How Far Can the Sharing Economy Go in Disrupting the Beauty Industry: Part 1
From poster-child Airbnb opening its doors to the masses, to the more obscure practice of food sharing at LeftoverSwap, the sharing economy has left no industry unturned. Also known as the collaborative economy, it is fuelled by a shift in consumer priorities, including an experience-led culture and a growing inclination towards lightweight living, as well as the increasing importance of value for money and convenience. In beauty, Unilever has made clear that it is betting on the sharing economy to play a key role in the future of the industry. Already in 2016 Unilever has acquired men’s grooming subscription service, Dollar Shave Club, and its private equity arm Unilever Ventures has invested £500,000 in the UK’s leading on-demand beauty app Blow Ltd. This article is the first in a two-part series which will introduce how the sharing economy fits into the beauty industry.
Beauty subscription boxes and on-demand beauty services, which send local professionals to your home at short notice, have been at the centre of the industry’s attempt to capitalise on the growing trend for collaborative consumption. However, unlike in industries such as lodging and transport, the beauty industry has not witnessed such disruption. It seems that in beauty what the sharing economy offers consumers is largely additional and not a replacement for widespread existing habits or needs. In addition, these sharing models in the beauty sector conflict with some of the basic consumer priorities driving the movement, which is limiting its viral potential.
A value-for-money balancing act
Historically, convenience has meant paying a price for the privilege, but it was the sharing economy that changed all that, buying consumers precious time at highly competitive prices, which undercut many household names. On-demand beauty apps undeniably promote community collaboration and convenience, along with the experience element, but do they offer value for money? The challenge lies in the personal and often sensitive nature of beauty treatments, which means quality remains paramount and is less likely to be compromised over price. For example, services offered by The Glam App in both the UK and the US are not dissimilar in price, and, in some cases, more expensive than conventional beauty salons, starting at US$50 for a blow dry and up to US$100 for make-up.
The measurable and visible results of beauty treatments mean that trust and reputation play a larger part in the decision process for potential clients, leading to higher price tags and a more cautious adoption of the platform. Add to this the fact that in Western markets, where on-demand apps primarily operate, the proportion of the population that uses professional beauty services remains relatively small. Therefore the ubiquity of on-demand would rely on many consumers adopting an entirely new behaviour, rather than redistributing a pre-made market, as with Uber, and the price-efficacy relationship becomes even more important.
Transformation culture reigns
So, if on-demand beauty does not always offer competitive pricing, what is it beyond instant gratification that is keeping these platforms afloat? It has been widely reported that consumer preferences are shifting towards experience over possession or experience as a means to possession. Brands are becoming increasingly aware of consumers’ attempts to become better versions of themselves and are looking to engage in activities that will help transform them in some way. Beauty treatments fit naturally with these demands, offering an experience as well as visible transformational results, which is producing an appetite for on-demand. Apps such as Priv have gone one step further to benefit from the wellness trend by offering not only traditional beauty services, but also fitness and yoga classes in the home too. Priv is the first of its kind to provide a rounded ”transformational” package, and as the lines between beauty and wellness continue to blur there will be further opportunity for on-demand beauty to position itself this way.
Some powerful lifestyle movements, such as the pursuit of transformational experiences and holistic wellbeing, perfectly play into the hands of the sharing economy in beauty. Whilst it seems the overriding importance of quality, and the personal aspect of both beauty products and treatments, limits how much on-demand can disrupt traditional services. However the sensitive nature of the industry also presents itself as an opportunity. Part two of this series will evaluate how companies supporting a sharing economy can target the discerning customer through curated and authentic distribution channels.