- Drug prescription streamlining solutions (Curology, Skin+Me): these services provide consumers with easier access to prescription-only skincare ingredients (most notably tretinoin and high percentages of azelaic acid) while using the "personalized products" D2C marketing strategy as described above. The match between online prescriptions and the "product personalization" marketing model is made in heaven because the online prescription service requires a degree of personalization (including patient record and diagnostic data) due to regulations, while the "product personalization" marketing approach enables higher price points compared to traditional brands of prescription-only skincare products and helps to "lock the customer in" with the own product label. This business model is understandably vulnerable to changes in regulations (for example, availability of tretinoin over-the-counter as is the case in some European and other countries could end the model's attractiveness), or enhanced scrutiny from the regulators over the prescription practices.
- Diagnostics technology (Olay Skin Advisor, Neutrogena Skin360, Vichy SkinConsult AI). These solutions use image recognition technology to diagnose the state of the consumer's skin and pinpoint "problematic" areas. These solutions have been on the market the longest and so far have largely failed to win a wide user adoption. Here are some of the possible reasons:
- Consumers mostly know their skin concern because of its cosmetic nature (it is visible), and do not see additional value in a device telling them what's wrong with their skin.
- Even in the best technical execution, the face scanning technology and portable cosmetic skin diagnostic devices have a limited value add: dermatology practice does not rely on these technologies in in-person clinics (dermatologists rarely use devices that measure trans-epidermal water loss, wrinkle scanners, or skin pH readers - the parameters that face scanning and other portable diagnostic devices can tackle). Despite the limitations, the face scanning technologies are still useful as a progress tracking tool for the data-driven category of consumers.
Skincare Advice personalization solutions rely on approaches that are successfully applied in other industries, most notably, in e-health.
Despite the tech availability and the success of the approach in the offline world with cosmetic dermatological and estheticians' consultations, it is not widely used in the online skincare space yet. The advice component is treated as secondary to the face scanning or other "skin diagnostics" solution, and is mostly limited to direct product recommendations (see the diagnostics technology examples above). In contrast, a more advice-focused solution would take into account a wider array of consumer data (including, for example, current skincare habits and experience with skincare products in the past), and supplement product recommendations with holistic skincare routine advice and educational elements that would empower consumer to take a better care of their skin.
The main reasons for the limited application of this advice-focused approach, in our view, is that brands & retailers see a more direct path towards the return on investment with the straight focus on pushing a sale rather than investing in an advice solution with deeper value-add for consumers.
This approach however is shortsighted: solutions focused on product recommendations have already become a commodity in the online space and, due to their low value add for consumers, they fail to generate customer engagement, trust, and loyalty.
Overall, investment in the personalized skincare so far has heavily leaned towards the real or positioned personalization of physical products, leaving the opportunity for engaging consumers with in-depth skincare advice untapped. The winners of the future will likely combine the two approaches and delight consumers with "augmented" skincare solutions: high quality online personalized advice delivered continuously throughout the customer's skincare journey complimented with customizable skincare products that are developed and marketed with the "e-commerce first" mindset.