Why the Beauty industry must gear up for the rise of EthicTech
Few sectors are now shielded from consumers’ and citizens’ demand for transparency, as a growing public distrust of large companies and ever-faster information sharing seem to feed each-other.
However, we have not entered an age of “radical transparency” yet, for two reasons. First, if you want transparency, you must know what to look at, what criteria are important in the buying process: are we primarily interested in good working conditions, the quality of materials used, the supply chain, the way value is shared amongst stakeholders? Indicators will end up vastly different from one individual to another. The second reason is that once our top priorities and associated indicators have been set, the data sources often remain opaque or incomplete.
However, this may change with the acceleration of what I call EthicTech.
EthicTech are BtC technologies that help individuals make consumption choices in accordance with principles such as preserving the environment, using only natural/healthy ingredients or ensuring good working conditions.
These technologies are often mobile-first and claim their objectivity by relying on public databases. For the moment, they tend to stick to one criterion of analysis — they screen products through a single grid (ingredients, carbon footprint, supply chain…), for the sake of simplicity and legibility. However, one can expect the emergence of multi-criteria rating platforms in the future.
The epitome of EthicTech today is of course Yuka. In less than 5 years, this application has gathered 20 million users in Europe and shaken up the entire French food and retail sector. With its simple interface, a clear focus on one aspect of the offer (ingredients’ impact on health), a transparent database and a promise of incorruptibility, Yuka has accelerated what consumers groups, nutritionists and public authorities had been doing for years.
The Beauty sector is under scrutiny
Yuka is not alone. The Beauty industry is heavily scrutinized by EthicTech. Several applications and services are now vying to separate the wheat from the chaff in the field of cosmetics: CosmEthics, INCI Beauty, Clean Beauty, Think Dirty, Mireille… Again, for the sake of simplicity, these apps focus on a common rating criterion: the “cleanliness” of products.
Demand for clean beauty — for health or environmental reasons — is actually on the rise. Half of consumers (49.7%) now say they favor natural beauty products. This figure climbs up to 71.1% for the biggest category spenders (dentsu M1, 2020–2021).
Nevertheless, Beauty EthicTech is far from achieving mainstream status. First of all, data remains unidimensional: all applications screen ingredients through the same database, INCI (International Nomenclature of Cosmetic Ingredients). This international standard is mandatory and offers a good basis, but it does not fully disclose the proportions of ingredients used. Above 1%, the ingredients must simply be listed in descending order of concentration — below 1%, there is no rule. Moreover, most product analysis algorithms are black boxes with byzantine rules, which lead to results differing greatly from one platform to another. The same eye mascara can be deemed good by one application and end up chastised by another. Finally, the user experience remains clunky. Many apps still offer a somewhat technical, if not nerdy, approach to beauty; and experience is dry at best, if not downright cheap.
This may explain why there is no “Yuka for beauty” yet — even though Yuka itself can scan cosmetics! The market seems fragmented, and usage remains niche.
Nevertheless, these applications are catering to a growing demand and each of these weaknesses can be easily addressed. We can therefore expect market consolidation and the emergence of one or two key players who could, in the long run, force the sector into deep change. Cosmetic companies should gear up right away.
Product discovery and affiliation platforms
It’s obviously about not being taken aback once these technologies become truly mainstream; especially since being absent or poorly represented could reinforce mistrust towards certain products or brands: “if the product is not on the app, it probably means they are hiding something”.
Besides, even if your brand or product are present and well rated by these applications, the consumer experience could be smoothed out: SKUs (product references) are not always well informed, photos are poorly framed, product ranges are not clearly displayed…
Some might say: why improving the brand experience, these apps are not e-commerce platforms anyway… To which I’d answer: actually, they are. Most of these applications will send users to 3rd party e-commerce players to buy scanned products or get cleaner alternatives. By doing so, they are both product discovery and e-commerce affiliation platforms. It is vital to integrate them into brands’ wider marketing & communications strategy.
If an EthicTech app were to emerge as the ‘Yuka for beauty’, i.e. a platform which consumers use daily, it would instantly become a formidable recruitment engine for brands. For cosmetic groups, this means both risks as opportunities.
For instance, if a hero product turned out to be poorly rated, the brand should quickly double down on pedagogy to reassure consumers. In the medium to long term, the product formulation would have to be revised to be vetted by the algorithms.
On the other hand, brands with clean products could ink affiliation and promotional partnerships with these apps to make sure their products are systematically pushed as the best alternative to controversial products. For small players, this would be a great way to emerge and recruit. For established brands, this could help to strengthen their e-commerce efforts.
While this transformation will take several years, brands must monitor closely EthicTech. This calls for careful reverse-engineering to understand each application’s business model and the inner workings of their algorithms. And it requires the collaboration of very different, often siloed departments within companies: R&D of course, but also legal, marketing or e-commerce. Thus, EthicTech could accelerate clean beauty, but also the transformation of companies themselves!