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Blockchain: Beauty’s New Link to Transparency

Beauty brands are going on-chain to reveal all about ingredient-sourcing and supply-chain processes.

PARIS — Thanks to the blockchain, traceability is the new transparency.

Beauty brands have recently dabbled with NFTs, which are on-chain. Now, many brands are starting to go a step further with the technology, using the blockchain to be more transparent about ingredient-sourcing and supply-chain traceability.

The blockchain is extremely helpful for this, since it’s like a living, digital, non-hackable ledger, which is universally accessible. That chimes with the desires of an increasing number of beauty purchasers these days.

“Consumers are evolving. They want transparency about your brand, your supply chain, your integrity and your ideals,” said Swan Sit, a Web3 adviser and creator.

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The relationship between beauty and the blockchain is in its nascent phase, according to industry experts, who underline that it can — and will — serve even more wide-ranging purposes in years to come.

“The brands who lean into it and embrace it will do better, but I think it’ll eventually hit everywhere,” Sit said.

“We are at the beginning of a long story,” agreed Philippe Guguen, founder and chief executive officer of Agence Map Émulsion, a marketing and communication agency specializing in retail and digital. “The blockchain is not a trendy buzzword. It’s a new way to bring trust.”

Yet still today, just a few beauty players have been using it for that. Leading the charge among the multinationals is Groupe Clarins.

The French beauty company just migrated information about 26 of its products there and views that move to be an organic extension of its customer relationship-building heritage.

“We were the first to create the client card, where the client could give feedback to the brand,” said Virginie Courtin, managing director of Groupe Clarins and part of the third generation of the founding family running the company. “So in a way, my grandfather created CRM. The client is at the heart of everything we do.”

But as today’s client has changed, so has Clarins. In 2016, it acquired a domain in the French Alps, where it cultivates plants for use in skin care and makeup, and carries out biodiversity studies.

“When we bought the Domaine Clarins, we wanted to add verticality in the way we supply our ingredients to make sure that we control everything from the field to the jar,” Courtin said. “Then we said: ‘Now, the client wants transparency and traceability.’”

Many of Clarins’ formulas include some ingredients from that domain, and 80 percent of the brand’s formulas overall come from plants. While that has always been integral to the brand’s marketing messages, the blockchain enables the company to share unassailable information.

“How can we ensure the customer has real traceability?” Courtain continued, explaining that until now anything on the subject has been based on a brand or supplier’s word. “It’s not really protected or integrated information.”

So the challenge was how to ensure that information is protected and unchangeable.

“That’s how we learned about the blockchain,” Courtin continued. Clarins decided to go with a French startup called NeuroChain. “It really was a bet for the future,” Courtin said.

Together, they created three interfaces: one for the suppliers, who give information about ingredients; certificates, and facts, such as dates when plants are culled and their batch numbers.

The second interface is like a safe holding the data, and the third is a consumer platform, called TRUST, which is an acronym for “traceability,” “responsibility,” “uniqueness,” “security” and “transparency.”

“We want it to be very user-friendly,” Courtin said.

TRUST was launched in the U.S. in mid-October and in France on Nov. 9.

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For Clarins, using the blockchain is a way to show consumers — especially young ones — that it is 100 percent sure of its formulas, according to Courtin.

The first 26 Clarins products on the blockchain have ingredients from the domain. “But we will reach 100 products by next year,” she said.

Thirty-five of the brand’s ingredients and information from about 20 suppliers are already on the blockchain.

It’s early days for TRUST, but Courtin said: “We have really good response for all the customers that are connecting to the platform.” For Clarins, TRUST should give a good sense of how much traceability and transparency its consumers want. “Our goal is to have all our products and ingredients on the blockchain in the longer term,” Courtin said.

Guguen said he was drawn to the blockchain after understanding that 37 percent of consumers who buy fake products believe they’re real. He also thought about phoney product reviews and greenwashing.

The European Commission screened websites for greenwashing in business sectors, such as garments, cosmetics and household equipment, and released a study in late January 2021 that found “national consumer protection authorities believed that in 42 percent of cases the claims were exaggerated, false or deceptive,” the EC wrote in a statement.

“This technology is very interesting for those who tell the truth and make big efforts to improve their impact and to move the cosmetics industry in the right direction,” he said.

Guguen’s office in Marseille, France, is close to researchers from the Centre National de la Recherche Scientifique, or CNRS, who patented blockchain solutions to track and trace shipping containers.

They helped Guguen and his team transfer that technology to a platform launched in spring 2021, called Sorga, which helps to certify the authenticity of beauty brands’ claims through a public blockchain.

“It’s something you can read easily on your smartphone,” he said. “You just flash a QR code in an elegant form, a diamond shape.”

Then, people can discover secured pages giving information, which can be dragged and dropped to verify metadata anchored in the blockchain.

“We can tell you if the PDF that you are looking at is the original one, or if one single pixel moved, changed from the one we have signed from Ecocert, WWF — any certificate,” Guguen said. “As soon as you declare your own proof, you’ve signed [it], it’s legally opposable.”

Beauty brands are given a dashboard, showing where each product has been flashed, and whether those flashing are product buyers or prospects. All are anonymous.

He described the first cosmetics brands to sign on to Sorga as being “agile.”

Clever Beauty, a French indie nail polish brand with natural and zero waste claims, is an example. Guguen said Sorga can shine a spotlight on many of the brand’s points of difference, such as having glass bottles that are recyclable and employing workers with disabilities for packaging production.

Clever beauty nail polish.

“When you are in store, if it’s a product without this Sorga tag, no one can discover [that],” he said. “Our mission is to accelerate responsible consumption.”

To wit, Guguen worked to reduce Sorga’s environmental impact energy-wise.

“We succeeded, because we’re not in a transactional situation,” he explained. Sorga zips data into a small package, therefore it does not use more energy than sending two emails, according to Guguen.

“It’s dividing the impact of blockchain energy by 10,000 [to] 100,000,” he claimed.

“You can actually do records on the blockchain for fractions of a penny,” Sit said.

Among other brands using Sorga is Lao, an independent French natural hair care producer.

“What I wanted to do in the first place was to find a way to show to the world that we can do fully transparent cosmetics, that we can reveal everything — from the grain to the shower,” said Lisa Schino, founder of Lao, which launched a year ago and began using Sorga in May.

So far, some take-aways have been which products are the most scanned and which sections of the data are the most read.

“What [consumers] look for is mostly the ‘where,’” Schino said. “They want to know where the ingredients come from, who produced them, where the product has been made, if it’s really made in France and where in France.”

Clever Beauty founder and CEO Maëva Bentitallah explained once one of her products’ QR codes is flashed, it brings up information on the brand’s “who,” “what,” “where,” “why” and “how.”

She can see how Clever Beauty, introduced in 2017, is globetrotting. Most recently, a Clever Beauty product was flashed in Cameroon.

“Our products are nomads,” Bentitallah said.

Along with giving consumers assurance, she is interested in how the blockchain brings a human element through technology to Clever Beauty.

Despite its strengths, some executives wonder whether the time is ripe for beauty to delve deep into the blockchain, given most people don’t understand what it is. The technology can also be clunky and hard to use.

It’s possible the blockchain might be a bit risky if a company isn’t operating well. If a brand touts having clean ingredients or good workplace practices, it’s going to be held accountable.

“So maybe not all brands would like that level of transparency,” Sit said. “But accountability and transparency is a much better ecosystem for brands and consumers alike, including the middlemen of distributors and retailers.”

Another possible drawback is if a product’s margins are exposed, that could be surprising for people outside of the beauty industry.

But the possible downsides are outweighed by the upsides, many experts attest. The future is exciting.

Courtin believes the blockchain could be a good weapon against counterfeiters and gray-market sellers.

“When you see counterfeit product, not only are you able to authenticate it if you chip it, you then also know what truck it fell off of,” Sit said. “So now there’s accountability in the supply chain and all of your supply-chain partners.

All steps up to purchase, even inventory management, become a lot easier to track.

Blockchain is expected also to support everything from consumer data to loyalty and consumer relationship management. Sit believes that will become even bigger than the supply-chain piece.

Digital wallets can potentially be used to purchase various goods and services, and could therefore offer a host of data about the consumer.

“Consumers use an average of seven to 12 different beauty brands, but it’s unrealistic to think they’re going to buy a night cream from, a mascara from, a fragrance from,” Sit said. “We’re not going to make 12 different e-commerce site orders, not only because it’s cumbersome, but we don’t get loyalty.”

So often people will shop at multibrand retailers or multicategory retailers outside of beauty.

“That’s consumer behavior,” Sit said.

Inside a digital wallet, a brand might see that a person loves 20 different beauty brands, making it clear she or he is a beauty junkie. Or a brand might learn that someone has bought its product 12 times in the last three months at various different retailers.

“So it’s incredibly powerful to look in that wallet and not only infer macro-level data…but you also know everything else — what concert they went to, where they went,” Sit said.

Privacy issues can be dealt with by allowing users to opt in. That is key, because it will be a universal wallet, which allows them to make all sorts of purchases.

“Imagine the data you can glean just at a macro level of cohorts and different types of products and brands people like to cluster around,” she said.

A hypothetical: Perhaps a person has 20 collectable MAC Cosmetics lipsticks in their wallet, each one launched over the past three years.

“That’s a loyal customer, so let me drop an NFT saying thanks for being such a great MAC fan,” Sit said. “If you’d like, please redeem this token for a free custom lipstick of your color, and we’ll print your name on it — or something like that.”

Then, the consumer can decide whether to disclose her own data.

“Now, it actually allows a value transfer from brands to the consumer directly,” Sit said. “The people who control all that data are actually vulnerable, but brands and consumers stand to win.”

Blockchain can also support the creator economy. From a beauty industry perspective, that could have ramifications for how-to video makers or product-review writers.

“How do we reward the people who do the work?” Sit said.

A how-to video might be NFTed and authenticated. Someone could bake in a smart contract, so that if people use or like the content there might be a charge, a donation or fractional payments.

“It just gives payment to the original creator,” said Sit, adding wear-to-earn is also another possibility.

“Engagement and loyalty happens between purchases,” she continued. “Now, we actually can have a much rounder way to think about loyalty, in terms of not just purchase — but advocacy and network.”

Product usage might also be tracked. An RFID sticker would allow a brand to tell how many times a product is opened or closed and to store that information in the person’s account on the blockchain.

“You can actually think about usage-tracking statistics and show efficacy of products at the granular, personal level if people wanted to share that information with you,” Sit said. “So think about then product testing, etcetera.”

She believes the creator economy stands to be completely overhauled “with the ability for creators to make money off of anything they post, and for brands to be able to identify and reward different types of behavior,” Sit said.

“The blockchain is the reinvention of the Internet,” she said. “That’s how big this is. And the biggest difference is the efficiency, the distribution and transparency of data.”