Retail

The Power (And Problems) Of Personalizing DTC Beauty

Power (And Problems) Of Personalizing DTC Beauty

While it might not be true that everyone is seeking better hair, the roughly $87.9 billion spent annually on haircare products indicates that it’s a concern for an awful lot of consumers worldwide. For most people, the quest for really good hair can literally last a lifetime.

But while most consumers are always on the lookout for the product or products that will make every day a good hair day, finding them on the mass market is challenging, and for a fairly obvious reason. According to Function of Beauty Founder and CEO Zahir Dossa, everyone has different hair types and hair goals, and thus have different needs for their products. It is what drew him to the haircare business a little over three years ago: the nearly infinite possibilities for formulations and custom products that can be sold directly to consumers.

In his pre-founding days at MIT, Dossa observed that the beauty industry was in need of disruption – particularly in its supply chain. As he noted in an interview, customers pay a lot for products, with much of the price created by the number of hands those products pass through.

“In 100 years, the value chain for beauty is almost totally unchanged, and is utterly laden with unnecessary middlemen,” Dossa noted.

Function of Beauty sought to build a more functional direct-to-consumer (DTC) model, designed to match consumers to the right haircare products by custom-creating them. To start the process, shoppers complete the online survey that has become almost de rigueur on DTC sites at this point. This one is aimed at helping customers build their hair profile: It asks them about their hair’s structure (straight, curly, dry, oily, etc.) and about their goals for their hair (more volume, deep conditioning, length, etc.) The consumer also gets to customize the color and scent of their shampoo.

The brand started out with shampoo and conditioner, which remain their core products – though in the last year, they have also expanded into hair masks and serums.

Going forward, the brand faces the challenge of scaling and growing its vision for DTC haircare products. Among DTC upstarts looking to crack into the mass market, a common move is to either venture into physical retail on their own via pop-up shops or even permanent locations, or to forge a wholesale partnership with an established brick-and-mortar brand. But for Function of Beauty, Dossa said, that option doesn’t hold much appeal, because its customized products and core value are not well-suited to physical retail.

“We could do in-store experiences or partnerships with retail, but then we couldn’t achieve scale or hyper-growth,” Dossa told Glossy. “One of the sacrifices of doing personalized products is that if we want to achieve scale, we have to do things in an automated way – but that requires a more centralized model.”

As of today, he noted, Function of Beauty can create some 27 trillion different products depending on the exact ingredient formulation – and that could never be replicated in a physical location. But that level of exact customization is exactly what the brand is offering first and foremost to its consumers – and now, to more and more buyers worldwide.

While the up-and-coming beauty brand has not been able to expand its footprint into physical retail, it has expanded globally, to Canada, Europe, Asia and Australia. That has required back-end buildup in terms of expanded manufacturing facilities. It has also involved no shortage of compliance hurdles: To sell in the EU, all products must carry a CE mark, which is a regulatory certificate stating that its ingredients are safe. Not all of the ingredients in Function of Beauty’s products – particularly the ones that are newer to the market – have gone through the certification process, which added costs to their international expansion.

But, said Dossa, the expansion is ongoing. In an increasingly small, connected world, it is easier to sell to a global base, even with a custom product.

——————————

NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

TRENDING RIGHT NOW