HOTARU PERSONALIZED exceeds 110K sessions in the first 3 months since the launch with Perfect Corp.’s AI Skin Diagnostic

Sparty, Inc. is the company behind ‘MEDULLA’, made-to-order customized hair care product line offering personalized shampoos for individual hair textures. In May 2020, Sparty has launched personalized skincare brand called ‘HOTARU PERSONALISED’. Ten short survey questions combined with Perfect Corp.’s AI Skin Diagnostics allow HOTARU to offer customized skincare to every consumer. The brand launched during COVID-19 and kicked off with impressive 110K sessions in the first three months. We asked Sparty, Inc. CEO Mr. Yosuke Miyama about the secret to the brand’s success.  

What is the background story of the company focusing on beauty personalization, subscription type business model and digital / EC?

Mr. Yosuke Miyama, CEO of Sparty, Inc., noticed that his wife was using various types of shampoo and realized how hard it is for some women to find a perfect shampoo. Many women have a hard time finding the perfect shampoo, and there is even a new word in Japanese called ‘#ShampooNanmin’ meaning that someone is lost among endless shampoo options. When Mr. Miyama was working in a media agency, he noticed that many Western brands offer personalized products and thought that there should be a market opportunity in Japan. Why wait for someone else to do something first when you can do it yourself? That is how ‘MEDULLA’ started. At ‘MEDULLA’, the personalized shampoos are constantly being updated based on each customer’s feedback. To make sure their personalized shampoos evolve constantly, MEDULLA deployed subscription-based business model. Currently there are 200K customers in Sparty’s database and we are gaining 30K new users every month.

How did you launch skincare brand ‘HOTARU’?

Sparty’s slogan is ‘SPARTY made to order’ and we aim to grow as a company that specializes in personalization. Your own personalization agent, so to speak. For example, we want to recreate the experience of private shoppers coming to your house from luxurious department stores, but do it online.

To do so, we are building a data platform where we can offer the best items, based on customers’ individual tastes and habits. We chose a skincare brand as the first step in creating our platform.

What are the unique features of ‘HOTARU’?

HOTARU is a skincare brand that lets its users answer 10 simple questions and take a selfie to analyze their skin condition. Then, we create the best lotion and moisturizer matching their unique skin conditions and needs. We worked closely with a pharmaceutical company to create 110,000 formula combinations in 6 months. We also utilize our haircare personalization knowledge that we have learned from ‘MEDULLA’. From an advertising point of view, the word ‘personalize’ appeals to many and Sparty feels that the demand for personalization will continue to grow. The brand’s website UX was also designed around personalization and one of the main features is PERFECT Corp.’s AI Skin diagnostics, which provides highly accurate skin analysis. Subjective questionnaires combined with objective AI Skin Diagnostic results boosted our users’ confidence

‘HOTARU’ has launched during pandemic. What was the initial response from the market?

We’ve had a lot of discussions regarding the launch timing. We had to consider if we would be able to get our necessary materials from abroad and so on. However, as customers cannot actually visit physical stores to get skin diagnostics to purchase items, Sparty wanted to bring that experience online and make customers enjoy the new experience. That is why the brand decided to launch in May. As a result, we had a huge reaction from customers and media. The brand shared some feedback from customers such as ’It is a very useful tool to have when I wanted to invest a bit more and get better skincare for my Stay-Home-Beauty.’ ’As I can’t meet beauty advisers, the diagnostics I get from a selfie is very trustworthy.’

It could be said for EC as a whole, but because customers cannot use testers in stores anymore, Sparty feels that the demand for personalization is growing very rapidly. Now you see the testers covered with plastic and no one is allowed to touch them, so Sparty predicts that customers will continue using digital solutions even after the pandemic ends.

Sparty had such a huge reaction from the start. Is this something Sparty expected?

The answer is Yes. By early September, we generated more than 110,000 sessions on our website and the conversion rate was higher compared to Sparty’s haircare products. This proves that there is a huge potential and opportunity in personalization industry. The brand initially thought that most of the customers would be beauty specialists and someone who has in-depth knowledge about beauty. It turned out that many of the customers want to use something good, but don’t really know much about cosmetics and are passive in receiving information. HOTARU added questionnaires and skin diagnostics to their shopping journey and the brand thought it might cause some issues for those users who might not want to spend too much time online and go through all the steps. However, HOTARU found that users are actually enjoying the UX since the brand not only added some simple questions, but also incorporated fun elements to entertain consumers throughout their online shopping journey.

How did you choose Perfect Corp.’s AI Skin Diagnostic?

Sparty had initially sought out other companies in Japan and thought about developing an AI solution on their own. However, no one could beat the accuracy of Perfect Corp.’s AI Skin Diagnostics, and Sparty had no doubt it was the one. The more data there is the more accurate the results. Also, Sparty is looking to expand globally in the future, so the company needed someone that will expand with the brand, and Perfect Corp. can certainly do that.

Sparty is very pleased with Perfect Corp.’s highly accurate results, and our customers are very happy with the results they receive.

In Japan, even though users are active online and digitally, 90% of people still purchase in store. Does HOTARU have a plan to expand in store?

For now, HOTARU doesn’t have a plan to expand in store, but the haircare brand MEDULLA already has a store in the heart of Tokyo. We had a popup space in one Japanese popular store ‘LOFT’ in March, but it was hit hard by COVID-19.

Personalization in store is very hard to execute. Online experience can deliver personalization, but in Japan, the company somehow feels the pressure to consider physical stores. If the company does open a physical store, the plan is to utilize AR solution, something that YouCam offers, and do the diagnostics in store, hand out samples, and lead customers to purchase online.

What is the future looking like?

When there is personalization, Sparty thinks it is necessary to have ‘personalized communication’ as well. For instance, if you go to a store and staff tells the same story to all shoppers that is somewhat not trustworthy. It works exactly the same way. It is crucial to bring personalization to entertainment and communication and create a perfect experience for a particular customer. To do so, entertainment element and accuracy become key. At HOTARU that means using Perfect Corp.’s accurate technology combined with an entertainment element. The focus should be on asking ‘what kind of person you want to become?’ not on delving into consumer’s issues and keeping constant overwhelming communication flow to find out new information about your customers. ‘Experience’ is the most important factor for both online and offline. Sparty believes that customers will be able to have many different choices in the future, in various aspects of their lives.