Selah Li has a background in Human-Computer Interaction and Innovation Entrepreneurship. She’s now the co-founder and CEO of Swedish startup Ellure.
— The company was born as an idea at KTH Innovation (an innovation hub at the Royal Institute of Technology in Stockholm, Ed’s note). I sensed that our society is valuing more and more inclusivity and diversity, I got very excited about this and wanted to be an enabler of it as well. Especially with the launch of Fenty Beauty which provides 50 shades of foundation instead of 10, I started questioning, how can they sell all the products? How much waste is produced because of unsold products? How can the industry be more sustainable while providing more inclusive products? I chose the tech way to answer my questions. After a lot of validations, I started Ellure in 2019, she says, continuing,
— Back then, the first generation of our lipstick printer was just a wooden shell to test if people were interested in buying custom lipsticks. During the past 4 years, we have quantified the problem of over-production and have indications on how customization can increase the usage rate of products. Our research shows that 7% of cosmetics in general and 14% of lipsticks are unsold at retail levels because customers’ demand cannot be 100% accurately estimated. By producing custom-made products on-demand, unsold products can be reduced to 0% while all ranges of colours can still be provided.
And what do you offer now?
— Today, with the eighth edition of our cosmetic printer, you can design, formulate, and manufacture any liquid FMCG (Fast Moving Consumer Goods, Ed’s note) on-demand and customized within 5 minutes. Our vision is to offer affordable customization for everyone while reducing excessive production and waste. Starting with cosmetics, we enable brands and retailers to produce custom-made products on-demand at scale by using our efficient and scalable manufacturing platform, which we call a Cloud Factory. The platform consists of several services to enable this type of flexible production:
– Design Studio: This service enables businesses, or even end-consumers, to design and create products digitally, powered by advanced visualization technologies such as AR and VR to visualize the products as real as possible.
– Realization Center: This enables the businesses to, after the product has been digitally created, send the information to a network of IoT-enabled machines, such as 3D printers, to produce the product, ready to be used by the end consumer. All this can happen in real-time and within several minutes.
– Flow Monitor: All processes can be monitored and analyzed in real-time to optimize the production and sales processes.
— Our platform allows products to be made both in large factories as well as locally close to home with dedicated mini fabrication machines, depending on the quantities and requirements, and needs of the business, customer, and product. It has the potential to accelerate new business models and strategies, for example, the circular economy, Li explains.
By integrating design, production, and fulfilment within a single system, she continues, customer demands can be satisfied nearly in real-time.
— This platform benefits businesses to:
– Be more inclusive and agile to capture niche markets and be able to produce more than 10,000 custom variations of the product in terms of shade and texture.
– Reduce operational complexity, decrease stocking risk: reduce SKU (Stock Keeping Unit) from 40+ to only 5 per product category.
– More sustainable — as mentioned, reduce waste coming from unsold products to a minimum of 0%.
Can you explain more about how you work with 3D printing?
— The norm in the beauty industry is to pack cosmetics products in plastics, but in fact, only 9% of all plastic waste ever produced has been recycled. One way to attack this problem is by allowing for a circular life cycle for each product produced, which is why we created this special design of lipstick bottle that is made from both recyclable and reusable material.
— The lipstick bottle itself is made out of glass that can be recycled as clear glass. The applicator top is 3D printed with plant-based materials derived from corns. Since corns contain starch, they are more and more often used to make biodegradable, carbon-neutral, renewable — even edible — bio-plastic. So when the lipstick is finished, the applicator top can be returned to us to reuse for new 3D printing filament. Besides, 3D printing technology also enables us to create the shape with the thread, and technically, it can be any shape that one desires.
Can you explain your business model? You sell both B2B and B2C?
— We launched our online D2C brand Ellurelipsticks in 2020 to test operating our mass-customization technology. With Ellurelipsticks, customers can create any shade they desire, and the vision of the brand is to create lipsticks that are loved by people and by the planet. The brand helped us to validate the market, but also made us realize that a single brand is hard to make a huge difference. We believe that mass-customization production methods should be adopted by more brands and retailers in the industry to revolutionize the current situation. This is why we made the decision to shift from focusing on B2C to B2B, as we want to be the enabler and actually make a change. The D2C brand is still alive though, and with the minimum marketing effort, it receives great consumer feedback and achieves an ROI of 100%, Li explains. She continues:
— Our main revenue streams consist of two components: a monthly access fee to the cloud manufacturing platform and a production fee on each realized product made. The dedicated machines that we are developing are small scale so they can both be used in-store in a retail environment as well as in the background — an E-commerce environment. The machines are made at comparably low cost so a full-year payment of the access fee to the platform covers the initial hardware cost. The platform fees in the years thereafter will easily cover the maintenance fees of the machine and software. It is estimated that clients are able to recover the annual costs as long as the machine makes more than 5 products a day with a middle range pricing, around 2,000 products on a yearly basis. With a production capacity of 288 products per day per machine, it should be feasible for clients to recover costs quickly.
How’s the business going?
— We are currently in the transition of moving from product development to the early stages of the commercialization process. At the moment, we’re focused on the liquid-FMCG (fast-moving consumer goods) market to validate the operations of the system. Our beachhead market is the cosmetic industry as we have identified a high demand for inclusivity, custom products and sustainability there. As the global cosmetic market is estimated to be $300B, it has great potential for the company to establish ground in this market. We have done our first small-scale pilot with the biggest beauty retailer in the USA in March 2022 and are planning for a larger-scale integration later this year. We received invitations to perform demonstrations at different events in Sweden, Belgium, and the Netherlands and we are also in discussion with several other beauty brands and retailers, says Li, adding,
— We are also looking for funding. Within 3-6 years, we expect our system and manufacturing methods to be mature enough to fulfil needs in other markets like pharmacy and diagnostics. That market size is estimated to be $1.27 trillion… Our long-term goal is to be able to significantly contribute to SDG 12 (Responsible Production and Consumption) and SDG 9 (Industry, Innovation and infrastructure) and inspire others to start a revolution with us to reduce the environmental impact of the products we create and consume. We aim to make mass customization and responsible consumption the norm.
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