What is Private Label and how can it Help You

by Harry Patel Sales Manager

What if someone gave you a ready-made product and all you had to do was a slap on your label and bingo… it’s yours! This, in a nutshell, is private label skin care cosmetics manufacturing. It’s the perfect solution for a newbie. If you are a start-up or an adventurous soul who’s decided that their business lies in cosmetics, private label manufacturing provides you with the most efficient and safest way to test the markets.

What we effectively do here is to use the manufacturing facilities of a specialist. There are different types of transactions that you can establish with your supplier. You can go for a minimum supply or go for large quantities. In fact, many big brands today actually have a ‘private label’ arrangement with selected suppliers.

Benefits of Private Label manufacturing

How does this help you? There are many benefits of this arrangement, particularly if you are just testing the waters or running a small business:

Reduced costs

The prime reason it works is because of its simple economics. Manufacturing units cost money. There are astronomical rents, labor costs, overheads, lab running costs, and some very expensive machinery. On top of it, these is all recurring costs that will repeat every month with depreciation mounting up! On the other side, you cannot be sure of your returns, particularly if you are just launching your product. In fact, it will take you quite some time to break even. When you go for a private label skin care cosmetics manufacturer, you automatically reduce the extra costs, paying instead just for the product.

Reduced liability

It may not seem like it, but a manufacturer is liable for a whole plethora of factors — from the employees on the premises of the manufacturing facilities. There are standards that you have to maintain, such as GMO standards, check every batch, source carefully, and see that the packaging follows all rules. None of this is optional. You will be legally liable for each component. Neither is it very easy to carry out, especially for someone who is just starting out. Outsourcing your manufacturing does not remove your liability completely. As a seller, you do have some responsibility. But it is significantly reduced.

Test the market

What is the safest way to start in a new market? The safest way would be to test your product in the market and see how it goes. Does it find acceptance? Is the competition too fierce and the slice of profit too small? In short, is it worth it? It makes little sense to set up a manufacturing unit if you are only going to try a sample. An already established company may have the manufacturing capacity to take out a small line, but for a small business, this is not possible. The initial investment is too heavy, especially if we consider that the experiment may not work.

Working with manufacturing experts

You may have a great idea for a product and marketing plan ready, but not the actual product. So, you decide to start manufacturing. Only, it’s far more difficult than you imagine. You have to scout for the right location, hire people, get licenses, register your company and then invest in machinery and raw material. Then there is the actual process of manufacturing where you must get everything right. Errors could be expensive and delay untenable. With a private label skin care cosmetics manufacturer you have ready access to manufacturing expertise.

Quick results

The manufacturers usually have a base solution. For really quick delivery, you can opt for everything short of branding. In other words, you can have the product ready to be marketed under your brand! You may have less control over what you are getting — instant purchase means that the product is ready — but you do have access to a prepared product. Alternatively, you can go for more customization by adding your choice of color or ingredients to a base solution. After all, the base is generally the same across a product category. This is a handy solution if you need a production line to run quickly.

Private label skin care cosmetics manufacturing has many advantages, particularly for small and new businesses. Even big business is now using the strategy to expand into new markets.