According to Statista, revenue from Beauty & Personal Care in Vietnam reached 1,959 million USD in 2020, and is expected to reach 2,603 million USD in 2026. This figure for the global market is 503,589 million USD and 679,657 million USD in 2021 and 2026. For the spa market, global spa market size reaching 47.5 billion USD in 2020, and expected to increase to 117.8 billion USD by 2028.
These are clearly impressive figures showing that the market pie is growing larger, leaving open opportunities for startups with new technology and business models to exploit.
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POPULAR BUSINESS MODELS IN THE BEAUTY & SPA INDUSTRY
From more than 30 prominent startups in the Beauty & Spa industry, ThinkZone found that tech startups around the world in this industry mainly have business models belonging to one of the following groups:
➤ Platform connecting users and SaaS tools for beauty service providers (beauty service providers)
➤ Sell beauty products online (e-commerce, O2O, subscription,...)
* ThinkZone's selection criteria include that the startup must have high technology content in its business model, so models that sell products or provide purely offline beauty services are not included in this list.
Below, let's go through each model in turn with a few representative names.
1. Platform connecting users and SaaS tools to beauty service providers (beauty service providers)
Two prominent startups selected for this model are Planity and Fresha.
1.1. Planity
Planity is a connection platform that helps customers make online appointments with beauty services such as spas, hairdressers, beauty salons,... Besides, for beauty service providers, Planity is also a tool to help these units manage appointment schedules, operations, revenue reports, customer analysis, loyalty policies,...
According to Planity's statistics, this startup's SaaS tools and connection platform has helped customers and beauty service providers receive many values such as:
➤ Customers book appointments 24/7, online, and anytime, anywhere.
➤ Reduce the rate of customers forgetting appointments by up to 4 times with the calendar reminder feature via SMS.
➤ Increase the appointment rate by up to 50% for service providers during outside opening hours.
➤ Increase the frequency of customers' store visits by up to 60% due to effective communication through the platform.
Focusing on the European market, Planity currently dominates the market in France, and is aiming to expand the market to other European countries, starting with Germany. Planity's goal is to equip 60% of beauty service providers in Europe with online scheduling tools within 5 years. (current estimate is 13%).
Some figures stand out
Established in France in 2016, Planity has so far achieved a number of outstanding achievements such as:
➤ More than 1 billion euros in total booking value.
➤ On average, 1 booking is created every second on the Planity platform.
➤ 2 million Monthly Active Users.
➤ Has raised a total of 55.7 million USD, of which the most recent capital call was in July 2021 with 30 million Euro.
Business model
Although popularly known as a platform that connects customers with beauty service providers, Planity does not collect money from connection activities. (unlike platforms like Grab or Airbnb that collect commission from booking value).
Planity positions itself as a SaaS company, in which this startup collects money from monthly subscription fees of units using Planity tools for appointment management, operations, customer analysis,...
With this business model, Planity's biggest problem is attracting service providers to use its SaaS tool, while the connection platform acts as a valuable add-on so that spas, salons, barbershops,... have more motivation to use this tool.
1.2. Fresha
Similar to Planity, Fresha also provides both a customer connection platform and SaaS tools for beauty service providers, in which the startup started with a SaaS model first. (formerly named Shedul), then expand the model to the connection platform.
In terms of products, Fresha offers more features than Planity, in terms of SaaS tools, including calendar management, online payments, customer management, employee management, data analysis, marketing, voucher creation,...
Some figures stand out
Established in 2015 in the UK, as of June 2021 Fresha has achieved:
➤ 50,000 corporate customers providing beauty services.
➤ 150,000 stylists and beauty experts.
➤ Operating in more than 120 countries (mainly UK, US, Canada, New Zealand and European countries).
➤ 250 million bookings have been created.
➤ Total capital raised is 132.5 million USD, of which the most recent capital round is 100 million USD Series C in June 2021. Fresha's valuation in the previous $20 million Series B funding round was $105 million.
Business model
The interesting point about Fresha compared to Planity is: despite investing a lot in building features for the SaaS tool, Fresha does not charge a fee to use this tool.
In contrast to Planity, Fresha collects fees from connecting customers with beauty service providers on its platform, with a specific pricing policy as:
➤ Transaction Fee: Fresha charges $0.2 + 2.19% of the total booking value for each booking created online.
➤ New client fees: Fresha also collects a finder's fee for each new customer who books a service provider's appointment for the first time, with a one-time fee of 20% of the first transaction value. For returning customers of that service provider, the price is applied as above. Note: a customer may be a new customer of spa A, but a returning customer of barbershop B.
With this business model, Fresha's biggest problem is attracting both customers and beauty service providers to participate in its connection platform, and the SaaS tool is a valuable add-on for service providers.
* In Vietnam, some startups are following the same model as Planity and Fresha, including iSalon, EasySalon, or Lookme.
2. Sell beauty products online
The remaining popular model of tech startups in the Beauty & Spa field is to sell beauty products online, with some variations in business models. Some prominent representatives include:
➤ E-commerce combined with AI - Naked Poppy
➤ E-commerce follows the O2O model - MyGlamm
➤ E-commerce with subscription model - Ipsy
1. Naked Poppy
Established in 2019, Naked Poppy is a company specializing in selling beauty care products. (makeup, skincare) With clean, natural ingredients, no substances harmful to health.
The highlight of Naked Poppy is that this startup uses AI algorithms (protected intellectual property) to analyze customer data (such as skin color, allergies, hair color,... collected from a survey form when new customers buy Naked Poppy products) to suggest products that best suit their needs.
Targeting the US market, Naked Poppy is currently selling more than 500 products and has raised a total of 5.1 million USD.
2. MyGlamm
Established in 2015, MyGlamm is a platform for selling beauty products with an O2O model, combining both online and offline sales at stores across India. In addition, this startup also uses technology to help customers easily find products that are right for them, along with blog channels and social networks to build communities and increase interaction with customers on beauty topics.
Currently, MyGlamm is selling more than 800 items including makeup, skin care, hair care,... with 250,000 new customers every month, and 15,000 points of sale across cities in India. (contributing 40% to MyGlamm's total revenue).
MyGlamm's total raised capital is 161.9 million USD, of which the most recent round this startup called 71 million USD in July 2021 at a valuation of 270 million USD.
In August 2020, MyGlamm also acquired POPxo, the largest online community for women in India on a variety of topics from fashion, beauty to weddings, showbiz,... POPxo currently has about 300,000 Monthly Active Users, and is expected to reach 100 million MAUs by March 2022. The acquisition of POPxo helps MyGlamm solve the problem of collecting and retaining customers, significantly reducing Customer Acquisition Cost - CAC.
➤ Learn more about calculating CAC in the article: How to calculate Customer Acquisition Cost properly?
3. Ipsy
Established in 2011, Ipsy is an online subscription platform for beauty products. Based on the needs and characteristics of customers, every month Ipsy will send a subscription box, called Glam Bag, for $13/month, which includes beauty products suitable for each person's needs.
Besides the subscription model, Ipsy also makes money from selling individual cosmetic products, including some product lines that Ipsy produces itself.
In terms of business data, Ipsy has so far achieved impressive numbers such as:
➤ 4.3 million subscribers for Glam Bag.
➤ Estimated revenue in 2020 is more than 1 billion USD, already profitable.
➤ Ipsy's total raised capital is 237.2 million USD, of which the most recent capital round was $134 million USD in December 2020. Before this latest round of funding, Ipsy was valued at $800 million.
Ipsy's success is largely believed to come from the existing customer community from co-founder Michelle Phan's beauty blog and YouTube channel. (8.8 million followers). Later, Ipsy also collaborated with many other beauty vloggers to promote Ipsy, with an estimate of more than 10,000 beauty vloggers having promoted Ipsy.
In addition, Ipsy's competitive advantage also comes from its wide network with cosmetic brands, when Ipsy negotiates with brands to put their new products into Glam Bag at very low prices or even for free, in exchange for access to Ipsy's large subscriber file. This is the reason why Ipsy can keep the price low, only $13/month, for Glam Bag boxes that include many products of big brands to attract such customers.
SUMMARY
Above are some popular business models in the Beauty & Spa field of tech startups around the world, along with some prominent companies. In your opinion, can these models be applied in the Vietnamese market? And which names will lead the market? Let's wait and see.
Reference
https://www.crunchbase.com/organization/planity-2/company_financials
https://fitsmallbusiness.com/fresha-review/
https://techcrunch.com/2021/07/26/amazon-backed-indian-d2c-beauty-brand-myglamm-raises-71-million/
https://mediakix.com/blog/how-ipsy-studios-michelle-phan-does-influencer-marketing/