The beauty industry is betting big on AI

SPEAKER_1 (0:00)

Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo, the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier, from CRM, accounting, inventory, e-commerce and more. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. This is why over thousands of businesses have made the switch. So why not you?

Try Odoo for free at odoo.com. That's odoo.com.

SPEAKER_2 (0:30)

This Marketplace podcast is brought to you by Wealth Enhancement, who asks, Do you have a Wealth Blueprint? Your advisor might not offer that. Which means your plan could be missing tax strategies, retirement, estate planning or more.

See what a comprehensive plan has to offer. Find out what the Wealth Blueprint at no cost and see what comprehensive planning can do for you.

Though you'll wonder what you've been paying for. Learn more at wealthenhancement.com/build.

Megan McCarty-Corino (1:01)

Would you take lipstick advice from a chat bot? From American Public Media, this is Marketplace Tech. I'm Megan McCarty-Corino.

The global beauty market is expected to hit almost $600 billion by 2030, according to McKinsey. And just like pretty much every industry, it's being transformed by AI.

L'Oréal and OpenAI announced a partnership this summer to bring virtual makeup try-ons and product discovery to ChatGPT. An AI styling firm called Alta is integrating ELF beauty products into its virtual try-on avatars. And consumers are increasingly looking to chat bots for skincare and makeup recommendations. Apparently beauty inquiries account for almost half of generative AI retail referral traffic, according to market research firm EuroMonitor. For more, we're joined by fashion tech journalist and consultant, Maghan McDowell, who's been following this trend.

Maghan McDowell (2:08)

Beauty is very well suited to the types of conversations that these very smart chat bots allow.

I would argue even more than fashion, because people have often all these products, skincare products, color cosmetics in their drawer.

And it's almost like they're putting together a recipe. I have these products, how should I combine them to look a certain way, or how should I apply it? And beauty is very much personalized. I would say it's much more personalized than probably most of the products we buy. It's literally how you look on your face and your body. So people are having relatively in-depth conversations. I mean, we hear it across all sectors. You're having conversations that are like, you would have your therapist. Well, now people are having conversations like they would have with their dermatologist or a makeup skincare advisor at the beauty counter. And I think what I'm seeing that's really interesting is that apparently these product searches and these application searches are longer than a traditional Google search would be. So Google data has showed when people use their AI mode, they're spending roughly 11 minutes having these conversations, looking for help with their beauty products or their beauty routine, whereas a traditional Google search is maybe three to four minutes when you're trying to find a new product. And I think that really speaks to this conversational element. It's almost as if a search engine can lean in and say, okay, tell me more about what you want. So that's a very clear application that I think I've used. I didn't even realize I was using it, but it's like I asked for advice on a skincare concern, and I was considering a dermatological procedure, and it wasn't my last visit, but it was definitely starting the conversation for me, and it really helped.

Megan McCarty-Corino (3:47)

Yeah, I've definitely transitioned to using AI chatbots for the kinds of queries that I maybe at one time would have gone to Reddit for.

I'm expecting that the chatbot is going to summarize the best of Reddit on what is the best Korean sunscreen for my purposes. I mean, how is that AI search changing the beauty industry?

Maghan McDowell (4:11)

For so long, it was like, how can we quickly move someone to purchase? How can we increase the time spent to purchase, move them quickly through that process? Now, they're slowing down thinking about how can we add more context to how we describe our products? How can we add more expertise to what we offer our consumers? And so, I think the personalization thing isn't new. Brands have been wanting to do that for a really long time. But what I'm seeing as new is that they're adding more descriptors. Like you mentioned Reddit. These chat bots are looking at all the sources, including Reddit, including a brand's own website. And so brands are now compelled to offer maybe more technical data, more before and afters, more testimonials, to improve what we call GEO, you know, generative AI engine optimization, instead of SEO, search engine optimization. And so brands are starting to think more about how they can offer more information that a chat bot can read.