Blockchain beauty: ‘For the moment, it remains relatively niche’, says GlobalData

17-Jan-2020 - Last updated on 17-Jan-2020 at 14:03 GMT

FMCG majors like Nestlé and Starbucks are already experimenting with blockchain but in beauty it remains 'very much at the new stage' (Getty Images)

Blockchain remains expensive and emerging, used only in an experimental fashion across beauty, but the technology offers clear benefits around loyalty schemes and personalisation, says a GlobalData analyst.

Whilst still in its infancy, blockchain technology is being driven by increasing demand for digital security along with government investments and the promise of reduced transaction time and costs, according to data analytics and consulting firm GlobalData’s recently published report Blockchain: Building a Blockchain Ecosystem for the Enterprise.

Blockchain in beauty ‘experimental’ for the time being

Speaking to CosmeticsDesign-Europe, Ryan Whittaker, consumer analyst at GlobalData, said use in the beauty and personal care category, however, was “still very much at the new stage”.

“For the moment, it remains relatively niche as companies and startups attempt to implement it in a new or helpful way. When companies say they’re using it, it’s usually in an experimental fashion in established brands, or through startups,” Whittaker said.

For the time being, he said plenty of hurdles remained when considering how to integrate blockchain technology. “Blockchain is expensive to develop and run, and its benefits aren’t yet proven at scale.”

Countering fraud and providing transparency?

Outside of beauty and personal care, Whittaker said majors like Nestlé, Starbucks and IBM were experimenting with blockchain to assure provenance in the fast-moving-consumer-goods supply chain, especially in food where fraud had been a “big issue for years”.

This concept, he said, could potentially also be applied to beauty. “With online retail, I imagine that fake or contaminated cosmetics are a significant issue for that industry, so you might see future brands attempting to implement blockchain concepts to track the sourcing or movement of products.”

Asked if it could be used to track and provide transparency on sustainability efforts, Whittaker said: “It could be, but it is not a panacea and may turn out to be reinventing the wheel. Qualitatively, I think the marketing benefits of associating yourself with blockchain has probably reduced since 2008.”

UK beauty startup BYBI previously told CosmeticsDesign-Europe it was looking into blockchain to log and communicate transparency within its supply chain. However, co-founder Elsie Rutterford acknowledged that for such a system to work, it would have to remain independent and third-party.

Improving consumer experience – loyalty schemes and personalisation

Whittaker said areas that would be “easiest to develop uses of blockchain” in beauty and personal care were loyalty schemes and secure personalisation.

And there were already some examples in the category of blockchain being used for this, he said. “There are unusual examples like EpigenCare that utilise blockchain on their proprietary platform to encrypt epigenetic data in order to generate a consumer-specific cosmetics profile,” he said. This type of “next-level personalisation”, Whittaker said, would be a “key future development theme” in personal care and beauty and a theme blockchain could certainly play into.

Online beauty service startup Jolyy was also using blockchain on its booking platform, giving tokens for user engagement to incentivise a more meritocratic behaviour on the platform, he said.

The key for any beauty firm considering use of blockchain, Whittaker said, would be to remain focused on “the benefits it will supply to the consumer experience”.