If you’ve ever found yourself wondering why some skincare products just seem to sell better than others, even though they’re sub-par, or you’ve thought to yourself, “if this product had better labeling or slightly different ingredients, it would be better,” you’re not alone. There are tons of other cosmetics experts just like you that ask the same questions and take action by building their own private label.
Private labels are a source of passive income that lets you, the business owner, have complete control over what’s going into your product, how it’s made, and what it looks like. Your brand is your own: you design the packaging and the face of your product and the marketing? That’s all you too! With a little creativity and a lot of passion, you’ll be able to put out products you want to see on the market; chances are, others want them too!
The idea of sitting at home, still earning revenue doing something you love even while off the clock may sound like a fantasy, but it’s possible! Selling private label cosmetics is the best way to achieve this dream and make something entirely unique along the way. You’re already passionate about cosmetics and skincare, so why not take that passion to the next level?
Without any help, establishing your own private label seems nearly impossible– but with the right tools and knowledge, this previously daunting task becomes much more approachable. In just a few short lessons, we’ll help you get started on building your own business in cosmetics. In each lesson, we’ll go more in-depth with these key aspects of starting your own business:
If all of this sounds great to you, perfect! Check out our next installment here :
Building a private label cosmetics business means creating a recognizable brand and making it your own. It requires creativity, passion, and determination to get your product out there, but before anything else, it takes knowledge. Knowing the size and scope of the current industry is important, yes, but what exactly is a private label? How do you sell private label products, and why build your own label, to begin with?
A private label is a product typically produced under an already established, third-party manufacturer but sold under a specific brand’s name or label. When you walk into Costco and see the Kirkland label, that’s a private label item. The Costco OEM manufactures the product, but it’s sold under the Kirkland name. As a brand, private labels control the packaging, image, where a product is sold, and how a product is sold. Product creation is outsourced to a licensed manufacturer. Nearly everything can have a private label, too—even cosmetics.
The Private Label Industry is Growing, and it’s Not Stopping Anytime Soon
With an estimated value of 564.4 billion dollars this year, the private label beauty and personal care market is expected to grow even more, with an average 4.76% growth rate between 2022 and 2026. Private label cosmetics have taken over the beauty industry through ethos; niche, private labels are seen as more trustworthy than big, generic brands. With an image built around expert knowledge and care in a specific market, customers flock to brands that fit their ideals and specific skin care needs. Especially for professional skincare providers like Estheticians, Cosmetologists, and Dermatologists, the additional personal relationship with the customer makes purchasing products less scary for the customer.
Exploring The Three Types of Private Label Cosmetics Businesses
Private label products are available for purchase in various ways, each based on one of several main business models: the retail model, the subscription model, and the multi-level marketing model.
Retail business models revolve around selling products through a digital storefront or a brick-and-mortar store in real life. This includes selling products via an online store or Amazon marketplace, selling products in a salon or spa, or selling products in general retail stores. If you’ve already got your own establishment at a salon, dermatology office, or spa, the retail model fits perfectly as a source of additional income alongside professional work. In this model, you’ll have complete access to the products you’ve developed to demo and sell to clients.
Multi-level Marketing (MLM) models rely on direct sales to sell products. Instead of selling via a storefront, most products are sold by person-to-person interaction between a customer and sales representative. MLM sales occur during organized get-togethers or via social media. Sales representatives in an MLM are encouraged to recruit more representatives to work under them and purchase large amounts of product out-of-pocket. Mary Kay is one of the most popular cosmetics MLMs out there.
Subscription-based models are similar to the retail model, but sales are continuous and mainly occur online. Instead of shopping in person, consumers pay a monthly fee to have a product shipped directly to them. Alternatively, customers purchase a single product and then pay a fee for refills as needed. Labels that sell via subscription usually specialize in products that need frequent refills or replacements, like razor blades, or they showcase new products each month in a sample box. Dollar Shave Club, Ipsy, and The Beauty Box are all subscription-based cosmetics sellers.
When choosing a model for your private label skincare business, several factors play into how your decision will affect product distribution and overall cost. When looking at business models, ask yourself these questions:
To help answer some of these questions, check out this table comparing the pros and cons of each business model:
|
|
Retail Model |
Multi-Level-Marketing |
Subscription Fulfillment |
| Ability to Test Products |
Yes |
Yes |
No |
| Off-Site Storage |
Not Initially |
Yes |
Yes |
| Mail Order Available |
Not Initially |
Yes |
Yes |
| Scheduled Product Refills |
No |
No |
Yes |
| Emphasis on Product Sales |
Yes |
No |
Yes |
| Sell to Customers in-Person |
Yes |
Yes |
No |
| Excess Costs |
Storefront Rental |
Demo kits and Recruiting Events |
Website Costs |
Some wholesale cosmetic and cosmeceutical brands sell in bulk, so you have to buy large volumes of products with each purchase. While cheaper in the long run, bulk buying tends to cause shoppers to overspend on excessive amounts of product. While this is fine with paper products and nonperishable goods, it’s a bit harder to deal with when you’ve got a shelf-life to worry about. For cosmetics, buying wholesale may not be the best choice for any customer, but it’s great for private label owners who can purchase products from their manufacturers at a wholesale price to sell for a profit.
Private label cosmetics brands usually partner with a wholesale manufacturer– the label determines what products do and contain, while the wholesaler manages packaging and production. This way, private label owners can profit from their skincare line while making wholesale purchases. Tons of manufacturers also allow private label owners to purchase products in smaller amounts to cut down on product waste and provide lower minimum purchase amounts. Although these first orders may be a bit more expensive, you won’t feel rushed to sell hundreds of units before their expiration date, and you’ll still get the full opportunity to see how well a product sells!
Ready to start your journey as a private label skincare business? Contact us at info@halecosmeceuticals.com to learn more!! We have been partnering with skincare professionals for over 30 years! Our products have excellent 2+ year shelf life and will serve you and your clients well!
WANT TO READ MORE! CHECK OUT PART 2 OF OUR PRIVATE LABEL COURSE