The cosmetics industry is one of the older industries with some of the big brands having a history that spans over a hundred years or more. A handful of such brands dominate the market. They do not have complete domination though. It looks like that will never happen. Private labels are growing and springing up in stores all around. The trend does not provide an immediate threat to the bigger brands which have a loyal market and brand image. It keeps chipping away at the market slowly growing over time. What does a private label mean anyway?
What does it mean?
Private labels are products that are manufactured by a company or organization that is sold under a different brand in a retail outlet. The seller maintains the standards and takes care of the branding and sales while the manufacturer only has to think about the production aspect. In most cases, the brand gives specific guidelines to be followed or even a recipe for the product. In other cases, private label cosmetics manufacturers are given more freedom to bring out a variety of products that a potential customer would find appealing.
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How does it provide a competitive advantage?
- It helps both the manufacturer and seller since they can pay more attention to their limited roles.
- It helps more variety and customizations that cannot be achieved by the bigger brands.
- Private label cosmetics have earned the reputation of using natural ingredients. They can afford to do that because their products do not require preservatives and additives that a big brand has to use.
- It shortens the supply chain since in most cases the products are acquired locally.
- In contrast, when it comes to more durable products, it could be acquired from anywhere as long as the specifications are met and the price advantage stays.
- The shortened supply chain also means that the margins are higher for both parties involved and the price can be lower for the customer as well.
- They are able to appeal more to the customers since it gives a more personal and exclusive feel. Think of going to your favorite family-owned restaurant instead of going to a McDonald’s.
- The retail chains prefer to sell private label products due to better margins. They make an extra effort to sell more of them.
- Private labels are more relied on in cases where the shelf life of the product is short.
There are disadvantages as well as using private labels. The seller cannot ensure that the same product isn’t being sold to another brand. They also do not have the same degree of control on your product as you might have if you were making it. It is hard to say how this trend will play out in the long term. The cosmetics industry with centuries behind it will not dramatically change overnight. The change will be gradual but private labels have made their mark. They surely have a big part to play in the future of the cosmetics industry.
Author: Ria loves writing about pop culture, lifestyle trends and latest fashion that directs anyone’s life. The writer is a glam junkie, music geek and a full-time curator of taste.