L’Oreal finds beauty in open innovation

The beauty giant partners with local ecomm startups to create an accelerated path to tapping emerging opportunities.

DailyKarma_ALT

This story originally appeared in the Summer 2021 issue of strategy.

When it comes to innovating in beauty, it’s “no longer David versus Goliath. It’s David and Goliath,” says Robert Beredo, L’Oréal Canada’s chief digital officer. “We need to partner together in order to accelerate technology.”

In 2019, Beredo spearheaded L’Oréal’s first Canadian Open Innovation Program, backed by Bonjour Startup Montreal and aimed at helping the beauty giant identify and capitalize on emerging opportunities in ecommerce.

The inaugural year led to successful partnerships with five Montreal startups, among them livestream shopping platform Livescale – which Beredo believes stands as a shining example of the benefits L’Oréal can reap from partnering with startups. “It’s not just about the technology. It’s also about the way of working, the collaboration process, creating an accelerated path… That’s a really important part of our approach to innovation.”

Since Livescale launched a proof-of-concept with Urban Decay, L’Oréal Canada has used its tech to host more than 100 live events across nine brands, and there are plans to scale it globally. Tests have shown that livestream events generate conversion rates that are three-times higher than in other channels, and that 50% of customers are new to the brand, Beredo says.

The innovation program is now in its second iteration. Ten startups that were selected in May will pitch their concepts to L’Oréal execs during a virtual presentation on June 8. From there, winners will enter a proof-of-concept accelerator program this summer, culminating with a results presentation in the fall and, hopefully, a business proposal from the beauty giant.

This year’s finalists include social commerce tool ShopWindow, community building platform Viafoura, and cause marketing platform DailyKarma. Beredo says the selection criteria was left fairly open to avoid limiting entries; however, it did put extra focus on startups that facilitate social selling, as well as companies with purpose that can make a “meaningful social contribution to consumers in Canada.”

As was the case in 2020, next year L’Oréal will not run a new cohort as it turns to focus on scaling the partnerships with the winners of this year’s program. “It’s not just about finding something shiny and new,” says Beredo. “We want to make sure there’s value in the new service, the innovation, the technology, and that we can actually scale them across Canada or the group internationally.”