Sep 19, 2018

Five Benefits of Selling Your Own Private Label Products

When you sell skin care products from other manufacturers on your e-commerce site, you may find that you have to trim your already-slim profit margins even smaller in order to compete with all the other e-sellers offering the same items. Even when you do make money from your sales, there is not much you can do if the manufacturer changes or discontinues a product that has been selling well.

One option for increasing your profits and maintaining control over your product is to work with a private label manufacturer to develop your own skin care brand. If you have a good sense for what your customers would like and a way of getting their feedback on your prototypes, you can research manufacturers to select the best one for you. You may decide to put your own label on a formulation they have already developed, or you may work with your manufacturer to create a custom blend. In either case, the potential benefits to your business include the following:

1. Profit Margins are Higher

When you sell another company’s brand, you have to pay a portion of their marketing and distribution expense. By the time the product is passed from a middle-man to you, it will cost you more than if you had picked it up from the manufacturer yourself. When you develop your own line, you can produce a high-quality product with less overhead. And because you are the only one selling your product, you can set your price however you wish. Supermarkets use this principle when they promote their house brands. They keep their quality high enough to generate customer loyalty, while their low overhead allows them to make a profit while still charging less than similar retail brands.

2. You Have No Direct Competition

As the only seller of your product, you would no longer need to keep dropping your price to compete with other sellers or accommodate another manufacturer’s decision to slash prices. The challenge lies in drawing new customers to your brand in the first place – and you may want to keep a few retail brands in your store at first to draw attention – but investing in your own marketing efforts can eventually help you create a successful business with its own following.  

3. You Can Customize Your Product

Your private label manufacturer will have some formulas ready to go, but many also offer you the option of creating your own blend. For example, your clientele may prefer a fragrance profile that other manufacturers are ignoring, or you may want to incorporate a trendy ingredient in a unique way. (However, first make sure that the manufacturer you select will test out your ideas in the lab to ensure that you end up with an effective product with a good shelf life.) You can also tailor the shape and appearance of your packaging to appeal to the demographic you are targeting.

4. Turnaround is Faster

When an edgy trend begins to make waves, you can respond to it faster as a small business with a virtual storefront than you could as a large corporation. You can also test out your idea on a much smaller scale, depending on your private label manufacturer’s minimum order requirement. You may even want to meet regularly with your manufacturer to get early insight about the ingredients that have been generating a buzz in the skin care industry.   

5. You Can Build Your Own Brand

Developing one successful product can be the first stepping stone to extending your line into a lifestyle brand. You can take advantage of the ability to market a private label skin care line to a very specific market, and leverage it into the creation of other products, services or events. One example would be Lush, which expanded its engagement with its market through campaigns promoting animal rights and internet access. You might also work in the opposite direction by adding a skin care line to an online presence you have already created, as Gwyneth Paltrow did with goop. In both cases, a well-developed brand helped attract more sales.

If you are ready to research your market and your manufacturers, making the move to develop your own skin care line can help you create a stronger business over time.

To learn how Evora can help you develop your own private label product line, contact us here.

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