Private label cosmetic contract manufacturers

The market for the production of cosmetics is now completely focused on a contract manufacturing chain, often as a private label, or production under the customer's brand. In this article, we explain why this business model is so convenient that it dominates the market.

Private Label production on contract manufacturing, a solution for everyone

Let's start with a general concept, the one of skills and competence. People may have ideas related to their brand, dreams, projects, funding, but without the ability, expertise and experience to make them come true, dreams often remain confined to a drawer.

Thus was born the "contract manufacturing private label", made up of professionals and experts in production and manufacturing, who make their expertise available to companies and professionals who want to produce cosmetics under their own brand or "private label".

Because the contract production, rather than the execution and manufacture of cosmetics and products, is a service. It is knowing how to make, with the tools, the material and intangible resources necessary to bring the idea to reality.

Private label contract manufacturing in the cosmetic industry

Third party services in the cosmetic industry can be extremely differentiated, ranging from pure intellectual competence to the field of actual production with a series of steps that provide the customer with a product ready for marketing. Let's give some examples: a formulation development service, a cellophane wrapping, filling, closing, inflating, casting, labeling, sleeving, cartoning service, even just capping, up to full service.

Everything is customizable and modular according to the needs of the customer, who receives a product ready to be placed on the market bearing its own brand.

This highlights how the cosmetic production chain is extremely fragmented and granular, and how each actor has a different mission to pursue: a brand will aspire to supply organic cosmetics to promote skin longevity; a full service subcontractor will aspire to provide the solution to a cosmetic production problem, starting from the development of the samples, to the scale up in production, to the choice of packaging and consequent filling of the bulk; a cellophane wrapping contractor will aspire to be the best specialized supplier on the market for product packaging; thus each actor in the supply chain specializes with an advantage for the final buyer, who will be able to benefit from better products at a lower price than the competition who will not use a fragmented supply chain.

The benefits of contract manufacturing, how the business model dominated the market

Although the cosmetic production chain market is one of the most stable, resilient and anti-cyclical markets with respect to economic structural crises, the flexibility and adaptation of companies to external conditions is one of the key factors of success and survival.

The organization of the supply chain through third party services have determined the success of the B2B cosmetic sector, with significant advantages for manufacturers:

  • specializing the competence allows to increase quality and reduce prices in a specific field, giving an important competitive advantage;

  • it allows you to start with fewer investments compared to a long and integrated supply chain, to carve out a niche, to test the business;

  • the commercial development of a cosmetic brand towards the general public requires very high communication and marketing resources, very long times and considerable investments. Producing by a contract manufacturers in private label allows you to enter the market by lowering the barrier to entry.

On the brand side, a private label service represents:

  • lower development and production costs: although sometimes internalizing may seem less expensive, it is a Chimera. The management of production, human resources, machineries including their maintenance, all the problems that derive from them, require management skills and time, the only finite resource, which if dedicated to these aspects cannot be spent on other strategic areas;

  • access news, trends, cutting-edge equipment: being the subcontractor specialized in his own service, he works with a multitude of customers, has greater visibility on the market, has an interest in innovating, doing the best in his field, and always offering something new to the customer: all aspects that with an internalized service are more limited;

  • time saving, and therefore lower cost. If you opt for a full service solution, you are not only buying a service but solving a problem. In fact, it starts with generic technical specifications, requirements and objectives (brief), that the subcontractor will be able to translate into technical specifications, executing them through production to deliver a finished product to the customer.

This is why overall development costs are considerably lower if you rely on a professional subcontractor who can guarantee a quality service.

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