The cosmetics industry is massive. It’s also massively secretive when it comes to the ingredients contained in its expensive lotions and potions. That’s something CosmEthics — a startup launching its app today at TechCrunch Disrupt Europe — is determined to change.
The barcode-scanner app is designed to be a tool for European consumers who have concerns about the ingredients in their toothpaste, shampoo, face cream, deodorant, make up and so on, and want to get an independent breakdown of the contents, free from the slick gloss of marketing snake oil.
Users of the app scan the barcode of a product they’re thinking of buying (or search for it by name) to pull up an info page where they can view an ingredients list with any potential toxins flagged. They can then tap through to explanations of what individuals ingredients are, why they might have been included in the product, and potential risks if they’re on the app’s default toxicity alert list.
The app also enables users to set up custom alerts for specific ingredients they might be personally concerned about — perhaps because they have an allergy — so they can tailor its overview to their particular needs.
Perhaps they have specific health concerns about parabens, hormones or known carcinogens that are still used in the manufacture of some cosmetics products. Or they might be allergic to certain substances and thus want to avoid them. Or they may have religious or ethical objections to particular animal ingredients and want an easy way to screen those out of the products they buy.
Individuals have diverse needs when it comes to the substances they are putting on and therefore into their bodies (via the skin) — needs that are not being served by the opacity of the beauty industry, argues CosmEthics’ founder Katariina Rantanen.
As well as being a tool for individual consumers to analyze the make up of their make-up, CosmEthics intends its app to catalyze a community of users who can help crowdsource the data required to empower consumers to make healthier cosmetics buying decisions.
The app includes a feature where users can submit photos of products that aren’t currently in the CosmEthics database so its team can transcribe the ingredients list to include the item. Obviously there are a vast number of cosmetics products in circulation, and more being churned out every day, so it’s unlikely to be able to offer comprehensive coverage — but Rantanen says there’s a sub-set of popular products it hopes to be able to stay on top of.
At launch CosmEthics has around 4,000 products in its database — which means it’s done the linking of the ingredients list and product photos to the product’s barcode to create the app’s core data package — and is adding more all the time, with a minimum of 1,000 new products per week going into its database. “This rate is scaling upwards,” adds Rantanen.
“One of the U.K.’s leading web shops, they have 2,000 products online available that we’re in handover with. The Finnish department store — which is market leader in Finland — they have 10,000 products online, so even though the whole population of cosmetics is enormous, what is sold in supermarkets, what is sold most frequently, this kind of long-tail effect, the most popular products we should have represented very quickly,” she says.
At present, while European manufacturers have a requirement to display an ingredient list somewhere on the product itself, this list may not be available if you’re buying cosmetics online — creating consumer demand for more information in the industry, argues Rantanen.
And even when you can view the list before making a purchase decision, these lists of ingredients are often deliberately obscured by overly secretive manufacturers. She points to the use of Latin terms on cosmetics labels as an example of how consumers’ are discouraged from fully understanding what products are made of — so, for instance, ‘water’ might be termed the less immediately familiar ‘aqua’.
Such deliberately obscure nomenclature obviously makes it harder for consumers to understand exactly what they are buying, and also harder for them to compare products from different makers.
“In a normal consumer setting, when you’re deciding about what product to buy, it’s very difficult to understand the actual ingredients. They’re written in Latin or the molecular name. Unless you’re a bioscientist they really don’t say a lot to you,” says Rantanen. “So picking the healthy products from a shelf full of tonnes of products and the marketing messages is really difficult for the everyday consumer.”
Ultimately CosmEthics’ hope is to create a movement that is a win-win for the entire industry by using the ingredients data it is amassing to open up greater dialogue between cosmetics makers and cosmetics buyers, to push towards more popular and safer products.
“I’ve applauded the [manufacturers] that are transparent… and they’ve also been keen in learning what users value and what is problematic for users, so at the end of the day the way I see a service like this shaping the industry is that everyone wins,” she says. “It’s not from a lack of knowledge that we have certain types of products… [if] both manufacturers and users are informed of each others’ desires [they] can build healthy products as a result.”
CosmEthics is not explicitly taking a stand on the toxicity of particular disputed ingredients — but rather Rantanen says the aim is to link consumers to third party information, such as scientific research papers, to inform and empower their buying decisions. And to generate debate and discussion among cosmetics buyers.
The team works with bioscientists, and Rantanen says the business may expand into performing deeper analysis of products — such as, for instance, testing the quantity of an ingredient used in a product — but for now it’s focusing on providing ingredients explanations and links to relevant research.
“We have a relatively narrow list of what we have put as our default settings [for toxicity alerts]. The content of this is also linked to the research papers from the research community. We’re not trying to take a stand on being an authority in a respect but rather building a tool for users who want to avoid a certain ingredient, and we’re building a platform where this discussion and debate will be quite open,” she says.
“It took 40 years to prove that smoking causes lung cancer… But there was a concern in the research community very early, from various stages of the journey. So this is the way I see our platform. Ideally we can voice that concern against an ingredient and have the research papers adjacent as links that the consumer can view, and then they can make their own decision.”
On the business model front, CosmEthics has a freemium model for the app, with a basic set of features offered for free and in-app purchases for premium content such as a list of common allergens. Or the ingredient quantity analysis service noted above (which has not yet launched). It also has an affiliates revenue business model in place, monetizing sales generated via the products it recommends to users.
“We review a product based on the ingredients that it’s composed of so if you need a certain type of product based on your alert settings — let’s say you’re a vegan — it will only recommend products that don’t have our basic alerts and also comply with your vegan settings. It lists recommended products based on those ingredients,” she adds.
Rantanen has a business background but also worked in the cosmetics industry for some years, designing perfumes, which ultimately led to her having concerns about the ingredients going into these products — and to founding CosmEthics.
“Along the way a lot of people close to me got cancer and I became more and more aware of what we’re putting into our bodies — not just what we eat, not just how we live, but what we’re putting into our bodies in terms of topically, what enters our body through the epidermis,” she says.
CosmEthics is focusing specifically on Europe because uniform barcodes and legislation across the region make the market easier to target. It’s also, she says, a bigger market than the U.S. But in terms of competitors, the service that’s most similar to CosmEthics is in the U.S. — with Rantanen name-checking the Environmental Working Group NGO as an entity with similar aims.
Q: Diving down into market sizing, you’re saying in the EU 67BN, out of that what percentage do you think really focus on ethical cosmetics?
A: Theoretically any consumer is a client of ours but in special cases like you have an allergy, you’ve had cancer in the past, or aware of ingredients and health applications makes anybody a potential user
Q: What is the plan for acquiring customers?
A: We’re launching today and in the customer acquisition we hope to have goodwill because we’re the underdog of trying to bring transparency to a huge industry, which in many cases benefits from a lack of transparency. So to answer the question bloggers and also in department stores when you have professional salesforces… that’s also a rollout strategy for us
Q: Talk a littlee bit more about the revenue model. I was curious when you’ve been beta testing this and what sort of conversions you’ve been seeing…
A: We haven’t launched yet and at the moment the affiliate revenue isn’t activated yet so we’re focused on getting this to spread and getting a wide user base. We have multiple revenue streams.
Q: Any comparables with other cosmetics info sources? What do they convert?
A: On bloggers, the conversion rate is about 5-7%.
Q: What does the average woman spend annually on cosmetics and what would the affiliate fee look like?
A: $200 in EU on average but heavy users can be $1000 per month. In some countries up to $2000 and women are typically heavy users. There is quite a large spread.
Affiliate fee, we’re expecting 5% to be converting to premium [in app content] and roughly 20% of the searches leading to a recommendation that leads to a sale
Q: Any competitors at this point in time?
A: We’ve seen the industry change where humans started to be concerned with food first, and now the new wave, the new trend is what we’re putting into our bodies through the skin. This is very much emerging.
Q: From a tech IP standpoint is there anything unique that you do that’s going to offer a fantastic advantage over time?
A: The tech isn’t that tough, it’s a mobile app with a back-end database. Probably not.
Q: Where do you see people using this app the most? In store shopping or at home? How get affiliate if in store and have product in their hand?
A: There’s one situation where people tend to really change their consumer behavior — it’s when one partner is pregnant. There is the single most awareness rising critical incident.