Private Label – taking a manufacturer’s stock formula and adding your label to it.
Custom Formulating – creating from scratch in a lab. You can either work with a cosmetic chemist or the manufacturer’s R&D team.
Making your product at home or in a studio.
Risk & Benefits for Each Product Development Strategy
Benefit: The benefit of choosing private label is that the formulas are tested, pre-packed and ready to go. They cut down on your speed to market if you select a manufacturer who has a well thought out program. The formulas are tested and the correct packaging is selected, all you have to provide is the artwork!
The other HUGE advantage is the time to get to market, most in stock formula’s turn around time is 2-3 weeks and the investment in inventory is significantly less.
Risk: The risk is if you are selling in a crowded marketplace such as Amazon, or Ebay you will have to work hard at differentiating your brand. It’s easy enough to do with a little market research and some thought.
There are opportunities to make a private label product look like custom with a few tweaks. We review those in our Speed Product Creation Course.
The other risk is that while the initial capital investment is less, the price per unit will be higher than if you were customizing it.
Benefits: The benefits of custom formulating is that the formula will be unique or different than your competitors in the market place.
As a brand owner, you get to create a signature product that allows you the chance to stand out in the market place. Working with either a cosmetic chemist (you can find some at ChemistsCorner.com) or the manufacturer’s lab, you have the opportunity to create something different.
Risk: The most common obstacle that entrepreneurs face when creating a custom manufactured product:
1. Development time – it will take 6-12 months from moving from concept to proper finished testing. Testing includes stability, RIPT testing, etc.
2. Cost: The investment in chemist time, lab time and actual production can be a significant initial investment. However, if you negotiate it correctly you will own the formula.
3. Copycats: If you do have success and maybe find a niche market it will be just a matter of time before there are copycats. That’s why if you have a good idea, get it to market quickly before everyone else sees the opportunity.
Making Your Products at Home
Benefit: There are so many beautiful products made at home. Although, I write about private label and working with labs many of my clients make their own products at home. And these products are innovative, passion filled and usually amazing products that just need some tweaking in their packaging and messaging.
The benefit of making your products at home is you control inventory production, you don’t have any manufacturer mark-ups and it’s a fantastic selling point.
The Risk and Challenges for Indie Makers Are:
1. Your ability to scale, when opportunity comes your way it can be a challenge to get prepared for them. Also when you are producing 500 units a week of multiple SKU’s it can get a little overwhelming especially if it’s in your kitchen.
2. Split focus – Often times people making their own products spend so much time on the manufacturing of products that they don’t actually spend enough time on marketing & sales. The business can sometimes have a tough time growing when that occurs.
3. Quality – Many home makers struggle with quality issues such as bacteria, mold and yeast growth or product separation.
If you are an indie maker, I can’t recommend enough that you join IndieBeautyNetwork.com for both the product liability insurance and the support from the community.