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Successfully Introducing New Cosmetic Brands to the Market Without Owning a Production Base
“If there is something we cannot do more efficiently, cheaper, and better than our competitors, then there is no point in doing it; we should hire someone who can do it better” – Henry Ford.
Henry Ford’s words encapsulate the essence of outsourcing – minimizing costs and risks, maximizing profits and opportunities.
For many years, the cosmetics industry has demonstrated that creating new brands and distributing them widely does not necessarily require building a factory and employing a team of experts. Establishing a production facility, warehouses, raw material resources, technological lines, machinery, equipment, and ultimately a rich human capital (specialists and experts) along with scientific thought and quality systems represents a massive investment that does not guarantee success on its own. Experienced creators and distributors of cosmetic brands are aware of this, which is why they outsource production to entities specializing in private label manufacturing.
When deciding to collaborate with a chosen service provider, it is crucial to carefully and thoroughly check whether they can deliver services at the highest level. They should be specialized in the field you want to outsource. Depending on your knowledge, resources, and priorities, you can decide which areas you want to outsource. For example, our clients can choose full outsourcing (from product idea, through design to production and distribution) or selective outsourcing. In the first case, they sign a contract for comprehensive project management under their brand, while in the second, they choose which areas to include in the contract. The ability to select appropriate business areas allows for maximum customization of services to meet your company’s current needs, resulting in cost-effectiveness.
Thus, manufacturing cosmetics under the client’s brand takes various forms but is always tailored to the contractors’ needs, allowing us to build long-term relationships with our partners.
This seemingly mundane and nominally immeasurable argument hides significant benefits from avoiding:
In other words, it is much easier and more convenient to outsource production to an experienced external company than to set up a production line within your own structures. One might say: it is enough to place an order, pay one invoice, and forget about the issue while moving on to the next projects. Indeed, that is how it works. However, contract manufacturing is more than just convenience. It is a kind of perfect arrangement: the client ensures security and peace of mind while achieving their strategic company goals, and the contractor (manufacturer) utilizes their technological resources and specialized know-how, which is the essence of their activity. Such organized cooperation builds good relationships in the common market, which are crucial for success in the industry, bringing satisfaction to both parties, not only financially but also from achieving goals.
Executing a contract (cosmetics production) requires investing a specific amount of capital, not only in fixed assets but also in receivables and inventories. This capital is permanently frozen. At this point, you must ask yourself whether it is worthwhile to invest your capital in the independent execution of this contract. Such an investment might cause you to miss out on alternative investment opportunities like product line development, promotion, brand building, and more.
The responsibility for properly conducting processes and the final outcome of the project lies with the production entity. The client can rest easy, provided they have chosen the right place for their product production – an experienced partner for whom project execution is not just a financial goal but also a matter of honor in the partnership relationship between entrepreneurs.
As a contract manufacturer of cosmetics on commission, we take full responsibility for the projects entrusted to us and the associated burdens daily. However, years of experience, process optimization, and modern project management allow us to overcome all adversities and successfully deliver contracted products on time, enabling our partners to enjoy all the aforementioned benefits.
If you want to learn more about contract cosmetics manufacturing, its individual stages, and the benefits of such cooperation, please contact us and visit our blog.