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Starting a makeup business is hard work and can seem like a never-ending to-do list. You must build a website, hire employees, manage inventory, and produce products. Cependant, what if you could outsource the production of your products to a makeup manufacturer that already has an established product? This is where most retailers go, and they streamline the process by partnering with third-party manufacturers to adopt a private label model.
Private label products are produced by third-party manufacturers to retailer specifications, and then the retailer markets and sells them under its own brand. This partnership not only saves time and resources but also helps brands get to market quickly.
If you’re wondering what a private label is or how to create a private label product line for your store, this post will provide you with a comprehensive guide.
In the following content, we will explore the differences between private labels and custom formulations to help you find the best option for your brand. Whether you are just starting out or looking to expand an existing product line, understanding these two strategies will be crucial to your success.
What is a Marque privée?
Private labels are products directly produced using the formula and design of a manufacturer’s existing products and sold under another company’s brand name. Retailers often use private labels to offer exclusive items, expand product lines, etc..
Advantages
- Low Cost: No R&D expenses, lower costs when producing large batches.
- Fast: Products can be directly launched, saving time.
- Low Risk: Products with market verification have a low probability of failure.
- Control Over Pricing: Private label sellers and manufacturers can adjust their product lines’ manufacturing costs and price points. Try different pricing strategies to maximize profit margins.
- Customized Marketing: As a private label retailer, you can choose the marketing campaigns to promote branded products.
How Does Private Label Work?
The private label business model involves two types of companies:
Private label manufacturers who work with businesses to design and produce products.
Private label retailers brand, market, and sell private label products for customers.
A reliable private label manufacturer will ensure product quality and control production costs. Savvy private label retailers will build brand trust among consumers, advertise, and establish profitable pricing models.
What Kind of Business is Private Label Suitable For?
Private label products are suitable for startups or new brands looking for a quick and low-cost way to enter the market and small retailers who want to quickly expand their product lines but have tight cash flow. This approach allows brands to launch products swiftly without the high upfront costs of custom manufacturing.
What is Custom Formulation?
Custom Formulation is the development of a unique product formula based on the brand’s specific needs. This approach allows brands to create distinctive products based on the target market’s specific needs.
Par exemple, AmorePacific’s personalized customization service « BESPOKENEO » uses a skin color determination program jointly developed by AmorePacific and the Korea Advanced Institute of Science and Technology (KAIST) to instantly create 150 air cushions and liquid foundations suitable for the skin colors of women around the world through skin testing and one-on-one consultations.
Advantages
Uniqueness and Innovation: Customized formulas enable companies to develop unique cosmetics products, such as unique colors and textures.
Brand Image: Customized formulas can strengthen the brand’s personality and values.
Meet Specific Needs: The R&D team can accurately formulate the product according to target consumers’ skin color and makeup needs to enhance market acceptance.
Quality and Effect Optimization: Through repeated experiments, each product is ensured to achieve the best effect, reflecting the company’s insistence on quality.
Intellectual Property Protection: Unique formulas can be patented to protect the company’s innovative achievements and enhance market competitiveness.
Targeted Solutions: Customized solutions can be provided according to the target audience’s specific needs.
What Kind of Companies is Suitable for Custom Formulation?
Custom formulas are suitable for mature brands or industry leaders who must consolidate their market position through differentiation and have sufficient budgets because they are completely customized. They are also ideal for brands focusing on niche or high-end markets, such as vegan skincare brands needing customized animal-free formulas.
The brand has full control over procurement, formules, and packaging design to meet its ever-changing needs. This makes it an ideal choice for companies that prioritize unique brands, high-quality ingredients, and fully customized product lines.
The Difference Between Private Label vs. Custom Formulation
| Items | Marque privée | Custom Formulation |
| Cost | Low (no R&D cost) | High (requires R&D, testing) |
| Time | 1-3 months | 6-12 months |
| Market | Suitable for stable demand | Suitable for fast-moving market segments |
| Personnalisation | Limited to brand name and packaging, ingredients and formula are usually determined by a third party | Full control over ingredients, dosage, and product format to ensure specific needs are met |
| Conformité | FDA/GMP compliant | Requires regulatory testing and approval |
| Profitability | Low | High |
| Risk Level | Relatively low (easier to transform if necessary) | Very high (requires market validation and investment) |
How Do You Choose Between Private Label and Custom Formulation?
Choosing between custom formulation or private label depends on your business goals, budget, and long-term plans.
Marque privée
Private label is ideal if you want to enter the market quickly in a low-cost, low-risk way. It is suitable for the following situations:
- Quick Launch: You want to launch the product quickly with minimal investment.
- Low-Risk Testing: You prefer a low-risk way to test the market.
- No Customization Required: You don’t need custom ingredients or formulations.
- Marketing Focus: You want to focus on branding and marketing, not R&D.
- Mixed Options: Private label with customization
Some manufacturers offer private label formulations with small modifications, such as adjusting the flavor or ingredient dosage. This approach is more unique than a standard private label but faster and more economical than an utterly custom formulation.
Custom Formulation
Custom formulation is best if you want complete control over the ingredients, branding, and long-term product development. This approach is suitable for the following situations:
- Unique Product: You want a unique product that no one else offers.
- Long-Term Vision: You have long-term plans and want to expand the brand.
- Willingness: You must invest in research, testing, and compliance.
- Specific Needs: You need a specific ingredient source, dosage, or delivery form.
Choosing the Right Manufacturer
When choosing a manufacturer, consider its production capabilities, contrôle de qualité, and price.
For custom formulations, look for manufacturers that are GMP-certified and FDA-compliant.
For private labels, choose manufacturers that offer pre-tested, off-the-shelf formulations and low minimum order quantities.
Regulatory and Labeling Requirements
All supplements must meet FDA, NSF, and cGMP standards. Private label manufacturers typically ensure product compliance, but the brand is responsible for regulatory compliance. Custom formulations require additional testing and approvals.
FAQ
Q: What are the main differences between private label and custom formulation?
UN: Private label usually uses existing product specifications, while custom formulation develops unique product formulations based on brand needs.
Q: How do you choose the proper manufacturer?
UN: When choosing a manufacturer, you should consider its production capacity, contrôle de qualité, and price competitiveness.
Q: Which is more suitable for small brands, private label or custom formulation?
UN: It depends on the brand’s goals and budget. If you focus on uniqueness and high-end positioning, the custom formulation may be more suitable; if the budget is limited, the private labels may be more economical.
