Expenditure on beauty has traditionally been influenced by economic problems, although this has changed since the COVID-19 pandemic, with home orders and masks tempering people’s urge to wear lipstick. This pushed stores to ramp up their online campaigns, seeking new ways to catch the interest of customers without in-store samples. Virtual beauty assessment technology, including those developed by Perfect Corp., will play an important role in this move to digital technology. The company revealed today that it has secured a $50 million Series C led by Goldman Sachs.
Headquartered in New Taipei City, Taiwan, and headed by Chief Executive Officer Alice Chang, Ideal Corp. Consumers are perhaps better known for their cosmetics app YouCam Lipstick, which allows users to “try” virtual products from more than 300 global brands, including those owned by the luxury conglomerates Estée Lauder and L’Oréal Paris. Launched in 2014, YouCam Makeup currently has about 40 million to 50 million active monthly users and has grown from improved selfies to incorporate live streams and tutorials from beauty influencers, sharing features and the “Skin Score” feature.
The technology of Ideal Corp. is also used for in-store shopping, e-commerce and social media tools. For example, its technologies helped develop a new virtual reality-powered Google Search try-on app that was released last month (also used for YouTube makeup try-on features). It has also partnered with Snap to incorporate makeup try-on functionality into Snapchat.
The latest financing takes Perfect Corp.’s cumulative value to around $130 million so far. Its most recent funding announcement was the $25 million Series A in October 2017. Series C will be used to further grow Perfect Corp.’s multi-channel retail technology and to open more foreign offices (it currently has operations in 11 cities).
In a press release, Xinyi Feng, Managing Director of Goldman Sachs’ Merchant Banking Division, said, “The introduction of technology through artificial intelligence, machine learning and increased realism into the beauty industry would offer major benefits, including amplification of digital distribution platforms, increased personalization and deeper customer interaction.
Perfect Corp. will also be part of the venture firm Launch with GS, a $500 million investment programme to help a diverse, multinational cohort of entrepreneurs. The business uses facial hallmark monitoring technology that produces a “3D mesh” around users’ faces so that beauty attempts appear more natural. In terms of privacy, Chief Marketing Officer Louis Chen told TechCrunch that no user info, including images or biometrics, is saved, and all computation is performed on the user’s computer.
The vast majority, or around 90%, of Perfect Corp.’s customers are beauty or skincare brands, while the rest offer hair care, hair colouring or accessories. Chen said the aim of Perfect Corp.’s technology is to mimic the makeup experience in a store as near as possible. For example, when a person literally wears a lipstick, they see not just the colour on their lips, but also the shape, as smooth, shiny, shimmering or metallic (the company currently offers seven lipstick textures, which Chen said is the most in the industry).
Although the selling of cosmetics declined after the pandemic, the demand in skincare has increased. The September 2020 survey by the NPD Community showed that American women are purchasing and consuming more forms of goods than they did last year. To help marketers leverage on this, Ideal Corp. Recently, a platform called AI Skin Diagnostic Approach has been released, which claims to be tested by dermatologists and assessed facial skin on eight metrics, including moisture, wrinkles and dark circles. The tool can be found on the pages of the skincare brand to recommend items to shoppers. Until COVID-19, YouCam Cosmetics and the company’s virtual reality software appealed to Gen Z shoppers who are familiar with selfies and filters.
Yet the pandemic is pushing beauty and skincare companies to step up their technology adaptation for all shoppers. As McKinsey’s study on the effect of COVID-19 on the cosmetics industry put it, “the use of artificial intelligence for testing, discovery and customization will have to accelerate as safety and hygiene concerns fundamentally disrupt product testing and in-person consultation.”
Based on the location of the brand, in the past, it is possible that just 10%, not more than 20%, of their businesses were direct to the customer, while 80% were by retail sales and distribution alliances, a network they have already developed over the year,” Chen said. Yet cosmetics firms are now spending more in e-commerce, and Perfect Corp. is capitalising on this by selling its technology as a SaaS.
Another way that Perfect Corp. has changed its services since the pandemic is to provide online consulting resources, which ensures that beauty and skincare experts who normally work in salons or shops like Ulta will show cosmetics to customers by video calls instead.
Every single thing we’re developing now isn’t a silo technology,” Chang said. “It’s now always combined with video streaming.” In addition to one-on-one chats, this also includes live streaming shopping, which is incredibly common in China and is increasingly taking off in other countries, and the kind of AR technology that has been introduced into YouTube and Snapchat.