Beyond Bitcoin: how blockchain is revolutionizing the beauty world
When people talk about “blockchain”, they probably don’t think of words like “lipstick”, “cleanser” or “cosmetics”. This might be partly because the beauty industry is mostly run by women, while the cryptocurrency space has always had more men, with women reportedly making up only about 15% of Bitcoin traders. But despite this, blockchain technology is set to make a lot of money in the beauty industry. This is because the global cosmetics market is expected to reach an amazing $758.4 billion by 2025, and male beauty is expected to reach $276.9 billion by 2030.
So, what exactly can beauty brands gain by embracing blockchain platforms? Beyond simply adopting cutting-edge technology to stay relevant in an ever-evolving innovation landscape, one of the most significant benefits addresses a long-standing challenge in the beauty industry: achieving true transparency.
Blockchain’s role in meeting consumer demand for supply chain transparency
Today’s consumers are increasingly digitally savvy and more conscious than ever about what they are consuming. They are demanding greater clarity from the beauty industry. A global study by the Fashion Institute of Technology revealed that a significant 42% of shoppers feel brands don’t adequately inform them about ingredient safety, while a striking 72% want brands to explain the purpose of product ingredients. Furthermore, over 60% of consumers desire brands to identify the sources of their ingredients.
This is where blockchain is really useful. Blockchain is a decentralised method of storing and transmitting data that companies and people can access all over the world, and in real-time. This allows brands to provide consumers with the information they want directly. For example, if a beauty product says it is “100 percent natural”, “cruelty-free”, “organic”, “clinically trialed” or “sustainably sourced”, these claims can be recorded on a special computer system that cannot be changed. This record cannot be changed or faked, and it can provide dated accreditation or certification. This gives consumers proof of the brand’s claims.
A prime example of this in action is Cult Beauty, a London-based global online cosmetics retailer. They partnered with Provenance, a software developer specializing in supply chain transparency, to implement over 1,500 “proof points” across 60 of their diverse brands. Similarly, in 2021, luxury giants LVMH, Prada, and Richemont formed the Aura Blockchain Consortium. Their stated aim was to create “a single, innovative solution to shared challenges of communicating information on authenticity, responsible sourcing, and sustainability in a secure, digital format,” ultimately providing consumers with an unparalleled level of transparency and traceability throughout a product’s lifecycle.
While supply chain transparency is a crucial and much-needed advantage, it represents only a fraction of how blockchain is beginning to reshape the beauty industry.
Elevating customer loyalty through blockchain
A well-designed loyalty rewards program can significantly enhance the customer experience. Conversely, programs plagued by low redemption rates, delays, and high operational costs can undermine a brand’s efforts. By decentralizing and streamlining customer loyalty programs, blockchain offers several ways to modernize and elevate their structure.
Smart contracts are self-executing agreements with the terms written directly into code. They can reduce system management costs by ensuring secure, tracked and transparent transactions. Cryptography guarantees these transactions. The blockchain can also record and make transactions accessible to multiple parties almost instantly, which helps providers credit points much faster. What’s more, every transaction is recorded as a fixed, time-stamped record in a database that is spread across multiple computers. This makes it easy to see every transaction and stops people spending money twice, being dishonest, or doing anything else wrong, because the records can’t be changed.
Em Cosmetics, founded by popular YouTube beauty guru Michelle Phan, has already embraced blockchain solutions to offer more flexible loyalty initiatives. Through a partnership with Lolli, a cryptocurrency rewards company, Em Cosmetics provides customers with up to a 4.5% portion of Bitcoin when they shop using Lolli’s web extension. This means customers receive Bitcoin back instead of traditional cashback, offering a novel and attractive incentive.
NFTs and ‘crypto cosmetics’: the future of brand relationships
In the dynamic world of beauty, brands are constantly seeking innovative ways to express their unique identity and connect with consumers. Strong branding differentiates a company from competitors and fosters meaningful relationships, ultimately cultivating loyal customers. Non-fungible tokens, or NFTs, are electronic tokens recorded on a blockchain ledger, signifying unique and verifiable ownership of a digital or real asset or concept. These completely unique digital assets can be bought, sold, and traded in cryptocurrency marketplaces.
The art and fashion industries were among the first outside the crypto sphere to leverage NFTs, creating unique digital pieces for consumers that offered digitally preserved ownership rights. This sparked a sense of exclusivity and allowed buyers to feel a genuine connection to the brands they admired. The beauty industry is now rapidly catching up, with several cult brands already venturing into the NFT space.
For example, in June 2021, e.l.f. Cosmetics released three limited-edition NFT versions of its bestselling products. These were The Poreless Putty Primer, 16HR Camo Concealer, and Ride or Die Lip Balm, all of which were reimagined in gold. In August 2021, NARS, a popular cult brand, teamed up with three female artists—DJ and music producer Nina Kraviz, collage and crystal artist Sara Shakeel, and fashion designer Azéde Jean-Pierre—to create three NFTs inspired by the famous NARS Orgasm product line. In October 2021, Clinique also started selling NFTs for the first time with “MetaOptimist.” Instead of selling them, the brand promised to give its Smart Rewards members the chance to receive one of three editions of the NFT, along with a selection of products, each year for the next ten years. To enter, customers are invited to share stories of positivity and what they hope for the future.
The line between the metaverse and real life is becoming less clear, like lipstick that has been smudged after a night out. It was only a matter of time before technologies like blockchain began to be used in the beauty industry, which can seem strange because cosmetics are real products. But looking at the big advantages and the big changes that are already happening, it seems like the relationship between beauty and blockchain is going to be really good for both sides. This is especially true because blockchain can help the beauty industry become more digital and interactive, which is exactly what consumers want right now. So, the future looks bright.
