora, the cosmetics retailer, launched a similar app to aid in selection of the perfect lipstick color.
Once a chatbot is programmed, it is a cost-effective replacement to relay basic, straightforward information that would usually require a human employee. Juniper Research “estimates that chatbots [will] save more than $8 billion a year by 2022”, across all industries—no breakdown focused on predicted cost savings for the cosmetics industry is currently available online.

PLATFORMS OFFERING TAILORED ADVICE

In February 2017, P&G launched Olay’s Skin Advisor, an AI-driven web-based platform which advises women on skincare products based on an uploaded "selfie" photo. The platform draws on “millions of selfies” which were input during its development, and uses an algorithm "to spot the key "aging zones"" thus enabling the Skin Advisor to recommend a particular Olay product for the issue detected. P&G claims it to be “the first application of deep learning in the beauty industry”. The platform “learns” from each additional photo uploaded, therefore the platform’s accuracy and benefit to customers will improve the more it is used. With over 1 million users uploading selfies since the “beta version was launched...in September [2016] in North America” and given that more than 80 million women globally use Olay products, “P&G is confident that [the Skin Advisor] will get better with time.” It is considered a valuable tool, as P&G’s research found that although “browsing the shelf is the No. 1 purchase influencer for women”, around 33% don’t find a product that meets their needs whilst on the shop-floor, demonstrating the opportunity for the web-based recommendation tool.
Shiseido also has a personalized skincare adviser app, currently in beta version in Japan, called Optune. They claim the app’s algorithm “can choose the best conditions of the skin along with the tones to achieve a moisturized state in each individual”. As another investor in technology, Shisiedo acquired Giaran, in November 2017. As well as AI, Giaran uses computer vision, big data and augmented reality to "provide personalized recommendation based on analyzing facial data."
Effective AI and machine learning-powered recommendations have great potential to add value, as according to Women's Wear Daily, “[p]roduct recommendations, long a staple in fashion and beauty e-commerce, become much more powerful when they match customers’ tastes”. As the technology becomes more sophisticated, "their value and uses go up."

PERSONALIZED PRODUCT FEEDS

The cosmetics brand ColourPop has been using AI in order “to build a personalized product feed that will make the discovery process on the mobile web easier”. They have drawn on the expertise of tech company Qubit to develop an “artificial intelligence-based personalization platform to help...segment and analyze its customers with [the] goals of better understanding buyer behavior and influences”. The platform works based on “heuristics, notions about how buyers learn about new products, which products they really like and what sort of trends most influence them to buy”. Although consumers spend a lot of time browsing online, especially on social media platforms such as Instagram, this doesn’t necessarily translate into sales, so ColourPop is using AI technology to encourage sales "by putting the right products in front of people through an algorithm-based feed. In doing so, the company has seen a 31% “open rate on the discover feed icon” and a 4% increase in revenue per site visitor.

SMART BEAUTY TOOLS

At the start of 2017, L’Oréal launched “the world’s first smart hair brush”. Along with sensors to measure the condition of hair and scalp and analyze brush strokes, the hairbrush is “equipped with signal analysis algorithms designed...to assess the quality of hair and monitor the effects of different hair care routines”. This feeds into an app, which can then recommend the best hair-care products for the user.

CUSTOMIZED COSMETIC PRODUCTS

Last month (March 2018), L’Oréal demonstrated new tools which use "machine-learning algorithms to technologically customize makeup" which are yet to be launched commercially. The first is for selection of foundation-the skintone of the customer is analyzed with a handheld color spectrometer and an algorithm determines the exact shade, “fed into a nearby machine that...promptly dispenses the product”. The other is for a “custom facial serum”, which is determined using a questionnaire-type app. Tailor-made products which are altered according to the customer's specific needs, instead of a limited range of off-the-shelf products, may well be the direction the beauty industry is heading in.

Aside from L’ Oréal, startups are also getting in on the act and delivering custom cosmetic and skincare products. The company Proven “creates personalized skincare products based on the largest beauty database in the world” and subscription-service Curology uses digital technology alongside human dermatologists to prescribe "personalized skin care solutions".

CONCLUSION

L’ Oréal in particular appears to be at the forefront of technology when compared to other major cosmetics players, with its acquisition of Modiface sending a clear message that AI and data analytics are expected to play a big part in the future of the industry. Technology is being used in applications to tailor recommendations and products which in turn enhances customer satisfaction, and to personalize online product discovery which has demonstrated an increase in revenue by ColourPop.
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