Selling private label products offers flexibility and room for creativity when you sell retail.
This isn’t Disneyland, but it sounds like Fantasyland: You name it, they’ve got it; if they don’t have it, they can whip it up. Have a special shade of pink that would look great in a bottle of polish? A chemist can create a perfect match. Would you like a lipstick to go with it? How about lip liner and blush? It will be your very own product line, complete with a name on the bottle that no one else has, and you won’t find it in any drugstore, anywhere. No need to worry about a favorite color being discontinued: You will add or subtract items in your product line when you see that it is necessary. You will set your own prices, and mark them up or down as you need to. This is the reality of private label products. Selling private label is an option for salon owners/managers who want absolute control over what they retail and how they retail it.
The decision to sell private label products is not one arrived at quickly or simply. As when making any other weighty business decision, adding a private label product line requires solid research. Being a smart shopper is part of being a smart business person.
WHAT TO LOOK FOR IN A LINE
When shopping for a private label manufacturer, you want to look for a line of products you can stand behind. This is very important because your salon’s name and reputation are on the line. To know what you are buying, experiment with the products first. Kim, a nail technician who goes by her first name only and sells private label products at Tops Hair Salon in Rockledge, Fla., gets samples at nail shows. “From those products, I choose companies I want to buy from. It’s a good way to check out things like polish colors because color charts aren’t always accurate,” Kim says.
You can find manufacturers who offer private label products in your 1994 NAILS Fact Book by looking in the Cross Reference Guide, or you can call manufacturers of your favorite products and ask them if they private label. Those who do will send you a catalog, price list, sales literature with information about their products and labeling options, and a labeling contract. The labeling contract typically specifies what constitutes a minimum order, and what the manufacturer will do for packaging, warehousing, and shipping.
Some manufacturers offer special services to salons that private label. You can find private label manufactures willing to offer free product liability insurance, educational services, and sales literature, as well as books and videos on sales strategies. Some manufacturers will sign confidentiality agreements with their clients. Carol Helms, co-owner of CLM Distributors in Birmingham, Ala., explains that this helps to prevent a competing salon from acquiring a retail line similar to yours, which helps ensure the exclusively of your retail line. Helms notes that confidentially between the manufacturer and the retailer (in this case, your salon) is a mutual agreement to prevent these competing interests from encroaching upon one another. “Confidentially works to prevent the retailer from profiting from the manufacturer’s advertising and marketing efforts, and it gives the retailer the privilege to determine her own marketing angles,” Helms says. “This is really an ethical matter, but it can turn into a legal one. If one party infringes on the other’s advertising or marketing interests and later on there is product liability litigation, you are talking about a huge, three-way legal battle that could have been avoided by keeping a secret.”
What the manufacturer may not offer, but that you should insist on being given, is the formulation of the product, including the percentages of each ingredient. You will need this information to fill out your MSDS; OSHA will ask for it.
LET CLIENTS’ BUYING HABITS GUIDE YOUR CHOICES
In your research on the wonderful world of private labeling, you will find that you can put your name on every kind of nail, skin, and hair care product known to the beauty world: top coats, acrylics, files, polishes, shampoos, lipsticks, skin creams, makeup brushes, just to mention a few.
To decide what products you should carry, know the retail buying habits of your clients if you sell brand name retail products, or do a survey of your clients if you don’t. Pay attention to which polish colors your clients request during nail service. These bits of information tell much about what your clients will be interested in buying from you in the future.
In some cases, you can choose to make the product, not just its name, exclusive to your salon.
Some private label manufacturers will custom-formulate products for you, meaning the manufacturer makes the product to your specifications. You can ask for polish that dries faster, wears longer, or chips less. If possible, the manufacturer will accommodate you. This will let you customize your retail line even further. Your clients won’t just think they can’t get your products anywhere else; they, in fact, won’t be able to.
Helms took this option to the extreme. She now offers a complete line of specially formulated, private label nail products. “I decided to sell private label products 10 years ago. I wasn’t happy with the products available, so I went through different manufacturers and they customized formulas to my specifications. My nail technicians would test the products, and their comments went into fine-tuning the formulas until we were happy,” Helms says.
It took Helms eight months of testing experimenting, reformulating, and retesting to tweak her product line into shape. “It sure has paid off. I have an acrylic line called Signatures, and that line alone grossed about $100,000 last year.” With diligence, extensive long-term planning, and high standards of how quality professional nail products should perform, Helms has made her product line financially successful.
THE LABEL CAN MAKE OR BREAK THE PRODUCT
How your products are labeled can make or break your line. This opportunity for making a big visual impact is one where you can turn potential buyers into future devotees of “your” retail line. Do you want your salon name painted on bottles in a brush script with a bright color or two, giving it a racy, edgy look, or would you rather have your salon name and phone number on clear gummed labels with a plain print for a more elegant look? What you already know about your clientele’s tastes and buying habits will help you make these kinds of decisions.
Many suppliers of private label products also offer labeling services. Or, you can have your labels made locally and affix them yourself.
There are number of ways to label products. Stickers are clear or solid-colored and come in various sizes. Some companies charge more for clear, some charge more for solids. Usually, only one color is printed on these labels, but there are companies that can do two colors.
Silk screening is painting through a mesh screen that has areas the paint won’t go through. The areas the paint will go through are in the shape of your logo, or whatever you want on the bottle, tube, pencil, or jar. This tends to be more expensive than stickers but is longer lasting.
Hot-stamping is a process where a die is made of either rubber or plastic in the shape of salon’s logo or the name and phone number. It is then heated and dipped in either gold or silver foil and stamped onto plastic bottles, compacts, or tubes. The hot die melts into the plastic in the shape of the die and the melted area is imprinted and colored with the foil.
Laser printing is generally used to put a salon’s name, address, phone number, or a short message on nail files.
The cost of labels varies, depending on which type of label you choose and how many colors are involved. One-color sticker labels are cheaper than silk screening and hot-stamping (which are about equally expensive), but using more than one color drives the price up. Using four colors on a sticker is more expensive than silk screening, says Christina Jahn, marketing director for Star Nail Products. “This can be misleading, however. Just the silk screening process may be cheaper than four-color labels, but one must take into account the warehousing costs. Stickers don’t have to put on the product until the private labeler either orders the stock or requests excess stock that we have warehoused from a minimum order. These would be unlabeled products that we keep in our general stock, so we wouldn’t charge for warehousing. Silk screening, on the other hand, requires a minimum order,” Jahn explains.
What you print on the label is as important as the type of label you choose. Use it as another type of business card and have your logo and phone number applied. You can vent even more creative urges by coming up with names for polish or lip colors. The most important thing to remember is what you must include by law. According to the U.S. Food and Drug Administration’s Cosmetic Labeling Manual, the label on a cosmetic product must include: the net weight, measure, or numerical count; name, street address, city, state, and ZIP code of the firm marketing the product (The street address can be omitted if the firm is listed in a current city or telephone directory); the words “Manufactured for,” “Distributed by,” or something similar if the product is distributed by a firm other than the manufacturer; warnings if the product contains hazardous ingredients; and a list of ingredients if the product is to be sold to non-professionals.
PRIVATE LABEL BRINGS MONEY AND RECOGNITION
For someone considering selling private label products, there are a number of advantages to be had from putting your name on a product. You don’t need to be a marketing wizard to make the most of the opportunity, just in possession of some good business sense.
You may be in the retail business already, selling brand name products. Offering your own retail line as well is an opportunity to expand your sales while advertising your salon. For instance, Kim puts the salon name and city on her labels. When clients buy her private label polish, it puts the salon name in front of their faces at home, or wherever they use the product, every time they use it. It helps tie clients to your salon as well because you’re truly offering them something they can’t get elsewhere.
Another advantage that private label products have over brand name products is with profit margins. Where as brand name products only make a retailer about 40%, the profit margin when selling private label products can be as high as 100%-200%, according to Star Nail Products.
When pricing products that you have put your own label on, be careful in how you do it. Avoid the temptation to undercut brand name products as a way to move products as a way to move product quickly; clients may believe the products are cheap quality, and you may inadvertently be undercutting your reputation in the process.
Kay Samuels of Studio III at the Stouffer Grand Beach Resort in St. Thomas, VI., keeps her profit margin around 50%. I still retail brand name products, but I sell private label products as more exclusive, something special. I don’t price up at 100%-200% like others do because, although I present my product as exclusive, it’s also a convenience for my clients.”
Samuels, who has been selling private label products for 15 years, points out another important facet of selling private label products: presentation. “Your ability to successfully sell the product lies in the salesperson’s confidence in the product; you must be very familiar with it. I use the products first; then I know the product and can tell my clients all about it. Particularly with nail services, I have the client’s undivided attention, and I use that time to apply the product and sell it. It’s all in the presentation.”
What private label products offer is the ability of salon owners to round out their service menus by creating a line of retail products that gives their clients everything they might need. It is a consumer-driven process that demands the salon owner know what her process to be a financial success. With timely research and careful planning, this process can be harnessed to create financial rewards that can send you all the way to Disneyland.