When you hear the term “blockchain,” it’s unlikely that the next words that come to your mind are “lipstick,” “cleanser,” or even something as broad as “cosmetics.”
Because the beauty industry is fueled mostly by females and the cryptocurrency scene is primarily dominated by a male audience—women make up only 15 percent of Bitcoin traders, according to investment platform eToro—it’s no surprise that blockchain isn’t commonly associated with cosmetics and personal care products.
But blockchains infiltrating the beauty industry would be quite the lucrative move, since the global cosmetics market is projected to reach $758.4 billion by 2025—with male beauty alone set to reach $276.9 billion by 2030.
What do beauty brands stand to gain from using blockchain platforms? Aside from adopting cutting-edge technology to keep up with an ever-evolving innovation landscape, one of the biggests answers is something that the beauty industry has been historically lacking: full transparency.
Blockchain could help the beauty industry meet consumer demand for supply chain transparency
We’re seeing a rising number of digitally savvy consumers who are growing increasingly conscious of what exactly they are consuming and demanding more clarity from the beauty industry. A global study done by the Fashion Institute of Technology found that 42 percent of shoppers do not feel companies inform them enough regarding the safety of ingredients while 72 percent would like brands to explain what the ingredients in their products actually do. And more than 60 percent want brands to identify sources for ingredients.
As a decentralized method of storing and transmitting data that individuals or companies can access globally in real time, blockchain allows brands to show consumers exactly what they want to know about the products they are buying. For example, when a brand has a product claim like “100 percent natural,” “cruelty-free,” “organic,” “clinically trialed,” or “sustainably sourced”—each one can be stored on a decentralized ledger—that cannot be tampered with or falsified—to provide a consumer with its dated accreditation or certification to justify the claim.
This is exactly how Cult Beauty, a global online cosmetics retailer headquartered in London, began using blockchain—they worked with Provenance, a software developer specializing in designing applications to provide supply chain transparency, to install over 1,500 of what they call “proof points” across 60 of their different brands.
In 2021, European luxury brands LVMH, Prada, and Richemont announced a partnership with The Aura Blockchain Consortium. According to LVMH’s press release: “This unprecedented collaboration between competitors represents a single, innovative solution to shared challenges of communicating information on authenticity, responsible sourcing, and sustainability in a secure, digital format. The objective is to provide consumers with a high level of transparency and traceability throughout the lifecycle of a product.”
While supply chain transparency is one of the most important and needed benefits, it is only a small piece of how we are seeing brands begin to embrace blockchain in the beauty industry’s bigger picture.
Using blockchain to centralize and elevate the customer loyalty experience
A strategic, compelling loyalty rewards program can elevate the customer experience but one that comes with low client redemption rates, time delays, and high costs can break a brand.
By centralizing a customer’s loyalty program, blockchain can modernize and elevate the structure a few different ways:
Reducing system management costs with smart contracts that report secure, tracked, transparent transactions guaranteed by cryptography.
Enabling a transaction to be recorded and accessed by multiple involved parties in near real time, helping the provider credit points faster.
Creating an immutable and time-stamped distributed database entry of every single transaction ever made, making each transaction and its record easily traceable, but also rendering them irreversible to preventing double spending, fraud, abuse, and any other type of manipulation of the transactions.
Em Cosmetics, founded by Youtube beauty guru Michelle Phan, turned to blockchain solutions to offer its customers more flexible loyalty initiatives. Partnering with Lolli, a cryptocurrency rewards company, they offer up to a 4.5 percent portion of Bitcoin to any customer who downloads Lolli’s web extension and shops with Em Cosmetics. So instead of the usual cashback, customers on Em Cosmetics receive Bitcoin back.
NFTs and ‘Crypto Comsetics’ could be the future of brand relationship building
In the world of beauty, brands are constantly looking for fresh and exciting ways to extrapolate their DNA. Good branding not only sets a brand apart from its competitors, but it also allows a company to build relationships with its audiences, eventually turning them into loyal customers.
NFTs, or non-fungible tokens, are electronic tokens that have been recorded onto a blockchain ledger (meaning it can be verified as the original of that specific file) and represent the unique and genuine possession of a digital or real asset or concept. They are completely unique digital assets that can be auctioned on and traded in cryptocurrency marketplaces.
The art and fashion world were some of the first industries outside the crypto-universe that began using NFTs to create unique pieces for their consumers that would offer digitally preserved right of ownership—resulting in a buyer’s sense of exclusivity and ability to feel like they own a little piece of the brand the love.
The beauty industry isn’t too far behind now as we start to see some cult brands offering NFTs:
In June 2021, e.l.f Cosmetics created three limited edition NFT versions of its bestselling products, all dipped in gold: The Poreless Putty Primer, 16HR Camo Concealer and Ride or Die Lip Balm.
Cult brand NARS collaborated with three female artists: DJ and music producer Nina Kraviz, collage and crystal artist Sara Shakeel and fashion designer Azéde Jean-Pierre, tasking them to create three NFTs inspired by their iconic NARS Orgasm product line, which it announced in August 2021.
Clinique created three editions of their first NFT, called “MetaOptimist” in October 2021. Instead of selling them, each year over the next decade the brand is giving its Smart Rewards members the chance to receive the NFT and a selection of products. To enter for a chance of winning, they are asking customers to share their stories of optimism and hopes for the future.
The lines between metaverse and real life are becoming as blurred and smudged as leftover lipstick after a Friday night out. It was only a matter of time until technology like blockchain began to fuse with beauty—which can be confusing given the tangible nature of cosmetics. But considering the bold benefits and all the ways it’s already begun to revolutionize the beauty industry, it seems that the mutually beneficial relationship between the two has a future.
And considering that blockchain offers the beauty industry an opportunity to become more digitized and interactive—one that actually aligns with the values that consumers are beginning to demand most, authenticity and transparency—it’s a future that looks bright.
Written by Kate Dillen