It is no news that startups have it rough in their first years even in top performing industries such as IT, security, finance, real estate and more. However, market research findings encourage the launch of new companies in emerging industries outside the “app zone”. Let’s talk about “the Internet of Beauty” and why you should launch a startup in the beauty industry today.
The beauty industry represents a multi-billion dollar potential, expected to reach $429.8 billion by 2022, and growing at a compound annual growth rate (CAGR) according to Allied Market Research. Little known fact is that since the 2008’s recession, it has still remained a profitable venture, with the United States generating nearly $56.2 billion.
Global beauty services have also shifted towards a better, more personal consumer experience. In addition, nearly half of global skin care sales have been attributed to Asia and Pacific markets, which triggered the thirst for beauty products among its consumers. An explosive growth of the industry has been reached thanks to social media marketing efforts, customized personal brand messages. More interest had been paid towards everyday community leaders (influencers) both online and offline, as well as to micro-branding and beauty ambassador programs.
Market Customer Behavior and Insights
The industry has enormous potential for growth in the long run, from a more dynamic perspective, as consumer buying behavior varies by category and preferences. According to the data provided by FacialCo, skincare products rank among top picks, followed by hair care products. Perfume, makeup, and toiletries are next in line, with an increase in revenue for online purchases of cosmetics in general. Here is the market share breakdown:
- Skincare 36.1%
- Hair care 22.9%
- Make-up 17.3%
- Perfume 12.2%
- Toiletries 10.4%
- Cosmetic online purchases 10%
- Oral cosmetics 1.1%
An interesting behavior to watch is online purchases, with a focus on the organic market. As consumers use mobile devices, beauty businesses will continue to extend their reach in joint industries such as apps and mobile solutions. More stats available in the infographic below.
Infographic created with graphic design software Vengage
The New Business Model: Organic Beauty Products
Much talk has centered on climate change and carbon footprint, which led to a rise in the “everything organic” trend. The beauty industry makes no exception. In the United Kingdom, the demand for organic products has surged. Organic health and beauty products, in terms of gross domestic product (GDP), have gone from $30.1 million in 2011 to $54.02 million in 2015. In other words, in just four short years organic beauty product demands have doubled.
In relation to organic personal care market shares, Grand View Research findings estimate the industry is to reach $25.11 billion by 2025. Previously mentioned beauty product categories have witnessed a growing popularity of organically enhanced products, as well. Among key highlights is the consumer perception growth of purchasing organic and sustainable products. Well-known companies have started shifting business and investments in this industry, thanks to that, such as L’Oréal, which acquired “The Body Shop” back in Oct. 2013 to increase market share presence.
Final Thoughts: Pre-Launch Startup Checklist
DynamicBusiness provides a pre-launch startup list to go by. With a few additions, here’s how you can be ready to launch your business in the Beauty industry:
- Commitment. Often known as passion or unwavering tenacity. In the long haul, you need to believe in your product or service, independent of the industry you plan to take over. Like Sun Tzu says in ‘The Art of War’, “in the midst of chaos, there is also opportunity”. Own it!
- Locating customers. And knowing them and their needs like the back of your hand. Ideally, be where your audience is, and don’t lose sight of it. Some beauty businesses work better locally, while others are more location-independent. Research both markets, compare growth potential factors and decide based on numbers and predictions, not based on personal preferences. Growth happens outside your comfort zone.
- Balance between work and life. One of the first must have items is a business coach, who will teach you how to be effective and fully operational, without disrupting the work-life balance. Especially when you know your product/service is helping someone and improving their lives. What about yours, then? It’s easy to forget to just breathe and take a break, but don’t make it a habit.
- Business war. Market dominance. Being the best, not just in search ranks, but also in the quality of products and services you deliver. “Beauty is in the eye of the beholder”, they say. But have you thought that it’s also in the hands of the provider? This isn’t the type of war where customers are victims. It is a fight for bringing wellbeing and happiness to customers worldwide. No casualties whatsoever.
- Cash flow. Money. It’s great if you have them from day 1, but be ready to put in some sweat and effort. Your products/services should be priced accordingly, based on ingredients, techniques, years invested in training and knowledge acquisition, innovation involved and so on. Prices should be kept steady, without frequent spikes, so to maintain a steady cash flow. Optimize your products and services for specific markets. I.e. do not gamble on luxury products in a location that cannot sustain such a segment.
In short: be smart, listen, observe, take notes and apply. A solid market research will aid you greatly in spotting needs that go unaddressed, and where to find them.