With the rapid development of the cosmetics/skincare industry, there are thousands of outsourcing manufacturers around the world.
It is easier than ever to build your own brand/private label and enter the market, even on a personal level.
In this article, we will get an overview of OEM in the cosmetics/skincare industry and then discuss the benefits of using OEM to produce custom private label cosmetic/skincare.
How exactly does OEM work?
OEMs help manufacture goods that can be directly sold to other businesses, producing using their brand name. Here are some points that should help you get a better understanding of how OEMs work:
The VAR places an order for the OEM product
The whole thing begins with an agreement between the OEM and VAR company.The client (VAR) orders a specific product directly from the OEM, which is processed.Sometimes, the OEM product may contain the branding of the VAR, such as brand emblems and logos.
The next thing involves the OEM building the private label product as requested by the VAR, which is usually done in the factory.
The moment the OEM completes the client’s order, they will deliver the product directly to the VAR, and the VAR will be obliged to make payments.
The next step involves the VAR selling the finished product as supplied by the OEM. After that, the brand/private label name is included, and they sell to the end-users.
What to consider before choosing an OEM？
When scouting for an OEM firm to partner with, ensure you pay close attention to the company’s compliance with international best practices and standards such as ISO22716 (GMP for cosmetics) and ISO 9001.
Also, it would help if you considered the adherence of such a firm to safety, reliability, and quality standards in their cosmetic/skincare manufacturing process.
Products made in the right environment and observance by the international code of ethics usually find it easier to move across the oceans from one country to the other.
Here are some other vital factors to consider before you choose an OEM:
1.A binding contract
When considering working with an OEM manufacturer, you should consult the services of a commercial lawyer. The contract you draw up should contain a confidentiality clause that states the limits and boundaries of both parties.
Before the OEM begins the production of your cosmetic/skincare product, ensure to learn the standards your product should adhere to. Ideally, it would help if you had a checklist of everything you may want to check as you don’t want to run afoul of the law.
When checking for an OEM, ensure to ask for the source of the ingredients. For instance, if you consider supplying the product to a Muslim area, you need to consider the Halal rule. Knowing the active ingredients and the same acceptability in your target market will help you make better-informed decisions.
Have a chat with the producer and reach a compromise about how the product will smell, look, feel, and function. Ideally, you should request a sample and the package it will be in. Before placing the final order, look out for your cosmetic/skincare formulation’s color, texture, viscosity, and smell.
5.Delivery time and size
The final factor you should consider is the delivery method of the OEM cosmetic/skincare product. For instance, would you rather have your products made in batches? How much time would you want it to be delivered?
Why should you use OEM factories for manufacturing your cosmetics/skincare?
Using the services of an OEM manufacturer gives you multiple benefits such as cutting down production costs, increased profitability, R&D, Logo & packaging design. Other fringe benefits include document registration, laboratory and clinical tests, distribution support, and shipping services.
Setting up a cosmetic factory will require at least ten million US dollars. Still, with OEMs, you can instead channel your resources into sales while avoiding the inherent costs of management as well as the several factors that come with running a factory. This price cut will translate to greater profits, improved efficiency, and better use of scarce resources.
2. Product originality
With OEM cosmetics/skincare manufacturering, you can create something never seen before using your mind, and it will be on retail shelves. Several big names out there started with this unique manufacturing strategy. The good news is that the OEM cosmetic/skincare industry is witnessing unprecedented global acceptance because the concept makes it possible to own your brand. You determine sales channels, business models, and profit margins.
3. Intellectual property
When creating your private label, you will have the exclusive right to the design and product. The good thing about this is that you can alter product specifications, prices, design, and formulation without being scared of a lawsuit. Therefore, if you find out that anyone is using the copyright of your brands, you can activate the entire apparatus of the law to persecute such persons and seek applicable damages.
4. Wide range of products
In the cosmetic/skincare industry, the needs of potential clients vary depending on several factors. Therefore, partnering with a factory with solid research and development arm makes it possible to simultaneously create different cosmetic/skincare products such as body care products, facial care products, and hair care products. Adopting this strategy means you don’t have to deal with multiple manufacturers to get your desired outcomes for your diverse clientele.
5. Quantity flexibility
For a small business just starting, manufacturing thousands of cosmetic/skincare product packages with a proper sales strategy may be a counterproductive move. But with the help of a solid OEM/Private Label manufacturering partner, effective solutions can be created that allow the business to place small orders before it increases in revenues.
6. Help with packaging materials.
Some key factors to consider when scouting for an OEM are compatibility testing, net content testing, and scalability testing. Also, there is a need to get an expert sourcing agent to help you screen the package material vendors.
If you are fortunate to deal with an OEM manufacturing facturering factory with a functional cosmetic/skincare packaging procurement system, you will not need to worry about packaging defects.
Now that you know what OEM manufacturing is all about and its inherent benefits, you can begin the journey into the cosmetic/skincare business. But while searching for an OEM, ensure you only deal with a manufacturer with a solid reputation and track record for delivering excellent products and services.