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The Truth About The Business of Beauty

August 24, 2013

Tomorrow sees the start of the 2013 Sydney Beauty Expo. An exhibition that will showcase 274 companies, many of them local (Australian) cosmetic or personal care brands developed by men and women with a dream to be the next Body Shop, Estee Laudee, L’Oreal or A.N Other.  Many of them will fail. Spectacularly.

The trouble with the cosmetics industry, at least here in Australia is that is has become very easy to enter and while I’m all for low-barriers to entrepreneur ship there is always a danger that when things are made too simple……

failure

Let me explain using this list of 10 things that the Australian Cosmetics Industry is free from!

  1. Free from having to know how to formulate to create your own cosmetics brand. Google has a few freebies and so do blogs such as mine (occasionally) and sometimes people just make them up!
  2. Free from having to understand  what the ingredients you want to use DO to set up a cosmetics brand.  Just read off the label of a competitor product, copy and voila!
  3. Free from the need to invest much in terms of packaging, labelling and design to create a cosmetics brand.
  4. Free from the requirement to pass any exams or be audited against any particular standard to sell a cosmetics brand.
  5. Free from the need to commit to large volumes when manufacturing a cosmetics brand.
  6. Free from the need to be patient. You can go  from idea to cosmetics brand in less than 2 months if you go with off-the-shelf options.
  7. Free from pesky regulations. It is easy to assume that because the cosmetics industry isn’t regulated you don’t need to comply to any laws when developing and then retailing your cosmetics brand.
  8. Free from the need to deal with  imports and foreign exchange to establish a cosmetic brand – everything you need is here in Australia.
  9. Free from pricing concerns here in Australia as we are quite highly priced in most cases leaving plenty of margin to cover your ass.
  10. Free from direct customer interaction.  You don’t need to talk to potential customers in the flesh any more, just set up a Facebook page, grab a cheap PR company and let them give away freebies for you. Job done.

Before I go on I want to say that all of the above are great and 100% empowering for the people who have the right attitude towards what they are doing.  In that I mean they are focused, serious, realistic (about the time and investment required personally, professionally and financially), mentally equip (mature) and open-minded.  Sadly it is not just these types of people who enter the arena and that, paired with the above is why globally something like 80% of brands fail to reach their fifth birthday.

Now I have to admit here that the statistics are a bit wooly but the 80% failure rate has been voiced by several large industry monitors and the fact that despite the plethora of small brands and medium sized-success stories that we hear about the big money and sales still remain in the hands of a tiny number of multinationals.

So let’s look more closely at what failure means for these wanna-be-beauty-kings-and-queens.

Referring back to my top ten list above I can add the following:

  • Not understanding the formulating (or chemistry) side of your business might not stop you getting started but it will seriously affect your sanity and bank balance moving forward.  Now of course I thought of this first because chemistry is my business. I didn’t do that to scare you into buying my chemistry services – I’m already booked out for the year anyway -no, I told you that because as with all things, the devil is in the detail and if you just cut and pasted a recipe from Google formulate then when you get asked to ‘shave the costs’ so that it can be picked up by price line you have nowhere to go.  If or when it fails stability or PET (preservative efficacy testing) you have nowhere to go. If an ingredient becomes unavailable or the supplier changes and the new source doesn’t work you have nowhere to go and so on and so forth.  I am passionate about my chemistry but I am also realistic and have to admit that I have seen many a brand run along for 5,6,7,8 and more years with basic formulations and money churning through the tills.  The only thing I would add is that they may be missing out on double that $$$$ and half the stress if they only got intimate with their chemical concoctions.  It doesn’t pay to over-simplify here and google doesn’t teach you everything.
  • Don’t let the perceived lack of regulation in Australia fool you.  Do the wrong thing and get caught and you will feel the pain.  If I have learned anything over the years it is this, ‘but I didn’t know, nobody told me’ doesn’t wash in court. The brand owner takes FULL responsibility for their product and that includes safety, ingredient suitability, packaging integrity, labelling, usage instructions, claims, pack weights, advertising and social media marketing.

The reason why I am posting this tonight is because I have just come off the back of a week that has been jam-packed full of interactions with people who have for whatever reason decided to enter the cosmetics industry and clearly haven’t done much in the way of research into any of the above.

My job is to help people overcome these hurdles,  to build better, stronger, faster, longer brands.  To enjoy it for goodness sake and to not go broke (or insane – most people go insane and then broke just so that you know) to boot and as such I am more than happy to present these little time-saving tips and tricks to those who are open to receiving them.  My sadness this week has come from the fact that fewer and fewer people seem to be open to the fact that this industry has depth and/ or substance TO learn.  There seems to be an assumption that all you have to do is dream it up and then sit back and wait for the millions to roll in.  They won’t. Here is a good Neilson report about the uptake of new product offerings. 

The secret to owning a successful brand is believing that you deserve to and unless you are really, really good at conning yourself then that belief should be based on something solid. That solid stuff is called blood, sweat and tears.  Research, education, information from places and people who know BECAUSE THEY HAVE DONE IT BEFORE and not people with another quick fix to sell,  time (lots of it), energy and patience.

Failure is a very real option for those that simplify to the point of absurdity.  Don’t be one of ‘those’ as if it was that simple the failure rate would be much lower.

But don’t give up hope because in the cosmetics industry much of the innovation comes from the small guys and not the big end of town!

Amanda x

PS: An interesting Honors Degree study on the marketing of cosmetic brand and another from Chemists Corner asking the question ‘can small cosmetic companies be successful. 

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