LAB21 SKIN CARE: ONLINE AND PERSONAL

Byline: Alev Aktar

NEW YORK — After years of ready-to-wear skin care, it took the Internet to bring us a couture version.
In late spring an innovative start-up called Lab21.com will introduce what’s billed as the first online treatment laboratory. Born of a sophisticated computer model and patent-pending technology, the company will custom-blend products to individual specifications. And because the formulas are fresh and personalized, delivering the appropriate concentrations of ingredients for each user’s complexion, Lab21.com founder and president Nathaniel L. Benson claims that they are up to 300 percent more effective than standard ones.
“Traditional products appeal to the lowest common denominator,” explained Benson. “Our mission is to provide consumers with a customized alternative to mass-produced skin care to better meet their individual needs.”
Benson argued that because Lab21.com is the first mover in the space — although Reflect.com offers mid-market skin care, Lab21.com is the Internet’s first upscale treatment brand — it has an advantage over future competitors. “We have a concept that no one else has, and we’re vertically integrated,” he noted.
Here’s how the system works: A consumer enters the Web site and completes a three-minute questionnaire — which was developed by a dermatologist — identifying her skin type, pore size, sensitivity, firmness, texture, response to the sun, breakout frequency and so forth.
The answers are processed by computer software that issues a personalized skin profile, free of charge. The computer also determines the appropriate product formulation, tailored to the consumer’s profile, which the site then recommends. If the consumer places an order, the items are manufactured and shipped within 24 hours. The formula is archived for reorder at a later date. If a shopper is not happy with a product, she can return it for a full refund.
Founded by Benson, a former Clinique executive, and Jennifer Alderson, vice president of marketing and an Estee Lauder alumna, the site is set to go live in late May or early June and will sell globally. At the same time, the made-to-order products will be introduced in a flagship specialty store in New York. Bergdorf Goodman is under consideration.
In the fall, the concept will be rolled out to a handful of U.S. specialty store doors and a London flagship, and by yearend, the brand should be sold in a dozen points-of-sale. Long-term plans call for distribution in about 500 doors in the U.S. and abroad.
Benson feels Lab21 could generate $15 million retail in the first 12 months. Prices for the products will be about 20 percent higher than those for Estee Lauder, with a 50-ml. moisturizer retailing for about $85 and a 1-oz. serum going for $100.
Customization has been a hot trend in the cosmetics industry for several years now, although there has been more action in makeup and fragrance than in skin care. Some of the Internet players are 3 Custom Color Specialists, which creates personalized lipsticks and blushes; Acumins, which formulates custom vitamins; Creed, which offers made-to-order fragrance, and Reflect.com. Getcustom.com, a new site offering custom sports equipment, apparel and gifts — including personalized votive candles — features 3 Custom Color’s products. The company is planning to add more beauty options, but decided not to launch with the category. According to Jeffrey Roth, founder and chairman, “We have seen that beauty is not the area that people are most interested in. We did extensive focus groups, and we found the top three categories are computers, apparel and gifts.”
Lab21.com, meanwhile, did its own focus group of 200 people. “We saw that consumers don’t like getting the same product as their mother,” said Alderson. “They want skin care formulations made specifically for their needs. Also, consumers said they don’t want to be reliant on a beauty adviser who has little expertise in dermatological skin care and might be selling the latest thing that’s inappropriate for their skin.”
Lab21 was made possible by two technology alliances. The first is with Collaborative Laboratories, a research facility attached to SUNY Stony Brook, which develops and manufactures core technologies and products for pharmaceutical and consumer product companies. Lab21.com’s products will be manufactured in the Stony Brook laboratories using a patent-pending technology licensed from Collaborative. It is exclusive to Lab21.com for Internet, prestige and mass-market distribution.
The technology enables Lab21.com to mix oil-based ingredients and water-based ingredients without heat or surfactants — which act like detergent — by using a high-speed, high-pressure method. As a result, the manufacturing process does not involve cooking, and products can be made fresh in a matter of minutes.
“Normally, to make an emulsion you must keep the surfactant, oil and water at a high temperature for several days,” explained Dr. James A. Hayward, chairman, president and chief executive officer of The Collaborative Group. “Now we can make [cold] emulsions on the spur of the moment.”
“Irritation is much lower with this process because there are no surfactants,” added Dr. Duncan Aust, director of development services at Collaborative. “And with this technology, you make exactly as much product as you want.”
The second alliance is with Pandesic, an Internet company based in Sunnyvale, Calif., that provides e-business solutions. Pandesic built Lab21’s e-commerce software and will provide the proprietary hardware. Its parent, Intel, is investing $20 million in the software.
Both Collaborative and Pandesic will receive royalties on sales, according to Benson. “They have a stake in our success.”
He added that to date, more than $10 million has been invested in Lab21.com, and over the next 12 months, $50 million in additional capital will be raised. Investors include Oak Investment Partners, Salix Ventures and New Light Ventures.
At launch, Lab21 will offer basic moisturizers, anti-aging moisturizers, facial sun products and specialty serums with a dermatological positioning. Of course, the number of formulations available is virtually limitless — 21 million are possible, according to executives — because each product is custom-blended. Key ingredients will include ceramides, Vitamins C and K, retinol catezomes and alpha-hydroxy acids — in other words, the traditional assortment.
While consumers will have the option of adding SPF protection to an item, they will not be able to create a product with, say, an extra-high dose of alpha-hydroxy acids unless the software allows it.
By the end of the year, the product lineup will include cleansers, toners and body products. Plans also call for a men’s line, botanical products, marine-based spa items and hair care.
Lab21.com will be backed by both digital and print advertising. The digital marketing program will include both Internet advertising and links from other Web sites. According to Benson, the company will invest some $30 million in advertising this year.
“We see ourselves as a small niche player,” said Benson. “But Clinique was conceived as a small, specialized concept,” he added, referring to America’s leading prestige brand.