Cosmetics
I was talking with a friend this week about an investment that he and his wife had made in a friend’s business. The friend had a killer product in terms of an all natural face cream that all her friends and acquaintances loved, and was able to produce in a sensible quantity and sell it for a healthy profit. In theory everything was in place for a mega business success.
The group of friends got together and put up some money to allow for increased capacity and then watched as their money disappeared. As in so many cases the business failed because it lacked distribution, the primary sales focus was out of town chemist shops, which were frequented predominantly by the elderly, who loved the sample, but not the price.
The cosmetics industry is very competitive and I certainly would not advise you to try and steal the world from beneath the likes of Chanel, Loreal, and Elizabeth Arden. There are however plenty of niche players who produce their own natural versions of cosmetics, or who refuse to partake in animal testing and other ethically questionable practices. If you can find a way to represent one of these small players, or to manufacture your own product then you are in the game.
Distribution, as I said in the introduction, is the key. We suggest you try the following approaches to marketing your products: -
Ebay
Website
Party Planning
Vending machines
Other retailers
Shop
A simple search on Ebay for cosmetics brings up more than 13,000 items. Naturally only a man would search on such a broad category, and you can narrow this down to about 500 items listed under face cream and roughly 1000 each for night cream and hand cream. In short the market is competitive. There are two strategies here, sell big name brands cheaper than anyone else, or create a value offering based on quality and exclusivity.
Websites are equally competitive, but if you don’t have one you can’t drive traffic to it. Many people who hear about a new brand will automatically search for it on the internet and read as much information as they can about it before deciding whether they want to buy. Regardless of your initial marketing strategies you must have a site, and it should contain two key elements, information and a shopping cart.
Party planning is a tried and tested method of selling cosmetics; the likes of Avon have built entire global businesses around this channel. This doesn’t mean that you cannot compete however; on the contrary many women are used to attending these kinds of sales events and are happy to find new products. The main advantage of doing this with your own product line is that you get to keep the profits that would normally be made by the big companies. Read the “finding customers” pages on the website to read more about this.
Vending machines can be used to sell many product lines, and I am currently exploring a possibility to sell cosmetics in them. Naturally there are some logistics problems in where you pace the machines, whether and how you brand them, and even how you avoid breakages in the delivery mechanism but these can all be overcome to give you a retail space without the cost of staff or a major rental outlay. Apple have used this approach to good effect with the recent introduction of vending machines selling I-pods and accessories.
Related shops such as women’s clothes shops may be willing carry some of your stock, providing you are willing to work with them. This is a better outlet than say a chemist’s store as your audience will be more targeted and the staff in a fashion boutique are likely to have more interest in the products than the staff in a less targeted environment. Make sure that there is a bonus involved for junior staff who make a sale as well as a healthy %age for the store owner.
Once you build some scale you may want to think about opening your own store. By this stage you should understand who your customers are, your price points etc, make sure that you choose a location which will attract the right group. In other words if your target market is older housewives you don’t want to rent a unit next to the teen clothing store or the ice rink. Setting up a shop is a big step, read as much as you can about it before you leap in, and keep your other sales channels running in tandem.
You can approach big labels and ask them whether they will give you an agency agreement, or franchise but this is likely to be an expensive way to start.
You could try to find a home based manufacturer at trade and craft fairs, or using related internet forums, or simply by searching for someone using Google. These guys are likely to be very interested in forming a mutually profitable arrangement of some description.
Another option is to play to a minority, for example you may want to buy cosmetics from the Caribbean and sell them into your local black community, or import from Japan for your local Asian community. The reason that this is viable is that skin tones can require different shades that are often not available in some countries but are main stream in others.
Although cosmetics are competitive, they are used by the majority of women around the world and have been in use since at least Cleopatra’s time. If you can come up with the right product for the right group you can definitely charge a premium.
Distribution is the key. Don’t order so much as a sample unless you are clear on how you will sell your product