Exclusive Data
The future of beauty ecommerce: customer identity
For brands to thrive in the ever-evolving world of beauty, they have to get to know their customers like never before.
In today’s digital era, our identity shapes almost every aspect of our lives. From unlocking our phones with face ID, to crafting our social media presence, to creating personalized hair care products that are uniquely us. And in the beauty and skincare industry, where identity and self-expression are at the center of it all, this could not be more true.
According to eMarketer, beauty and cosmetics account for just 11.3% of all ecommerce sales compared to apparel and accessories with a substantial 40% share. This shows there’s still a huge growth opportunity for ecommerce. But by staying ahead of customers’ evolving needs and expectations, beauty and skincare brands can empower shoppers to buy more confidently by leaning into identity-driven technology and tools. This means offering highly tailored, more innovative buying experiences, both of which are great ways to fuel growth.
So how can brands achieve this? It’s all about embracing the latest advancements in AI and beauty technology, prioritizing diversity and inclusion, and enabling hyper-personalization. With that, beauty brands can provide an exceptional ecommerce experience that resonates with each customer's values and needs. This in turn leads to more online sales, increased customer satisfaction, loyalty, and revenue.
To uncover the preferences and behaviors of online shoppers in the beauty and skincare industry, Bolt partnered with YouGov and surveyed 1,000 individuals.
The past and the present
Gone are the days when beauty standards were narrowly defined, largely eurocentric, and solely shaped by celebrities and pop culture.
Today, we see an important shift toward inclusion—as beauty and skincare retailers celebrate beauty of all kinds, shapes, and shades. This change is amplified by AI/AR beauty tech which allows merchants to capture data and create hyper-personalized online experiences that reflect the identities of everyday shoppers. The result? Shoppers are likely to see themselves represented accurately in brands, marketing, and beauty standards, and have a greater affinity towards those brands.
Looking at the numbers, the beauty and skincare industries in the U.S. alone are projected to grow 15% YoY and reach a staggering $94.41B in 2023 (Statista, 2022; Global Cosmetics Industry). Gen Z, making up 35% of the population’s purchasing power, is leading the change and demanding brands to address social issues, gender inclusivity, and diversity. In addition to that, the overall industry is evolving to embrace a holistic approach to beauty that includes self-care and wellness.
Amidst this ever-changing landscape, it’s easy for established brands and newcomers alike to feel overwhelmed. But guess what? This presents a golden opportunity to make genuine connections with shoppers on an individual level, stand out in a competitive market, and unlock long-term growth and revenue. The secret lies in recognizing the importance of customer identity. Knowing your shoppers is the key to building greater lifetime value and driving lasting customer loyalty.
What do we mean by customer identity?
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As beauty brands continue to navigate the future of hyper-personalization and the merging of technology and beauty, customer identity is becoming increasingly crucial. Data is skin deep, and brands that can leverage the right type of data to understand their customers’ behavioral and physical identities will be at a significant advantage.
Understanding customer identity across the entire customer journey, from initial discovery, to exploration, to purchase and loyalty, is essential for building lasting relationships. By leveraging first- and zero-party customer data, brands can create personalized experiences that resonate with their target audience, cultivate unwavering loyalty, and leave a lasting impression.
In this report, we'll uncover the power of customer identity and how beauty brands can leverage it to drive growth, promote inclusivity, and deliver personalized customer experiences fueled by cutting-edge technology.
AI beauty tech, diversity & inclusion, and personalization
43%
would rather shade-match using AI online than go in-store
The beauty industry has been experiencing a shift towards personalization, driven by advanced technologies like augmented reality and AI. And brands that embrace this shift are reaping the rewards. In fact, YouGov’s survey revealed that 58% of shoppers are willing to pay at least 10% more for personalized online shopping experiences.
Where science meets esthetics
62%
are more likely to buy when they use tech to find the right beauty formula
Technology is taking center stage, and it’s hard to ignore the impact. Not surprisingly, the investment in AI in the beauty and cosmetics market surged to $3.22B in 2022 and is projected to reach a staggering $15.75B by 2031 (Insight Ace Analytics, 2022).
AI is revolutionizing the way beauty and skincare brands engage with customers. Take for example, TikTok's first AI-powered filter, Bold Glamor, which went viral and captivated a massive audience, with 62.8M videos made using the filter. But it’s not just on social platforms—beauty brands are harnessing AI to enhance online experiences, from skincare diagnostics to shade-match try-ons. These real-life applications not only elevate the digital shopping journey, but also instill newfound confidence in shoppers’ purchases.
According to our YouGov survey, a staggering 80% of Gen Z and 62% of shoppers overall are more likely to buy a beauty product if they can find their perfect formula using tech. And get this: 43% of shoppers prefer AI-powered shade-matching online over in-store testing. Surprisingly, around half of Gen Z, Millennials, and Gen X also lean towards online shade-matching, while a whopping 70% of Baby Boomers and the Silent Generation still prefer the in-store experience.
Industry leaders like L’Oréal, Estee Lauder, Neutrogena, and Ulta have successfully integrated AI and AR technologies to provide interactive online shopping experiences. The results are increased engagement, personalization, and improved conversion rates.
Estee Lauder's virtual lipstick try-on achieved an impressive 2.5X higher conversion rate from shoppers who used this AI tool. Meanwhile, Neutrogena's collaboration with Nourish introduced 3D-printed skin supplements, called SkinStacks, enabling personalized skin care based on individual needs with a simple photo. These success stories highlight the demand for AI and AR-powered personalized try-on experiences. Investing in such technologies boosts shopper confidence and drives higher revenue.
customer experiences, foster loyalty, and drive revenue in the ever-evolving beauty industry.
- Diversify and enhance the customer experience with interactive online experiences. With AI, enable virtual try-ons for lipsticks, eyeshadows, and more. Partners like Perfect offer out-of-the-box solutions that enable brands to build out these experiences today.
- Utilize AI-search algorithms and quizzes to curate search results and provide dynamic and relevant product and content recommendations based on customer data.
- Drive engagement and increase time on site with shareable digital experiences. Introduce filters that allow shoppers to try on products, creating memorable and interactive online touchpoints.
By embracing these strategies, brands can unlock the power of 1:1 personalization, deliver exceptional online
Embracing beauty beyond boundaries
58%
Diversity and inclusion are gaining momentum in the beauty and skincare industries. It’s an important trend that promotes representation and supports women and minority-owned brands. With 40% of Gen Z and 30% of millennials prioritizing diversity and inclusion in their beauty product choices, it’s clear that representation matters (Statista, 2021).
This isn’t just a passing trend, but is vital for long-term success. Investing in diversity and inclusion is not only the right thing to do, but also a smart business move, with racial inequity in the beauty industry representing a $2.6B opportunity (BeautyMatter, 2022). Lately, the market has seen a significant increase in black-owned beauty brands, highlighting the demand and growth potential in this space.
Leading brands like Briogeo Haircare, Fenty Beauty, MALIN+GOETZ, Gucci, and Sephora are paving the way in embracing inclusivity and diversity. Briogeo Haircare focuses on natural hair care and has experienced rapid growth, while Fenty Beauty gained recognition for its diverse range of foundation shades. MALIN+GOETZ is a trailblazer in gender-neutral skincare, and Gucci's 2020 beauty campaign featured a model with disabilities, promoting inclusivity. Sephora supports inclusivity through initiatives like Sephora Accelerate, which empowers founders from minority and person-of-color backgrounds. These brands demonstrate that inclusivity not only resonates with customers but also drives market success.
- Listen and engage
- Pay attention to your shoppers, customers, and employees to understand their concerns and values. Invest resources in causes that align with their interests.
- Collect shopper demographic data
- Gather shopper data such as gender, age, race, and ethnicity, through store accounts to gain insights into your customer base. Use this information to develop inclusive products and marketing campaigns.
- Monitor purchasing behavior
- Utilize shopper data from store accounts to track buying patterns and preferences across different demographic groups.
- Be authentic
- Take a stand on social issues that align with your brand values and follow through with actionable steps. Avoid performative activism and ensure your actions are genuine.
- Showcase diversity
- Feature a diverse range of models and representations of beauty in your product and marketing imagery. This will accurately reflect the diverse identities of your customers.
By implementing these strategies, brands can create a powerful emotional connection with customers and build customer loyalty and brand advocacy. Capturing shopper data through store accounts, such as with Bolt, allows brands to align with customer values, develop resonant campaigns, and instill confidence in shoppers by reflecting their identities in promotions.
Embracing diversity not only fosters strong connections with customers but also fuels growth, loyalty, and sales in the skincare and beauty industry, where customer identity and self-expression are at the core of the product offering.
Personalization beyond one-fits-all
75%
would pay more for personalized online shopping
Personalization is extremely prevalent in our daily lives. We expect customized workout plans, content suggestions on Netflix, and curated social media feeds. Beauty and skincare are no different—with the personalized beauty space raising $1 billion in 2021. Our YouGov survey shows that 75% of shoppers would pay more for a personalized online shopping experience. To break it down even further, 72% of Gen Z consumers are willing to pay more than 10% for beauty products, with 57% of Gen Z having the appetite to pay as much as 11-20% more for their beauty purchases if it involves custom online shopping journeys.
There are many beauty brands that have built their business model around personalization and are doing it well: Curology, Il Makiage, and Prose, just to name a few. Take Prose Haircare for example. With over 50 million unique product formulations, online consultations, and personalized quizzes, they've earned 80% of customer recommendations and gained 250,000 loyal subscribers, projecting $100 million in sales for 2022.
In a similar manner, Curology—the personalized skincare brand—raked in over $200M in revenue in 2022. These numbers speak volumes and tell a very clear story. To thrive in a world focused on identity and shoppers' needs, beauty and skincare brands must embrace personalization.
- Capture consumer data for hyper-personalized online experiences. One way to do this is by gathering shopper information with store accounts. Get creative and incentivize shoppers to create store accounts by offering first-time discounts and exclusive benefits. Solutions, like Bolt, enable brands to easily register and login more shoppers through one-click account registration and passwordless login.
- Deepen personalization based on shopper identity. Tailor messages and experiences of the product and across the entire customer journey.
- Surprise and delight customers with a fast One-Click Checkout for a seamless shopping experience that reduces friction and increases convenience.
- Implement loyalty programs to reward customers and offer personalized deals and promotions based on shoppers’ preferences. These types of initiatives will unlock repeat shoppers.
- Use customer data from store accounts for targeted remarketing campaigns. Cater personalized ads and messaging to your customers that deliver value and resonate.
Leveraging customer data through store account creation is the key to unlocking personalized experiences and products for skincare and beauty brands. It's all about driving better online shopping experiences, and one way to delight shoppers is by providing a convenient one-click checkout.
However, personalization can’t be possible without data on customer identity, and that's where store accounts come into play. They serve as the vehicle for brands to gather the necessary data and make personalized experiences a reality. This not only increases engagement with your brand but also keeps shoppers on your site longer when you serve personalized ads and relevant deals. With Bolt, brands can create 1:1 personalized experiences at scale.
Bolt—unlock the power of customer identity and LTV
55%
of guest shoppers create a Bolt account during checkout
With all that being said, it’s impossible to leverage these trends, create the best possible experiences, and establish lifetime value without truly knowing your customers. Shopper identity holds the key to unlocking the value of 1:1 personalization and loyalty.
By truly understanding shoppers’ identities, skincare and beauty brands can tailor experiences that resonate with customers to drive long-term loyalty. Implementing these strategies may seem daunting, but there’s an easy solution: Bolt.
With Bolt, brands can easily register and login more shoppers through one-click account registration and passwordless login, gaining a deeper understanding of their audience and delivering unique and personalized experiences. By using Bolt, retailers can recognize more shoppers, grow shopper accounts, and drive higher customer lifetime value.
But it doesn’t stop there—Bolt takes it a step further by offering a seamless one-click checkout experience that boosts conversion rates.
The results speak for themselves
- Automatically recognize more shoppers
- Day 1: 17% of shoppers on a retailer's site will already have a Bolt Account
- On average: Bolt retailers recognize 43% of shoppers on their site
- Register and login more shoppers
- 55% of guest shoppers create a Bolt Account during checkout
- 83% of shoppers login to their Bolt Account during checkout
- Increase checkout conversion
- Bolt account holders convert 50% better than guest shoppers
- Drive repeat purchases
- Returning Bolt account holders check out in one click
Shoppers can create accounts with just one-click using Bolt and enjoy a seamless experience every time they return with passwordless login. This enables shoppers to make one-click purchases across Bolt merchants, even if they haven’t shopped at that specific store before.
Using Bolt, brands can easily know their shoppers’ identities and leverage that to create truly personalized experiences—from product discovery all the way through One-Click Checkout.
It’s time to get personal, and create unforgettable shopping experiences with Bolt.
**the total sample size was 1,000 U.S. adults aged 18+. The survey was conducted online from May 15th, 2023 to May 17th, 2023. The figures have been weighted.