Thursday, July 31, 2008

An opportunity that I deliberately ignore could become a big money maker for you.

Unless you're a great marketer with an ego that DEMANDS that you have your name written big on the fragrances you create, I have a "business opportunity" for you -- one that, to date, I keep walking away from. It's called "private label perfume."

As you may or may not know, "private label" cosmetics are a big business. "Private label" involves a manufacturer or middleman developing a stock product and then selling it branded with the retailers name. In the world of cosmetics, a very small retailer can, without much difficulty, obtain a complete line of cosmetics with their own name on it at a very affordable price.

Many of these small retailers and entrepreneurs would also like to have their own perfume. But "private label" perfume doesn't exist.

The reason why sources of "private label" perfumes don't exist is simple. Creating a successful perfume is a far more complex task than creating a cosmetic product. 90% of a cream, for example, is advertising hype. Everyone's creams are pretty much the same with the difference being the packaging and, often, the use of exotic ingredients or "new breakthroughs from science."

But the efficacy of these special ingredients is not easily demonstrated to the consumer. Only through advertising or personal sales pitches can the idea of the product's superiority be implanted in the consumer's mind. The consumer (truly!) cannot really "prove," in use, that one cream is superior to another. As for lipstick, anyone can easily reproduce the popular shades.

But perfume poses problems. Setting aside the issue of packaging, which is not particularly difficult for a private label product, there is still the issue of AROMA. And, unlike the claims that might be made for a cream -- or selecting the popular shades for lipstick -- a perfume can be "comparison tested" by the consumer against every other fragrance they have ever encountered, at fragrance counters, on other women, on granny's dresser. The nose passes judgment.

So to sell a fragrance successfully, private label or whatever, the aroma must (1) be pleasing to the consumer and (2) "original" enough so that it is not perceived as simply a knock off of something available elsewhere.

This, of course, is very challenging for the creator.

A private label perfume poses the ADDITIONAL challenge of needing a mass market appeal. Why? Because, as the seller, your market -- small retailers -- will be very diverse. A niche product will not succeed because THEY will be looking for a product with broad appeal.

So, in effect, you find yourself doing exactly what the major marketers of fragrance do each time they launch a new fragrance. They (1) want a fragrance that can be called "new," but (2) they don't want it to be too new or revolutionary, (just a little bit new so that the consumer's nose does not have to be reprogrammed,) and (3) they want it to have mass market appeal.

To succeed with a private label business, your creations would have to be similar.

Of course this is a huge challenge and, you may ask, "if I'm able to create perfume that would meet the standards of a major marketer, why would I abandon my own name and brand and sell it as a private label product?

The answer, of course, it to make money!

IF your perfume meets the three criteria mentioned above, it will be much easier to sell it to small retailers in bulk as "private label" than it will be to retail it on your own, or to sell it with your own brand name to major retailers.

IF your perfume meets the three criteria mentioned above, with a minimum amount of promotion you should be able to generate inquiries that have the potential of being turned into orders.

There are a few steps you will have to take to close your sales. Your perfume must be nicely bottled and boxed. The solution here is to buy, in bulk, a bottle and closure that will become your standard. Then, as all bottles and closures are the same, you can have a custom box made to fit the dimensions. On the front of the box -- and on the bottle itself -- will appear your actual LABEL (also of a standard size) which will carry your customer's name.

Whether you decide to name each fragrance yourself or allow customers to name individual fragrances would be up to you.

Of course setting up this business requires both time and capital as well as creativity in perfumery. You will have to purchase bottle, boxes, closures, labels, possibly some equipment to fill your bottles and print your labels. This could run you from $5,000 to $10,000 so certainly there is risk involved.

But the biggest risk lies in the possibility that you will not be able to create a series of six or more fragrances that meet the criteria mentioned above.

But, if you can pull it all together, this could be a profitable business which has the potential to grow large in scale.

1 comment:

  1. This was wonderful information for me. I am considering a private label cosmetics line that will include makeup and fragrance as well. Thanks!