Through this post, you will understand the difference between a private-label cosmetics company and a name-brand company. You’ll also get to see why having a private-label cosmetics company may be better than establishing a name brand.
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Often viewed as the underdogs in the beauty world, private-label cosmetic companies are here to stay. More than 80% of consumers opt for private-label cosmetics, mainly because they help save money.
Research shows that there has been a continuous year-on-year growth attributing to $200 billion in sales across the US. The main driver being price, quality, availability, and taste.
Name-brand companies on the other hand have been overtaken by private-label cosmetics. There are higher unit shares for private-label brands in the US supermarkets commanding 77 out of 250 product categories.
What Is the Difference Between Private Label Companies and Name Brands
A private label manufacturer produces goods on behalf of a retailer to be sold under the latter’s brand name. Name brands on the other hand are products manufactured under established and well-known brand names.
While a name brand is usually owned by a single manufacturer, private-label cosmetic companies create a beauty line and sell it to several retailers all over the world.
Another difference is the level of consumer trust and brand recognition between name brands and private-label cosmetics. Private-label cosmetics are usually cheaper and perceived to be less quality though it’s not always the case. Name brands build a reputation over time through extensive marketing and advertising campaigns.
Based on a name brand’s reputation, it can charge its products at premium fees due to the perceived value. Since private-label cosmetics are produced in larger quantities, they tend to be cheaper and with lower profit margins.
Reasons Why You Should Go For Private Label Companies
A private-label cosmetics manufacturer produces a wide range of cosmetic products. It can also provide other services such as research, product design, and manufacturing.
Today’s consumers are super conscious of what they’re consuming, therefore, you must ensure some aspects are taken care of. Such include ensuring the skincare products are cruelty-free with custom blends, and ensuring your products stand out among other beauty products.
You can also have your own formula development to create a better name for your own beauty line. You can also include your company logo on the products and have different packaging options.
There are several benefits when launching a product through private label companies. Read on to learn.
There are various ways you can save costs when you choose to go for a private-label cosmetic manufacturer. Among them include lower production costs as they have expertise in handling all aspects including sourcing raw materials and manufacturing.
Private label manufacturers can also research and develop your product to meet your needs, thereby, reducing the direct costs of setting up a research facility.
The marketing and advertising costs are also greatly reduced as the products come branded with your logo and packaged according to your liking.
For a small business looking for a less risky option, outsourcing production to a private-label cosmetics company may prove to be worthwhile.
Flexible Product Offerings
With a private-label cosmetics manufacturer, you can customize your products according to your unique designs, packaging, and branding.
The manufacturer usually has a range of packaging options that can include different shapes, sizes, and materials. Therefore, you only need to choose what fits your target market.
Private label manufacturers can also allow you to create a unique brand identity from their products. This includes having different design logos, fonts, and colors, and creating different product names and descriptions.
Often you can get products at low minimum order quantities which can allow you to test new product variations and samples before making a large investment. This helps to reduce the risks associated with new product offerings.
You can also extend your product line by introducing line extensions to complement beauty products that already exist.
Control Over Product Development
Having control over product development is a significant advantage as it allows you to customize products to your needs and specifications. A private label company can also allow you to have quality control over the product development process. This is to ensure that the products meet quality standards which is essential for building loyalty and trust with your customers.
Using private-label cosmetics products can also help in controlling costs associated with their development. This includes the raw materials used, the branding, and the packaging used. To control costs you can opt to use more affordable packaging options and materials while maintaining product quality.
You can also have control of product innovation as it allows you to experiment with new product ideas and concepts before mass production. You can take advantage of the industry expertise and knowledge of the private label manufacturer to develop new products.
Better Brand control
As a retailer, you have the benefit of better brand control as you are fully in charge of the marketing and branding of your beauty products.
Private-label cosmetic companies work closely with retailers to create customized branding that aligns with their goals and values. This includes creating product descriptions, names, designing logos, and selecting fonts and colors.
Using private-label products also ensures that you have consistency in your cosmetics line in terms of marketing materials and branding. The consistency resonates with both existing and potential customers across all marketing channels
Private label companies also help businesses protect their intellectual rights by ensuring that they don’t share product formulas. This helps to safeguard your brand’s reputation while maintaining a competitive advantage.
Greater Customer Loyalty
Through product differentiation retailers can create products that are unique from their competitors. The uniqueness allows them to cater to different customer preferences and needs thereby building brand loyalty.
Private-label cosmetic companies can make cosmetic products to high-quality standards. This is through the use of high-quality manufacturing processes and materials. Customers are most likely loyal to brands that deliver great products.
The pricing of private-label cosmetics can be made to reflect your branding and packaging. This also helps to build brand recognition as it can attract price-sensitive customers looking for value for their money.
Private label products can be produced and restocked fast helping you to quickly respond to consumer demands. Customers love it when they can rely on a retailer to have the product they need.
Higher Profit Margins
As earlier said, private label products are usually produced in large quantities thereby reducing the unit costs. This allows retailers to sell at lower prices while maintaining a higher profit margin in their cosmetics business.
Cosmetics from private label companies also provide greater pricing control as you can price the cosmetics at a level competitive with other products such as name brands. This allows customers to get value from your own brand while still making good profits.
High-quality and unique brands build better customer loyalty translating to repeat purchases and thereby higher profit margins. Retailers also don’t need huge marketing costs as they can rely on their reputation and brand recognition to drive sales.
Private label companies offer more advantages than name brands. They have flexible product offerings, are more cost-effective, and you get better control over product development. These advantages help small businesses build a brand image at affordable costs. If you’re a retailer looking to start a cosmetics business, be sure to consider private label options as an alternative to name brands.