Outsourced manufacturing and production provide brands with the means of formulating and producing beauty products across all major categories, from skin and hair care to color cosmetics, personal care, perfumes and deodorants. The product manufacturing process can be part of a turnkey process where contract manufacturers provide an end to end service, from formulation in their own lab, all the way to pack-out and distribution, or it can be an a la carte option for those founders who want more independence and have the capabilities to work with individual companies for every step of the process. Since many emerging brands choose the turnkey route, selecting the right manufacturing partner is a critical piece of the brand building process.
Contract manufacturers can take an existing formula you have created on your own with outside formulators and chemists and manufacture or produce your product using your formula, or you can work with a manufacturer that offers an end-to-end solution to help you develop and formulate your product in-house and then also manufacture it. Many contract manufacturers have their own labs.
Manufacturing services vary from existing formulations that can be purchased off the shelf, modified slightly to produce a brand new product, or custom formulations developed along your specific guidelines.
Naturally, the more bespoke the formula, the higher the price. Similarly, the smaller the batch, the higher the cost-per-sku.
Ownership of the formula is a critical discussion point brand founders should have with their manufacturers at the outset, if they are coming up with the formula as part of the process. Founders should understand who will end up with ownership and if there are extra costs involved to take ownership, if that is your goal.
Manufacturers often work with a network of ingredient suppliers, so you want to make sure you understand who those companies are and where those ingredients are coming from.
Visiting your manufacturing partners before you make a decision is beneficial.
Choosing a manufacturer that is close to your company’s headquarters may help save money on shipping as well as make it easier to visit the facility if needed to ensure quality and troubleshoot issues.
Making sure that the manufacturing facility meets all safety and regulation standards is very important. There are many certifications and accreditations to look for. For example,
USDA Organic Certifications
GMP Accreditations (Good Manufacturing Practices)
Private Label—Working with manufacturers who offer Private Label products gives brands a quick and cost effective way to launch a brand. These manufacturers have a library of products and formulas, and they allow brands to sell them under their own brand name. Many manufacturers allow a brand to buy the formula as is, or they can work with you to take their existing formula and make adjustments to your specifications. While going the Private Label route is usually faster and more cost effective, a brand does give up some control over their formula, so that is always something to keep in mind.
Custom Formulation—A contract manufacturer can work with you to create and come up with a custom formula tailored to your specifications.
Chain of Production—Many manufacturers offer end-to-end services that bring your product to life. In addition to formulation services, many offer all or a combination of the below services:
Research and Development
Packaging Sourcing Services
Packaging Design Services
Choosing the right manufacturer is key to a brand’s product launch, because unlike a PR company or attorney, or branding agency, switching to a new one is a complex process. Therefore, taking the time to find the right fit is critical.
Finding a quality and reliable formulator and lab to work with can be one of the most challenging steps in the product development process. Depending on your specific needs, you can hire a chemist to help you develop a formula or hire a lab that has a team of chemists who can develop and test your formula. Many contract manufacturers offer formulation and formula development as part of the turnkey services that they offer. Depending on your budget and vision, formulators can adapt their existing formulas to make a semi-custom product or they can develop a custom formula that is unique to you and your brand.
Ownership of the formula is a critical discussion point brand founders should have with their formulator at the outset. Founders should understand who will end up with ownership and if there are extra costs involved to take ownership, if that is your goal.
Be clear about your standards and take the time to make sure that your formulator can adhere to them and has experience formulating to your standards.
If you have a unique product idea that requires a custom formula or specialty ingredients, test how willing a formulator is to innovate and try something new and how willing they are to collaborate with you.
Understand your formulator’s core competency and whether they are competent in the type of products you want to develop.
If your formulator is sourcing the ingredients, find out the origins and where they are sourcing them from.
Establish turnaround times and number of revisions that are included in the cost.
Custom Formulation—Formulas tailored to a brand’s specifications.
Reverse Engineering—Taking an existing formula and breaking it down so as to determine the identity and quantity of each ingredient. Research and Development (R&D)—Structured research and development that brings forth new products and innovation. In creating your formula, the chemists you work with will also use this process to test your formula’s stability, efficacy, consistency, and longevity.
Third-party logistics providers (3PL) specialize in the areas of warehousing, distribution, order fulfillment, and inventory management for brands that are scaling up. Outsourcing these services can save time, money, and storage space for brands that have growing online sales and are fulfilling purchase orders from various retailers.
Geography and size of the operation, and whether it provides a level of customer service satisfactory for small business owners.
The length and terms of the deal, particularly when it comes to liability for product preservation and damage during shipping.
Pricing and contract transparency is an important element to be clear about at the outset of the relationship. Brands should ask for and know what is included in the price and what costs extra. For example, items such as returns and kitting can come with extra costs. Ask how damaged items will be handled. Understand the service level guarantees or agreements.
Choose a company that is capable of managing your current capacity but can also scale with you as you grow.
Consider whether a facility that specializes in beauty and wellness is the best fit. Some 3PLs handle logistics for all types of businesses and some specialize in just one or two types of companies.
Survey your technology infrastructure (like inventory and order management systems) to ensure that it can integrate with 3PL providers.
Warehousing and Fulfillment—Storing product, fulfilling orders, shipping products, and handling returns to and from B2B or B2C end users.
Logistics—Providing inventory tracking and other supply chain services.
Import/Export—Certain logistics companies can be called upon for help with EU certification, export to Canada, Asia and South America for U.S. brands. Other companies handle the logistics of International brands importing products to America and seeking FDA approval.
Wide distribution across existing but changing specialty channels is a long-term play, and presents unique challenges and planning. Having a reliable 3PL will go a long way to helping your brand scale.
Approaches to Brand Strategy and Creative contain related but distinct areas of business development that can be addressed in an integrated approach or through ala carte deliverables. After product development, proper brand strategy is one of the most significant determining factors for a brand’s success.
A brand’s logo design, identity and creative direction will be integral to its product packaging, visuals, website development, and marketing strategy and therefore need to be thoughtfully planned individually and in total.
Some companies specialize in specific areas of branding like logo or packaging design, while larger companies promise one-stop shopping from branding (logo and messaging), to website design, photography, videography and even marketing campaigns.
For independent brands, story is key. The more authentic the story behind the brand, the more natural and effective the marketing.
Before beginning to work with a branding company, it’s important to have thought about some basic ideas about your brand identity:
Brand Positioning - Keeping your customers and competitors in mind, what place and space does the brand want to occupy in the customer’s mind?
Audience - Who is your target customer and how do you want them to feel about your brand?
Brand Personality and Values - What is your brand’s mission and values?
Design Brief—Summary of the brand positioning, values, personality, budget and timeframe for the project.
Logo Design—The design of the graphic and visual representation of a brand’s public identity.
Style Guide—Guide that outlines for marketers and other parties the prescribed rules for logo, typeface, color palette, and other usage rules.
Website Design—The visual and functional design elements for a website, including layout, features, colors, imagery.
Packaging and Labeling Design—The design of primary and secondary packaging and labels.
Marketing Collateral—Print and digital media for promoting a brand and its products.
Photography and Video Production—Product and lifestyle photography for print and digital media; videography for marketing collateral, website and campaigns.
Even after launch, brands must be adaptable to adjusting their branding in response to market feedback, whether that means targeting or adding a new consumer, adjusting packaging or labeling on the advice of retailers, or even changing product or brand name and logo.
Marketing and communication is a set of overlapping tools and activities that will market a brand’s products and brand to its target audience, and if done effectively, will help generate demand and reduce the sales cycles for a brand’s products. These tools include Public Relations, Advertising, Email Marketing, Social Media Marketing, Events, Sponsorships, Sales Presentations, and several others.
Marketing activities should aim to take into account brand voice and positioning and a brand’s unique selling points and value proposition.
Understanding who are a brand’s main customers, their demographics, as well as what motivates them, is an important part of marketing activities.
Marketing and communication require consistency and an ongoing dedicated focus, therefore, brands need to ensure that they have a budget set aside for this important function.
Public Relations (PR), is a part of a brand’s marketing strategy, and is designed to raise awareness of your brand by getting it mentioned in print publications, digital media, mass media and, increasingly, by digital influencers.
To be effective, PR needs to be part of a long term strategy. Anything less than a 90-day play is unlikely to yield meaningful results. Ideally, PR campaigns can last as long as six months, unless it is for a specific event.
Marketing Strategy—Specific plan and steps for communicating your brand message and converting your target audience into customers through various methods, such as:
Digital and Social Media Marketing
Email Marketing Campaigns
Print and Digital Press
Print and Digital Advertising
PR Strategy—Partner with an agency that understands your brand, your goals, and can lay out potential press hits that will support business initiatives.
Key Collateral—The production of materials including press kits, social media outreach and engagement, content and outreach via emails and letters.
Even after launch, brands must be adaptable to adjusting their marketing strategy in response to market feedback and effectiveness of the marketing campaigns that have been put into place.
Operational business support, whether for accounting, legal, human resources, educational, regulatory, or IT needs, are commonly outsourced functions for beauty entrepreneurs. Consultants also play a role when brand founders need specific expertise on a project basis. While these functions play a supporting role, and are not revenue-generating, they are nonetheless critical in the successful launch and growth of any business.
An understanding of proper business practices, tax accounting, regulatory information, and legal terms in a wide variety of contracts will help brands avoid common pitfalls.
While daunting at times, unanticipated business challenges can be researched and resolved by the right experts.
While some outsourced business services are one-time projects, many others are recurring services where choosing a trusted partner will be critical to success.
Legal—Corporate and LLC Formation, Contract Drafting and Review, Intellectual Property (Copyright, Trademark, Patent), Dispute Resolution and Litigation
Regulatory—Labeling and Ingredient Review, International Regulatory Requirements and Certification
Consulting—Business Plan Creation, Commercial and Launch Strategy, Business Development, Market Research, Marketing Strategy, Brand Deck and Retail Deck Creation
Trusting key business functions to the hands of people well-versed in those areas, and especially as they relate to the beauty industry, can save growing brands time and money in the long run.
Optimized digital operations are at the heart of any successful beauty business. Consumers expect a fully-functional, fast, user-friendly, and efficient online experience, particularly on their mobile devices. Tracking their needs, interests and orders requires the development of electronic databases that can scale up and co-exist with email and accounting programs. Retailers, too, have digital interface requirements with their supplier brands that are prerequisites to being onboarded.
The developers of a brand’s website and digital support systems need to be maintained as partners. Switching developers may require the rebuild of existing assets. Choose wisely.
Today’s out-of-the-box solutions for point of sales (POS) systems and customer relationship management (CRM) tools are cost-effective options to customized software development.
When selecting an ecommerce platform, understanding how it will integrate into your current infrastructure is critical.
Full Website Build—Development of a brand’s website, site updates, bug fixes, support.
Ecommerce Platform—Backbone of a brand’s online retail website that handles everything from hosting your website, to managing your inventory and shopping cart, as well as payment processing and shipping.
Customer Relationship Management (CRM)—Database used by companies to track and manage all their relationships and interactions with leads and existing customers.
Point of Sale (POS) Systems—Business Management solutions that handle your sales transactions and process payments, as well as track and report on inventory, sales volume, purchase history and other relevant sales data.
Electronic Data Interchange (EDI)—Best-practices functionality of trading partners electronically exchanging documents like purchase orders and invoices.
Applications—Development or integration of shopping apps, social shopping communities, shop-by-ingredient tools or by skin condition, or virtual testing products.
Given the pace of technological improvements, more digital products and services are available than ever, and at lower costs. Even a retail-heavy business strategy demands the most efficient digital tools and practices, and cannot be overlooked. A bad website is deadly for an emerging beauty business, while a good one can present a small brand as sophisticated, powerful and cutting edge.
Packaging can often be an afterthought or a part of product development that receives a small part of a brand’s investment dollars; however, packaging is gaining increasing importance to discerning customers and retailers in a crowded marketplace of new and emerging beauty and wellness brands. Just like formulation services, packaging can be purchased from your contract manufacturer as part of a turn-key product development service or a la carte from a company specializing in packaging design and production.
Invest time up front to think about your target customers and your target retailers. Often retailers won’t onboard your brand because of your packaging or may ask you to revise it before they agree to carry your products. Consumers and retailers are spoiled for choice, and having packaging that stands out and effectively communicates your brand story and unique point of view is critical.
Similar to your product formula, you can buy stock packaging which you can decorate with your branded labels and decor or you can design custom packaging. Custom packaging is considerably more expensive than stock packaging since it often requires the production of a custom mold, which is a large investment not only in money but also in time.
Always consider your brand identity when choosing your packaging.
Sustainability in packaging is an important consideration for customers and retailers alike, and it is becoming as much of a demand from these two groups as sustainability in ingredients.
The size of the final container together with it’s outer packaging can impact your shipping costs, and therefore your margins. Often a small difference in ounces can add several dollars to the shipping costs of getting your product to your customer. Therefore, it is important to make packaging decisions with your shipping costs in mind.
Packaging vendors often have minimum order quantities (MOQs) for each container, so be sure to factor that into your budget and purchasing decision
Custom or Bespoke Packaging—Packaging that is unique to a brand and designed especially for that brand.
Stock Packaging—Generic and ready-made packaging a brand can choose from and customize with their own labeling and design.
Primary or Container Packaging—The vessel or container that holds the final product.
Secondary or Outer Packaging—The packaging that holds the product container.
Decoration—The decorative aspect of packaging that get applied to the container, such as, inner/outer spray, metalizing, embossing/debossing
Printing—Another decorative aspect, such as silk screen, offset printing, heat transfer, water transfer
Stock, rather than custom, packaging is the most cost-effective option for small and self-funded brands, but using a creative decorative technique and coming up with a unique logo and branding can still set your brand apart.
Ingredients are the heart and soul of any product, and sourcing the right ones is key to a successful brand or product launch. As the world of natural beauty products grows exponentially, the demand for natural, organic, sustainably grown, and ethically farmed ingredients is growing fast as well.
Similar to formulation and packaging, brand founders can source their own ingredients individually from various ingredient suppliers or work with a contract manufacturer or formulator that has access to a library of ingredients in their lab or can help source ones they don’t have.
Understanding the specifics of how to formulate with each ingredient in terms of temperature, solubility, contraindications, and effect on other ingredients in the formula are all key considerations in choosing the right ingredients for your formula.
Knowing where the raw ingredients are derived from is also a key factor to consider in your sourcing process.
Plan ahead and be cognizant that weather, labor, natural disasters, pandemics and other external forces can affect supply of natural ingredients, especially ones that are unique and not readily available. Have a plan B for every ingredient.
The more scarce and unique the ingredient and the more environmentally friendly, the higher the price.
Most suppliers offer a wide range of quantities you can purchase, from several ounces to gallons and drums.
Raw Ingredients—The raw materials that, when combined with other ingredients, make up a product’s formula.
Formulas—Some ingredient suppliers also have stock formulas for various products which you can get access to.
Formulations Services—Some suppliers can also develop your unique formula.
Before you embark on souring your ingredients, speak to your formulators and contract manufacturers to see if you can take advantage of their existing relationships.