The technology that will have the biggest impact is here — and it’s blockchain — according to Luxury Brand Partners president and chief executive officer Tev Finger.
“Technology and ease of experience can always change consumer behavior,” Finger said. “The blockchain will reinvent the way everyone in this room does business.”
Blockchain, which Finger called “the web 2.0,” keeps track of information and transactions on a digital block that runs across hundreds of computers. One benefit, Finger says, is the security — information is encrypted and cannot be altered.
According to Finger, blockchain technology could be used in the beauty sector for things like “smart contracts” between brands and influencers, cleaning up the gray market and fund-raising.
Brands and influencers could use blockchain for smart contracts, Finger said, that would allow both parties to respectively live up to their end of deals. Influencers have concerns about verifying the exact revenue owed to them or about valuing posts without product links, and brands want to make sure the influencers are delivering the work they are contracted for. Terms could be stored in a smart contract and payment between the two parties could essentially be kept in escrow until the terms of the contract are met, Finger said.
Diversion in the beauty industry affects many beauty companies, Finger said, adding “our products end up in places they were not intended for.” But with blockchain, the products would be trackable and consumers could scan the things they buy to ensure authenticity. “That entire process would live on top of the blockchain,” Finger said.
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Blockchain could also impact the fund-raising market, he noted.
“Imagine if you could go to the global markets to fund companies by issuing a crypto currency based on your business model,” Finger said. “You can have consumers with a vested interest in your product and a coin that is programmed to give them perks. It’s really the future of crowdfunding.”
One of Luxury Brand Partners’ brands has plans to launch its own crypto token, Finger said, and it will enable customers to “create wealth” by recommending the brand to other consumers. “The promotional power is absolutely awesome,” Finger said.
Finger, who started his beauty career at Bumble and bumble, launched Oribe and founded Luxury Brand Partners, has spent essentially all of those years skirting traditional beauty rules.
“It’s because I’ve spent my entire life in this space that I’m comfortable with the rules and sometimes more importantly when and how to go around them,” he said.
Each of Finger’s brands have gone against the grain — from Bumble, which started selling directly to salons instead of distributors, to Oribe, which started selling direct on Amazon in 2015, to Becca Cosmetics, which was one of the first makeup brands to work so closely with an influencer (Jaclyn Hill) that it put her name on the packaging.
“We didn’t just have her promote the product, we partnered and collaborated with her on a few key products,” Finger said. “We took the risk of putting her name on the collection of products and sharing a big part of the revenue with her. Today that sounds normal, but back then that was actually a huge risk.”
Another risk — Pulp Riot — created a line of bright hair coloring products with hair stylist influencers who sell to other stylist-influencers. “We went so far as to put the Instagram handles on the product they worked on,” Finger said. This year, the brand is expected to do between $35 million and $45 million in revenue — without a sales force.