Private Label Cosmetics 101 - Module 11

Cosmetics industry makes up for a multi-million dollar industry and is growing by the day. Inclination of masses for new cosmetic products is also ever increasing. In this game of demand and supply, big cosmetic brands are raking in on the moolah. Each day some new beauty product is launched in the market and customers are pouring in to get their hands on it.

However, in this world of glam and glitter, there is another sect of manufacturers which are steadily making their foothold strong in the market. Cosmetics and beauty product sector has huge profits and returns if set up wisely with the right type of publicity. Taking cue from popular cosmetic brands, private label cosmetic manufacturers are slowly entering the big market with their own product line and successfully giving big brands a fair competition.

Now obvious question that comes to mind is what exactly are these private labels? Well, simply put, if you are an entrepreneur and have started with a home based range of cosmetic products and also retailed them successfully, then your products would be tagged as private label products. You would be selling and promoting your product your own brand logo on your label.

So, one thing is clear that anyone can own a private label and start his or her own cosmetics company. With quality products and good marketing tactics, a private label can easily be turned into a big brand name. The next question is how to start one's own private label?

It is not necessary that you have a relevant university degree in chemical engineering or that you own a certified laboratory with modern setups. Let suppose you wish to manufacture you own >private label hair products, then all you would require is a professional cosmetics formulation and instructions for that formulation. There are common myths associated with opening your own private label like it requires massive investment, huge machineries, and certified degrees, etc. But as a matter of fact, cosmetics and beauty products can earn you large profits even without all these.

Private label manufacturers own their cosmetics formulation, establish their business, manufacture their product line for other retailers and for wholesaling purpose, and negotiate the minimum size order to be retailed. When manufacturers are in control of their business, they are better geared for negotiating deals, choose their suppliers, and make their products comparable with top level cosmetics brands.

If you have a business that uses or retails cosmetics, skincare, makeup, body and bath products, hair care, toiletries, etc, have you ever asked yourself:

Who is really making the profit?

Of course, it's the cosmetics manufacturers -- they're among some of the wealthiest conglomerates in the world.

When you consider that a hair, skin, beauty, body or bath product retailing for $50 costs between 10 cents and $3 to make, it's easy to see how these companies become so wealthy.

So, what's stopping you from making private label cosmetics? Why not make your own brand cosmetic and beauty products, and label them to suit your own business?

There's no need to contract a laboratory to manufacture for you -- this will only dilute your profits. Manufacturing cosmetics is easy -- its many advantages include the ability to make only what you require, without the expense of minimum orders. You can control the quality of the ingredients -- including essential oils, plant and fruit extracts, fragrances, etc -- and make products of an even higher quality than the leading manufacturers.

You've probably heard many myths about making your own private label cosmetics:

1. You need an expensive laboratory

Not true. You can make private label cosmetics, makeup, skincare, haircare and toiletries in your own home, workshop or shopfront using basic and inexpensive equipment.

2. Professional quality recipes are prohibitively expensive -- the average industry rate for one cosmetic formulation starts at $400.

It's true that buying private label cosmetic formulas singularly is extremely expensive. Purchasing multiple formulations need not be costly -- in fact, it can be highly cost effective.

3. You need to be a cosmetics chemist and have a degree in science or chemical engineering to be able to make private label cosmetics and toiletries.

Not true. If you can follow simple instructions, you can easily mix together the required cosmetic ingredients to make lotions, creams, liquids, gels, foams and any other form of cosmetic, beauty or toiletry product. Of course, you must use professionally formulated cosmetics recipes -- homemade or handcrafters formulas are not suitable for wholesaling or retailing.

4. You need permission from the FDA to be allowed to make private label cosmetics to sell for wholesale and retail purposes.

False. The FDA requires only that you follow certain simple rules regarding correct labeling and the use of approved, non-pathogenic cosmetic ingredients. You do not need permission or a license from the FDA. This misinformation is just another example of the multi-nationals trying to keep their stranglehold on this mega-profitable industry. If you use professionally formulated cosmetic formulas, you will be complying with FDA regulations.

Manufacturing private label cosmetics can add a new and highly profitable dimension to your business. You can even offer your services as a private label cosmetics manufacturer to other hair, beauty and spa salons, pharmacies and a diverse range of retailers.

Private labeling says a lot about a business as it creates a visual image that gets associated with the business and consumers start recognizing the company by its private label or the brand. Success or failure of a venture largely depends on the brand power of a company. Branding through private label is seen as a unique market strategy to race ahead of the tough peer competition. Specially, where small or medium sized businesses are concerned, private labeling brands make sense in pitching up product sales. Private label products offer businesses the opportunity to build a market reputation and develop a rapport with the client base while alluring prospective customers.

Private label companies are reveling in the fact that they are able to substitute high end products for value added variants and get a higher up in their market value at the same time. This is because extravagance and affordability comes together through private labeling and consumers start associating brands with premium quality. Subsequently, with brands, the number of benefits that gets into the product also increases. By using propriety labels and impressive visual branding, it is possible to change the perception of clients, thereby increasing the average expenditure through repeated sales.

Brands are what sets businesses and products apart from their market competitors and are responsible for what is termed as ‘brand loyalty'. In this brand war, businesses with maximum fan following or brand loyalty emerges as a winner. Private label manufacturing has become the sustenance strategy and the only way to drive up revenues and increase profits in the age of cut throat market competition. The exclusivity that comes along private brands works as magnet that pulls the customers on the basis of non-price factors.

The concept of private labeling has spread like a wildfire across industries and sectors, as manufacturers are in a bid to get maximum gains. Be it private label cosmetics, private label clothing or private label consumables, everyone is taking a ride on the "brand" wagon. Gradually the shift from national competitors to private labels is becoming apparent. For businesses which have a dearth of resources to spend on marketing gimmicks and merchandizes, private labeling has definitely come as a boon. Appealing packages and attractive imprints along with quality products is doing the trick both for the providers and buyers.