Alt: How can a small startup conquer high MOQs?
Alt: Just how much money will I need to start my own beauty brand?
Alt: Launching a brand with no capital
If you are thinking of starting your own brand of cosmetics, haircare, or skincare, you are probably overwhelmed by “now you're supposed to’s”. Worse yet, even if your partner (mom/dad/uncle) loaned you some money to get started, you quickly realized it wasn’t enough. Not to worry; no matter where you are in this process, you will find some extremely helpful information herein.
Let’s talk about the complexities of the journey you are about to embark on (or you already found out), as well as the simplicities. Of course, you already did the hardest part which is making the decision to launch your own products under your own brand. Congratulations, you are already far ahead of the rest of the crowd who is still thinking about it and scared to ultimately make that decision.
First the simplicities. You need to make sure the name you want is available as a trademark and a domain. You can search US trademarks to see if it is already taken in your category here: https://www.uspto.gov/trademarks/search. Next, search somewhere like www.godaddy.com to see if your domain is available. If your .com name is not available, consider a different name. You don’t want to launch with a name you think is great only to later find out you can’t trademark it or get the .com for it. You can use a legal service like legalzoom.com if you need help with trademark registration or hire a trademark attorney.
Now you will need a logo and a look and feel for your brand. Consider somewhere like 99designs.com or fiverr.com to get help from designers without breaking the bank. Pick a product and have them design a logo, using a font you like and get a feel for what a product will look like. Many of these designers have stock images they can use to give you a mockup of a finished product.
Now for the complexities and where we sometimes lose about 75% of the people who got this far. The dreaded MOQs (Minimum Order Quantities).
Most people google “Private Label ____” (the blank is the product you are looking for). So if you were looking to private label aloe vera gel, for example, you find several manufacturers who will private label that product. So, how many do you have to order (MOQ). Some manufacturers want 10,000 minimum to put your label on it. Some are just 5000. A few will do only 1000 and only a small handful will do 500. But, that is per item! So, if you were trying to start your own line, that is to say, 6 items times 1000 each for a total of 6000 units? And if the price averaged $6 per unit, you would be looking at a $36,000 investment. Add onto that shipping and handling as well as an advertising or marketing budget and we just lost all but about 1% of you.
How can the little guy compete? How do startups ever get large enough to order even the minimum MOQs? Is the whole thing rigged so the little guys can’t even get started to compete with the big guys?
The short answer is yes, sort of. But there is good news! Today's consumer has grown tired of the stale old beauty brands run by cigar-smoking old men wearing suits in boardrooms; the large fortune 500 brands sold in every department store across the country. They want clean beauty, organic ingredients, and natural formulations that appeal to their own sense of individuality. They want a brand they identify with and that they feel represents their own values and ideals. So, the barrier to entry to the consumer is very low. So low in fact that they are looking, right now, for the brand you are about to create or just created. Your brand will appeal to hundreds of thousands if not millions of consumers who have been searching for something just like what you make.
But, we still have this nagging problem of MOQs right? Maybe not.
While you could become a kitchen chemist and try your hand at formulating, you would then have to find your jars, lids, order them and try to deal with their MOQs. Then you would have to source every ingredient and deal with each of those companies’ MOQs.
The fastest and easiest is to find a company who already stocks a large assortment of items you can put your own label on. Find a company whose values align with yours (organic, vegan, cruelty-free, etc. whatever is important to you). While your idea (a special aloe vera gel that contains a mineral from the bottom of the ocean found only on the western shores of a small island in Fiji) may be the greatest product anyone ever heard of, it is much easier to find a few products that are of high quality and people already love and launch those.
You will have a few misses and a few hits. But you won’t have tens of thousands of dollars tied up in products that aren’t selling. Order 12 or 24 of an SKU. You will pay a little more, but these first orders and just to make sure you can create a market and find your customers. Then, you reorder maybe 100 or 200 at a time and grow within your budget.
Pretty soon, you will be ready to get that incredible aloe with the special Fiji mineral contract manufactured for you because you will already have a following who loves your products and will buy anything you come up with! And you will be paying for it with the profit you made from starting small.