When it makes sense to invest in a perfume

    The thought of marketing your own perfume and making a pot of money from your efforts is tantalizing. But when should you do it? Or should I say, "attempt it"? There are times when it makes no sense at all and times when "you'd be a fool not to do it." Here are some guidelines that can help you spot opportunities and avoid costly fiascos.   

 

Four Essentials

 

    Before you invest money in a perfume you need to have four areas nailed down. They must be secure rather than "probably okay." They are (1) The market, (2) Distribution, (3) Promotion, and (4) The knowledge of how to have your perfume produced for you at the lowest reasonable cost. Let's look at each of these considerations.

    The Market

    It makes no sense to develop a perfume unless you have people to sell it to. Here you have to think about numbers. How many people are there in your market that are candidates for your new perfume? Really what you are looking for is a specific opportunity, a gathering of people that, for certain specific reasons, are likely candidates to become customers for your perfume.
    The reasons cannot be general. You cannot proceed thinking "women always love a new perfume", or "men are attracted to a new cologne." You can't proceed thinking "everybody will love my perfume if I put a clever spin on the marketing." When I had my great success with "P" cologne it was because I had a captive market of older men, most of whom had never bought a fragrance in their lives, but who would try almost anything my company offered them once we had made an appealing pitch to them. You have to find a very specific opportunity for your perfume where the odds that the right number of people will buy from you is in your favor, before you launch your project.
    Looking at "numbers" and your specific market you must estimate the size of your market and then scale your project to that size. If your real market is only a few thousand people (often the case!) you have to scale your project -- your production and marketing expenses -- to insure that you'll be able to make a profit (an outstanding profit!) developing your perfume for that market.
    The first step in determining whether it makes sense to invest in a perfume is to identify this opportunity, a market that, for specific reasons, will be receptive to your perfume.

    Distribution

    How are people going to go about buying your perfume? How will you set up your distribution? "Internet" is the easy answer (which is really a highly complex approach) but I've had entrepreneurial hopefuls also cite "Macy’s" and "Walmart." Why not QVC and Duty Free Shops? None of these are the answer unless you have carefully prepared the way. Bint El Sudan (from Bush Boak Allen) -- a huge marketing success in Africa of the 1930's, '40's, and '50's -- bypassed the established trading houses and was distributed through mammy traders, women who sold goods in village market places. The fame of Bint El Sudan spread through the social media of the day -- word of mouth.
    "Internet" itself is not a distribution system. There are many online possibilities, your own website, affiliate marketing, etsy, eBay and more. But the challenge is in getting people to come to these various sites to make their purchase. The advantage of "internet" is that there are no barriers to setting it up. From your home office you can go out and do it.
    Retail stores have the similar drawback of being useless unless you can drive motivated traffic to them. The larger chains, the Macy's and Walmarts of this world, will have no interest in working with you (unless you are heavily funded and have brought on board some key industry veterans who can open doors for you.)
    Smaller retail stores, particularly local retail stores, can be more receptive to displaying your fragrance but establishing a relationship with these stores and servicing each "account" requires that you really think in terms of developing a distribution network that can be used for more than a single perfume. No one store will sell enough of your fragrance to make it profitable.

    Promotion

    Regardless of what your distribution may be, you can not expect to make sales unless you have developed a promotion that will motivate people to want to try your perfume to the extent that they will interact with your distribution system to buy your perfume.
    For example, if you are selling from a website (the easiest distribution to set up), what are you going to do to round up motivated prospects and drive them to that website? A website can only take sales (like a retail store). For the most part if will not executed the step of making people want to try your perfume. This is something you have to do and, until you can work up a plan for a promotional program that will make enough converts to make your perfume profitable, investing in your own perfume will be folly.
    How do you make these converts? How do you inspire people to seek out your perfume and give it a try? This is one of the great mysteries of marketing for which there is no stock solution. But it can be said that following a "business school" formula will probably not do the job for you. For you, a really powerful hook will be essential, otherwise hang on to your money for now.

    The knowledge of how to have your perfume produced at the lowest reasonable cost

    "Buy low, sell high" -- the rule of marketing success. If you buy at the wrong price, that is, if you pay too much to have your perfume made for you, profitable sales become impossible. The people who make money will perfume are the people who have studied all the costs that go into producing a bottle of perfume and how each can be minimized or controlled without degrading the quality of the finished product. This is true whether you are producing your fragrance yourself, in your garage or barn, or whether you are working with a consultant or through a fulfillment house ("assembly house" or "contract packager").
    You really have to look at all your costs before you get started. My own concern is usually with the cost to produce the fragrance. Have I fought for realistically low prices from each vendor? Have I cut every corner that can be cut without cheapening the product or compromising quality? You want to avoid middlemen as much as possible, particularly those who offer you a "package deal" if you'll follow some formula they've worked out to make their profit from entrepreneurial hopefuls who are ignorant of a manufacturer's cost for services and materials.
    Likewise with both promotion and distribution. Is someone ready to sell you an advertising program? Media is always looking for advertisers but is it media that can do something for you? Media salespeople have their statistics but none will really apply to your perfume. You have to think this through quite clearly. Where are your best prospects? How can you reach them? What will it cost?
    It is easy but not so effective to simply buy an ad and hope for the best. (I recall with embarrassment spending $10,000 for a page in a major fashion magazine -- without first testing -- and not making one sale -- thus this warning.
    If you have to convert people to your cause and see social media as a way to do it, you've got to consider the time and attention you will have to devote to the project before you might be in a position to launch your perfume. "Time is money" as they say and this truism tends to be forgotten when "free" social media are available.

Summary

 

    Here then are the basic elements that must come together before it makes sense to invest in a perfume. But look, they can and do come together for those with open eyes and, when they do, the results can be quite profitable.

Where are you planning to sell your perfume? Online?

    The most obvious points of sale for your perfume are retail stores and online. In my last message I wrote about the basic requirements for making sales in stores. Now I want to address the online option. There are alternatives to both of these that fall under the heading "guerrilla marketing" but it's hard to explain these opportunities as a good deal of imagination and energy are required to recognize and exploit them.

    Anybody can offer their perfume online. There are no restrictions, no gate keepers. You control your online presence. What is essential is that you have a device to take orders. This eliminates Facebook, Twitter, and Instagram although they can be highly effective for promoting sales. Typically selling online involves having a website, although there are alternatives such as eBay, Etsy, Shopify and "Etsy alternatives" (do a Google search for "etsy alternatives" to find them.)

    The cost of having your own website can be (realistically!) less than $60 a year -- if you are able to prepare your own pages. The $60 includes both web hosting and domain registration. For shopping cart you can use Paypal which is free. But, as Shopify warns, "Marketing your store is ultimately up to you, and is your responsibility as shop owner."

    So to sell online you need a store, you need to market that store, and you must be prepared to ship orders promptly (and be familiar with regulations for shipping perfume.) In short, you need to become a merchant but, as mentioned, there are no bars to prevent you from setting up your online store.

"Marketing your store is, ultimately, up to you."

    A platform like Shopify takes pains to educate its clients. Other platforms often make vague promises of marketing support. They want your business and the truth about how unlikely you are to sell any perfume with them unless you, personally, work at marketing it, does not encourage sales of their hosting services and it is the hosting services that they are selling, not your merchandise. You may need a hosting service but, just like having your perfume in a store, getting it into a store doesn't mean you're going to make sales.

    Sometimes the solution is a marketing partner, a person who can take what you have and make sales. It is not easy to find an individual who can take this role and, of course, it means that profits will be shared. "Sharing" is the key here. You don’t want to pay someone a fee to market your perfume based on promises alone but you certainly might make a commission arrangement with someone who can make sales for you that you otherwise would not have made.

    What it all comes down to is your overall plan. Having a product (your perfume), having a market (people who will be receptive to your perfume) and then deciding how to best connect with that market. If your market is local, a retail store makes sense. If your market is scattered across cities and states, an online store makes sense. But the key will always be how well you sell your perfume.

Could this be an opportunity for you? Using a window display to sell a lot of perfume!

  
  Thinking "big markets, unlimited sales" might close off any hope you have of becoming a successful perfume entrepreneur. You don't have the resources to complete and, by focusing on big markets, you're likely to overlook markets where you can make money.

Keep it small

    If you've never sold a perfume before and have never sold anything in big numbers, how many bottles of your own perfume do you think, realistically, you might be able to sell perfume? 50,000? Not likely. 10,000? Still a tough proposition. But what about 1,000 or perhaps a few less? Can you manage to produce just the number of bottles you need? Producing more bottles than you can sell can turn a good promotion into a disaster. Let's look at opportunities to sell 1,000 bottles, or even fewer.

No media, no sales
   
    You need media to reach your buyers. Sometimes the availability of a particular media opportunity can be your opportunity to sell your perfume. To expand your vision of media, look at this list. It could expand your thinking.

    From this list, look at one example: "window displays" which I take to mean retail store windows. Yes, windows can be media and, depending on the store's location and foot traffic outside the window, a window display could be used to sell an unknown perfume successfully.

Getting your perfume into a store

    It's not that hard to get a store to take your perfume on consignment, which means you only get paid for what is sold. It's no big deal for a local store to take your perfume on consignment. Perfume doesn't take up much shelf space. The problem is that, since a bottle of perfume is small, your perfume can easily go unnoticed and, when it is seen, it can easily be passed over ... unless people have some reason to take an interest in your perfume. Here's where a window display can change everything.

    Let's talk about that store window. I'm not suggesting you'll be allowed to take over the entire window (unless you have a really strong display) but you are likely to get enough space to put up a poster (big) advertising the actual bottle (small). This is media you don't have to pay for as you would with newspaper, magazine, radio, or TV advertising. The expense is nothing more than the cost of making that poster. The effectiveness will depend on your powers of persuasion. An alternative to a poster could be a video that loops. This would require some hardware and video production but many effective marketing videos are, today, shot with a mobile phone. You will, of course, have a duplicate display in the store with your perfume.

    Can you make an opportunity out of a willing retailer? Can you sell 1,000 bottles of perfume? You do have to monitor the store's traffic before you undertake a project like this. Are there are enough unique visitors to give to store the potential you need? If you find a good store that may not have all the traffic you want but good traffic for your perfume, consider cutting your goal down to 500 bottles or even 200 and keep your production in line with what you expect you can sell.

    Working with a retail store is a good experience because you will get a dose of the reality of what a store owner needs and what the public wants, and, in this "window display" strategy, you can get this with a very small cash outlay. If you can make it work, it can be your first step into perfume entrepreneurship.

Selling 1,000 bottles of perfume when nobody loves you

    (This message is a continuation of my blog and email from 8/8/19 which is now posted as a blog article here.)

    I have said that by selling 1,000 bottles of perfume you can make $10,000 in profit -- if you produce ONLY 1,000 bottles of your perfume so that your profits aren't dragged down by the money you spent on the bottles you didn't sell. But to sell those 1,000 bottles you need a market where people love you and are happy to buy your perfume. The question is how can you start your own perfume business and become a perfume entrepreneur if you don't have your own market of people who love you?

    The solution that has worked well for major fragrance houses is joint venture. They provide the perfume (which they don't make themselves), the joint venture partner provides the buyers. These arrangements are called "licensing agreements" because the legal implications of a true joint venture would take them somewhere they would not want to go. It will be the same for you but instead of a forty page licensing agreement you'll generally do quite well with a simple "letter of agreement." A good writer can reduce the essential nuts and bolts to a single page.

    To launch your perfume venture with this strategy you must be able to identify a joint venture partner who has a following that could, without too much difficulty, be led to buy your perfume (although it's likely they won't know it's your perfume they are buying.)

    The other piece of the puzzle is to sell this "entity with a following" on the concept of doing this deal with you -- you supplying the perfume, they providing the buyers. The ease with which you'll be able to sell your project will depend a lot on how confident your proposed "partner" is with their ability to sell your perfume to their customers or followers.

    You won't be breaking any new ground with this plan. Look behind the scenes at your local perfume counter and you are likely find that none of the companies selling their perfume created and produced that perfume. The companies that created those perfumes and control their formulas (but are restricted from marketing them) are not named on the packaging. Where you can break ground will be in applying this strategy to small, carefully targeted markets.

    You have to ask yourself, "is this an idea that could work for me?" But before you walk away from it -- or jump on it -- let me get in a few more words. Marketing requires imagination. The great marketers are those who can take the germ of an idea they picked up (not thought up!) and mold that idea into something that works gangbusters for them. Great promotions never come ready made.

    Likewise, in producing your perfume you need imagination to guide you to reliable vendors of the components and service you need who will give you rock bottom prices. You have to work at it. Nobody is going to hand you their best prices on a silver platter.

    It helps to study what others have done but to make it happen for you, you have to take what is given you and give it a spin that will make it uniquely suitable for your market. Remember, you are the one who has the most interest in getting the perfume produced and sold!

    Now here are my plugs for my books that can help you --

    Creating Your Own Perfume With A 1700 Percent Markup!

    How To Make Your First Perfume For Under $500 (free download, no email required)

These small opportunities can be your big opportunity

    It is entirely reasonable to expect a $10,000 profit from selling 1,000 bottles of perfume. That's ten dollars per bottle profit after production, marketing, and administrative expenses. To do it you produce only 1,000 bottles of perfume, not one bottle more.

    A market where you know you can't sell more than 1,000 bottles of your perfume may seem like a small opportunity. But if, in that market, you have good reason to believe that you can sell 1,000 bottles, $10,000 isn't such a bad profit. You could use it to develop another perfume for another small market or perhaps develop a perfume for a slightly larger market.

    To go about this successfully you have to nail down two requirements. First you have to know your market, the people in it and their tastes, and they have to know you. Then you have to know how to produce an acceptable perfume for them at a cost per bottle that will give you the markup you need, a healthy markup indeed. (See "Creating Your Own Perfume With A 1700 Percent Markup!")

    If you're not comfortable plunging into a perfume promotion, even a small one, you might find comfort in reading "How To Make Your First Perfume For Under $500". That book is free and it tells you a great deal about putting a fragrance together at a lower cost per bottle than many people believe is possible.

    Now about that small market where you can sell your 1,000 bottles of fragrance successfully. I mentioned that in addition to having to know the people in that market, they have to know you. How this works is simple for someone who already has a business such as a large retail store and meets his or her customers face to face. Likewise someone who is, say, a performer is likely to have a following and today it would be unlikely that this following could not be reached through social media. There are also a number of people who, for whatever reason, have a strong social media following. These are examples where "people who you know and who know you" are to be found.

    What about the person who is ambitious to sell their own perfume but does not have an obvious market for 1,000 bottles of perfume? I have a few thoughts on this that I am putting together in a separate blog post that I will share with you in a few days.

Testing -- forgotten or never known?

  
    My marketing mentors knew well the importance of testing but I suspect that you may be less acquainted with that art. There are times, such as when an individual or small company wants to launch a new perfume, that testing is hardly considered. Why?

    A major problem for testing is that you need a product to test with. Say you are planning to produce 50,000 bottles of a new fragrance. Can you, for a test, produce just 500 bottles? Will your vendors appreciate what you are doing and let you purchase just 500 bottles, 500 pumps, 500 boxes ... and just enough of the custom fragrance they have made for you to fill 500 bottles? Good luck with it! Here's a solution I once used.

    My company had what some thought might be an opportunity to sell a fragrance profitably. We had never sold a fragrance. The question was not the scent itself as we sold by mail and the buyers would have no opportunity to sample the scent. The question was, would our customers, the ones receiving our catalog regularly, have enough interest in a fragrance to make a fragrance offering profitable.

    A great many businesses are in this same situation. Their customers might go for a house-branded fragrance but developing one can seem like a very large financial risk.

    For us, to answer this question we purchased a few dozen bottles of a fragrance being sold by a competitor -- and advertised it in our catalog. The produce was a modest success.

    Here's where numbers come in. We projected what it would cost to make our own fragrance and how much money we could save on the cost per bottle by producing the fragrance ourselves. As it turned out, when we took charge and produced a fragrance ourselves, our cost per bottle was just 20 percent of what we had paid for the dummy fragrance. With the help of some inspired promotion, our new fragrance proved remarkably profitable.

Scent vs. market receptivity

    The test described above was for marketing receptivity. Would people in a particular market buy a fragrance from the marketer if it was presented to them "in their own language," so to speak. This  is really the first and most important test a fragrance entrepreneur needs to make. Your fragrance can be positively the best but if you market it to a universe of non-responders to your perfume, you'll get crushed.

    In my thinking, the most important question is not "will they like my perfume?" but rather "will they buy a perfume from me, the marketer?" Happily, while testing the appeal of various scents is a difficult undertaking for a small company, testing the potential receptivity of a particular market is considerably easier. Why Because you don't need the final product -- the real product -- to make a test. You simply need a product. This was my thinking when, in 2011, I wrote a little book called "How to make your first perfume for under $500". The book is now a free download from my website.

    The book guides you through the process of producing a small amount of your own fragrance but a large enough amount to allow you to test for the receptivity of your target market for a fragrance.

    With this test amount of a fragrance -- not necessarily the scent you hope to sell if your test goes well -- you can even establish a trademark. Once the fragrance is "out there" the name, if not in use by another, is yours -- and the trademark refers neither to the scent inside nor the bottle and packaging. If your test is a success you can upgrade to a more desirable fragrance and create nicer packaging while using same name -- the name that is now a protected trademark.

    This kind of test might not be your cup of tea but be aware that testing, to make sure that you have a receptive market, is important. It can save you many thousands of dollars that might be lost or, on the bright side, show you that putting your money into a perfume for this market will be a smart, profitable move.

    That free book download page is here.

Who will create the perfume you want to sell?

    Not everyone wants to sell perfume but I'm going to assume that you do. So I'm asking the question, "who will create the perfume you want to sell?" Once you've answered this question you can get started developing your perfume sales business.

    There are not a lot of options for creating your perfume. If you are confident and have some money and have a sense for what you want but know that you don't have the skill to create the fragrance you can hire someone to do it for you. The test here will be finding someone who can understand what you want scent-wise and who has the skill to give it to you. I wrote about this in Creating Your Own Perfume With A 1700 Percent Markup!

    If you don't have so much money and are willing to get your hands into it, you have two options. If you are not inclined to develop your own fragrance oil you can purchase an off-the-shelf oil from one of many sources and then build and bottle your fragrance with that. This is exactly what I went through for my first fragrance as detailed in Creating Your Own Perfume With A 1700 Percent Markup! and the venture was quite profitable.

    The final option, which is currently of greatest interest to me, is to develop your own scent -- produce it, bottle it, and sell it yourself. Clearly this isn't a path for everyone because it requires the ability to create a scent with sales potential and then go through the production and bottling steps as described in Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics. This is a risky path and the possibility of failure is high but this is also where you can achieve the greatest sense of satisfaction when a fragrance you have invented -- from scratch -- wins praise and dollars from others. If this path appeals to you but you are absolutely clueless in perfumery, a good starting point is the PerfumersWorld Foundation Course which provides both technical knowledge and materials to work with. My own latest fragrance was developed using nothing more than five out of the twenty six aroma materials that come with the course. Then, if you take this path to pick up some skill, you can return to  Creating Your Own Perfume With A 1700 Percent Markup! and  Creating your own perfume from dropper bottles: Methods, mechanics, and mathematics for production assistance.

    The issue of "who will create the perfume you want to sell" is the one that must be resolved if you want to be in the business of selling perfume.