22 June 2022
The beauty industry has no lack of ingredients, devices or products that are trending or hyped to be the next big trend. But forget the newest ingredient or device you’ve heard about. Right now, NFTs is THE buzzword in the beauty industry.
Most of us would not associate NFTs and cryptocurrency with the world of sunscreens, lip gloss and serums. But NFTS, blockchain and cryptocurrency represents a new paradigm shift in the beauty world- from the manufacturing processes to the marketing strategies as we know it.
NFTs have captured the world’s attention; with headlines of NFT art pieces being sold for millions. NFTs too, have also made their way into the world of beauty since 2021. Most notably, brands such as NARS, Givenchy Clinique and Elf cosmetics have also jumped on the NFT train with huge success.
One of the most famous crossovers into the metaverse would be NARS Cosmetics’ NFT launch. In July 2021, NARS released its first collection of NFTs in July 2021 on the Truesys marketplace, featuring its cult favourite shade, Orgasm. For its inaugural NFT collection, NARS Cosmetics commissioned DJ Nina Kravis, multi-medium artist Sara Shakeel, and designer Azéde Jean-Pierre for this limited edition art series. The first NFT artpiece drop by artist Sara Shakeel is a video of sparkling lips with waves inside of it,was offered for free. The most expensive NFT in the NARS Cosmetics NFT collection was the one by DJ Nina Kravis, which sold for $500 with a bundle of NARs products.
What has NFTs got to do with makeup and skincare? Why are beauty companies venturing into digital art- a realm so vastly different from cosmetics? What relevance does NFTs have in the cosmetic industry? Today’s blogpost will look at how the metaverse is shaping the landscape of the beauty industry; from NFTs, blockchains and cryptocurrency.
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In 2022, more beauty brands such as L’oreal and Nivea look set to launch NFTs as part of their business development strategies. These digital art pieces may seem unrelated to cosmetics and skincare; but NFTs represent a vast untapped potential for beauty brands. Statistics estimate that women, traditionally the dominant sales audience of beauty products, make up just 5% of all NFT sales. With cosmetic brands venturing into NFTs, this gender gap may start to swing.
One of the straightforward reasons that beauty brands are venturing into NFTs is that these tokens offer a secondary source of revenue for the brand. Traditionally, the success and popularity of beauty products have relied on visible and tactile results but with NFTs- it’s a whole new ball game for consumers. The perception of the brand in the metaverse need not match its image and products in the real world. By venturing into the NFTs and other elements of the metaverse, the brand can also collaborate with other artists and platforms to evolve their image and branding. With this creative strategy, brands can improve their engagement with new target audiences- such as younger consumers and males.
With NFTs, beauty brands can also strengthen their brand heritage and connection with consumers. Owning a brand’s NFT gives consumers a sense of ownership and strengthens their loyalty to the brand. And the appeal of owning an exclusive NFT is akin to purchasing a limited edition or exclusive item from a luxury brand. For the beauty industry, NFTs open up a new world of potentials- from exclusive offerings in the metaverse, evolve the image of the brand and connect with a younger, more tech savvy audience.
When choosing your skincare involves more than scrutinising the ingredient list and product reviews
Blockchains too, have started to revolutionise the beauty landscape as we know it- and for the benefit of brands and consumers.
Consumers becoming more informed about their skincare and makeup choices has been on an upward trend since the Covid-19 pandemic began. With the deluge of information from dermatologists, plastic surgeons, cosmetic chemists and the likes- consumers have become more savvy about skincare. Many skincare brands too have also introduced new products with marketing strategies in line with this trend. For consumers wanting a more clinical slant to their products or clean beauty fans- there is a vast array of choices for them.
With consumers becoming more savvy and discerning about their choices of beauty products, factors such as composition of the ingredients, origins of the ingredients, and the manufacturing processes are going to come under scrutiny. Does this product live up to claims? Can the ingredient list be verified? Is the product packaging and manufacturing process as clean or green as it claims to be?
For beauty brands wanting to capitalise on this attitude from consumers; ensuring transparency and that products live up to these claims are a priority. As consumers become more discerning about their products- can sway their purchases. Surveys have shown that consumers are willing to pay more for products that they regard as safer or more sustainable to the environment. For brands that cannot substantiate their claims, or worse have been found to falsify their claims, the repercussions can be disastrous for their public image. As South Korea’s sunscreen scandal (aka Purito-gate) has shown, brands that do not live up to their claims can face public boycotts and may have to discontinue their products. And the internet never forgets these incidents.
Unfortunately for consumers, there is no legislation or regulation that presides over skincare companies for their marketing claims. So it’s very hard for consumers to independently verify these claims- so if the brand claims that the product is green, organic, clean, organic and manufactured through ethical environmentally sustainable means- we’ll just have to accept it with a pinch of salt.
But what if these claims can now be verified? One of the benefits afforded blockchain technology in the beauty space is the greater transparency in the supply chain for consumers. Blockchain technology enables the manufacturer and relevant vendors to lock in data about the product manufacturing process at each step. This information can be time stamped and verified- and made accessible to consumers. By providing transparency to consumers, blockchain beauty can protect consumers against unsubstantiated claims.
One example of retailers employing blockchain beauty to empower consumers is Cult Beauty. Cult Beauty is a UK based online retailer of cosmetics. To improve traceability in the supply chain for customers, Cult Beauty has partnered with Provenance, a blockchain company, to convey the environmental and social impact of more than 90 beauty brands labelled as “Cult Conscious”.
Each of these “Cult Conscious” product has “proof points” that indicate that the product meets a range of ethical (e.g. cruelty free), environmentally sustainable (e.g. packaging made of compostable parts or fully recycled packaging) or supports special social groups (e.g. black founded or female owned businesses). The authenticity of these “proof points” are verified by a third party; and can be viewed by users on Cult Beauty’s website. The evidence that supports these claims and blockchain record can also be accessed by users on the same website.
According to Provenance, this partnership has “generated 1.7x higher sales volumes for participating brands” and “recorded a 27% increase in add-to-cart among shoppers who clicked on a Proof Point”.
The same traceability and decentralisation of blockchains can also be used to verify the authenticity of cosmetic products. Counterfeit beauty products have been made more accessible with the growth of e-commerce platforms such as eBay, Amazon and TaoBao. The challenge that these fake products present is two fold- first, a health hazard to users; and second, legal and financial problems for manufacturers, distributors and retailers.
For coveted beauty brands with cult status symbols like Kylie Cosmetics and MAC, consumers may end up turning to counterfeit products, knowingly or not. Fake beauty products can contain toxic substances such as arsenic and mercury and are usually manufactured in less than hygienic settings. In an episode on CBS News, counterfeit versions of popular MAC lipsticks and Jaclyn Hill eyeshadow palettes were tested and found to contain more than 15 times the maximum amount of lead recommended by the U.S. Food and Drug and Administration by 15 times. With these hazards, consumers who use counterfeit products are at a higher risk of infections, contact dermatitis and scarring.
As fake products become more sophisticated- it can become more challenging for consumers to differentiate them from the real McCoy. This challenge can be made easier with blockchains making the authentication process more visible. LVMH has recently launched a new blockchain platform to prove the authenticity of its goods, beginning with Parfums Christian Dior. Not much else is known about LVMH’s blockchain system yet- and this post will be updated as we go along.
A review of the beauty industry in the metaverse would not be complete without involving Cryptocurrency.
Using Cryptocurrency to purchase cosmetics is not new. In 2017 LUSH Cosmetics, one of the first beauty companies to accept Bitcoins for purchases, received 28 bitcoin payments totally 1500 pounds. Although the potentials of cryptocurrency has been largely untapped by the beauty industry, more cosmetic companies and retailers are welcoming bitcoin transactions. Wake Skincare and Glamnetic Lashes have recently announced their moves to accept Bitcoin.
On the other side of the coin, being rewarded with cryptocurrency for purchases is also now a reality. Lolli, is a bitcoin rewards site that lets users earn bitcoins with purchases. Some of the well known partners with Lolli are Em Cosmetics and Sephora.
The potential that blockchain technology and its related products, NFTs and cryptocurrency, can bring to the beauty industry remains largely untapped. Besides opportunities for alternative revenue streams and more innovative brand image, blockchain also offers customers more ease in identifying product authenticity and claims. It’s a win-win situation for beauty companies and their customers with the opportunities that blockchain brings. If you enjoyed this beauty tech and trends post, you might also enjoy the following related blogposts: