This shade, that one, orrr…OH! This One!

I don’t buy a lot of makeup, maybe 1-2 items per year. My typical experience is going into Macy’s Mac section and having the lady there match me to my shade. For items like mascara or eyeliner, I just make sure I replace it every year. So I never really thought of the beauty industry as something that can be “digitized.” However, since we have been hearing that digitization has been touching every industry, I decided to look at the beauty industry; surely that’s one industry where there can’t be much progress – I stood corrected. Not only is the Beauty industry becoming highly digitized, but it’s also expanding rapidly because of the new digitization it’s adopting across the world. In countries like India, it’s bringing in more rural customers who otherwise did not consume cosmetics. In South Korea, they are transforming the customer experience through AI and AR.  Companies like Neutrogena and L’Oréal are introducing new products that are highly digitized in experience. Before we dive deeper into these example, let’s take a look at the beauty industry trends.

In 2020 the Beauty & Personal Care Market was valued at $483B (Sources: Reports Globo, L’Oréal & Statista). In 2025, it’s expected to reach an upwards of 784.6B, that’s a 62% growth!!

Digitization is propelling this growth because it simplifies the buying/selling process, allows customers the experience brands in a new way and creates increased customer loyalty to brands. Beauty industry is the fastest growing category under consumer goods.

Lets look at some cool advances in beauty

Companies are changing their business models and introducing more subscription models. Take a look at Allure’s Beauty Box . Instead of spending on full size individual products, these subscriptions allow consumers to change it up and get personalized boxes each month on their doorsteps.

More companies are also using beauty apps to provide a differentiated experience to their customers. Virtual experiences instead of heading to the store to try different products is picking up. AI and AR are allowing companies to introduce these services that create more traction with the brand.

YouCam Makeup invites a level of discovery and experimentation that is not possible through physical try-on — for example trying on 30 lipsticks in 30 seconds,” says Alice Chang, CEO of Perfect Corp., the parent company to the YouCam Makeup app. “there are 180,000 SKUs and over 250 beauty brands worldwide to try on across all of YouCam’s apps, partner websites, and partner apps.”

L’Oréal Virtual Makeup Try-On, powered by Modiface, allows folks looking for more affordable drugstore makeup to try on their products in the comfort of their own home.

In South Korea, AI and AR allowed customers to “try on” their favorite brands without any human contact in stores. This was especially helpful during the pandemic. Folks could walk into stores and access AR/AI kiosks and go through the various options to see what it would look like on them. Stores like Sephora have also started offering this technology in their stores/apps.

Innovation is not limited to just trying shades and colors out without actually trying them on. There are now apps that will help you with your skincare regimen as well. Take a look at Neutrogena skin 360 App: “With just one facial scan, it’s advanced algorithm can analyze over 2,000 facial attributes to assess your skin’s health. From there, NAIA, the app’s AI, can provide you with personalized skincare tips and tricks.”

To take it a step further, not only can you have a skincare expert in your pockets now but you can have a skincare expert they gives you just the right formula of products for your skin. This is what Preso by L’Oreal does. “The Smart Artificial Intelligence (AI) system creates on-demand, personalized formulas for skincare, lipstick, and foundation that optimize over time — incorporating real-time skin assessment, air-quality, pollution data and trend analysis.” It also improves over time as it collects more data about your habits and skin type.

Last Thoughts

The “one product fits all” strategy does not work for today’s consumers. Beauty brands recognize this and are using AI and AR to customize the experience of each consumer. These customized products provide consumers with more insights on how to take care of their skin. Competition within the industry is also propelling advances in “digitized” beauty products. I wouldn’t be surprised if visits to dermatologist decreases with insights consumers will hold in their pockets or bathrooms in the future. Maybe next time I need a beauty product, I’ll have to try Sephora’s virtual try on app and just buy the products online instead of going into the store.


  1. Christina S · ·

    What a great post! I can’t believe we haven’t already discussed this in class – after reading, it seems like such an obvious industry that will benefit tremendously from digitization and has such an enormous and growing TAM. It seems like it will be so easy for companies to upsell products that have now been “genuinely” customized for your skin using such detailed analysis. I also feel that consumers may be more compelled to buy makeup products if they’ve had the opportunity to virtually test them out, especially from higher end cosmetics companies. Coincidentally, I had spent some time over the weekend checking out and some other brands’ sites after what feels like a multiple year hiatus. I was so impressed with some of these virtual features (and confident in what the makeup would look like in real life) that I wound up buying some!

  2. llamadelmar · ·

    I am in the same camp as you, where I only purchase 1 or 2 new beauty products a year. Part of that is because I am price sensitive and hesitant to try bold trends. I think the ability to ‘try on’ colors and different products, whether virtually or with test sizes, was meant to address consumers like me and help convince us to buy outside of my comfort zone.
    I’d be curious to see the numbers on how the use of AI & AR influenced purchases.

  3. bccryptoassets · ·

    What’s the accuracy of matching the tones online to that of what you regularly purchase? The returns might become an issue for these companies if there are so many competitors in the beauty industry. The mainstream brands will always be successful, but with Kylie Jenner, James Charles and Jefree Star upselling products for a higher markup, they generate more revenue than Mac and Sephora stores. They don’t even have the AI/AR aspect to my knowledge. Nonetheless, I’m glad you were able to bring this topic to life. Had you not, I wouldn’t know of the digital transformations in the beauty industry.

    1. Kanal Patel · ·

      Your question on accuracy got me to be curious and I looked it up: “The scan accurately detected skin tone with 98.3% accuracy”

  4. allietlevine · ·

    I am so glad you wrote about this topic! It is something that I have found very interesting but as someone who hardly purchases makeup I didn’t think I had the expertise to blog on the topic. Overall, I think digital transformation will benefit the make up industry as it will allow for personalization, which is important as everyone’s skin and facial features are different.

    Also after reading your blog, I tried out the Neutrogena skin 360 App. I am happy to report that I received a “good score” minus the dark circles under my eyes. I guess that’s what you get for being a Part Time MBA student.

  5. Really nice post. I confess that most of what I know about the digital transformation of the beauty industry are through student’s blogposts, but it has been a fascinating area to follow. Definitely big changes afoot.

  6. I love the example of the South Korean AR makeup mirror: it’s tangible and easy to grasp the usefulness, especially in the context of a more touchless retail experience in the age of COVID.

    And I know from experience (of having a 13 year old daughter) that there is seemingly endless revenue stream in this industry!

  7. Great blog post! My purchases at Sephora mostly consist of skin care rather than makeup but when I do purchase makeup (and skincare products) I prefer going into the store and seeing the products myself. Sephora is like a candy store for me and shopping online takes away from that! I have, however seen instagram promotions for shampoos and skin care products that are customized based on your needs, life style and location. I completely agree with your point on how one product fits all doesn’t meet the needs of consumers today.

  8. lexgetdigital · ·

    Great post! I’ve dabbled in the subscription arena but continuously discover that it’s better for the store, not me. I’ve also used the virtual try-on tech through mac cosmetic’s website – and that is really cool! I actually relied on it to pick my mascara. Granted, I just decided to stick with the mascara that my man Wyth over at Mac Bloomingdales in CNHL told me to pick! The other aspect of digital transformation that I think the beauty industry needs to focus on is the personalization — with Wyth, I trust him and buy whatever he tells me to buy (for the most part). He’s also incredibly accessible: I text him, and he next-day’s me my foundation. He’s incredible. Is the tech beating out people like Wyth? I don’t think so.

  9. kaylacyrs · ·

    I love makeup and at the beginning of the pandemic I would not have dared getting any new makeup that I did not already know matched my skin tone. In the past when I got color matched at sephora they would use some type of technology that would grab my skin tone from my face and then pull up all the colors of every type of foundation in the store that would match me. From there we would narrow it down based on the type of foundation I might be looking for. Sephora also has virtual try on technology that I am sure is useful for customers who can’t get into a store. I have used virtual try ons with other brands like Ray-Ban which have been helpful in online shopping.

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