This question was raised on the cosmetic science forum and I thought it was so good that it warranted a full treatment here on the blog. Many of our followers here on Chemists Corner are people who are interested in creating formulas and possibly producing their own line of products. Almost every good cosmetic chemist that I’ve known has said they wanted to start their own line.

But should they?

Reality of the Cosmetic Industry

Before answering this question, it is important to face facts about the cosmetics and personal care industry. Big companies have significant advantages over small and start-up companies.

More money

Big companies have more money than small ones. They can outspend you in every way from R&D to performance testing to safety testing to advertising and marketing. They can use the money to get their products in stores and get price breaks on packaging and raw materials. More money naturally leads to other advantages.

Less expensive products

Big companies can make less expensive products. Even if a small company copies the formula exactly from a big company they will not be able to produce the product as inexpensively as a big company. In fact, the product costs to a small company will be 2 or 3 times higher than a big company. This means that big companies can charge less for products that perform every bit as well as the ones you can create.

More scientists

The additional money available to big companies means they can hire more cosmetic chemists and create better formulas. A small cosmetic company just can not create a formula that will be as optimized and tested for superior performance.

More advertising

More money also means more advertising. Big cosmetic companies will buy TV commercials, magazine ads, and radio spots. They will host events for bloggers & beauty editors and they will have an advertising agency working to promote their brand. A small cosmetic company will not be able to outspend the big guys in advertising.

More distribution

Finally, the additional money and size of a big cosmetic company means that they will be able to get their products on more store shelves and in more locations than a small company. There is just no competition when it comes to mass market and drug stores.

Are big cosmetic companies unbeatable?

With all of these advantages, you might start get the feeling that Big cosmetic companies are unbeatable. You might also think that starting your own cosmetic line is a waste of time.

Well, that isn’t necessarily true. Think of companies like Burts Bees and Aveda who started small and built huge brands. It can happen because small companies have a few notable advantages over big companies.

Small markets

An advantage small companies have is that big companies want to make big money. If a brand is not going to sell at least $100 million with the potential to reach $1 billion, the big cosmetic company won’t even investigate the idea. When I was working in corporate America we discontinued many products that were bringing in over $2 million a year in sales because it just wasn’t enough money. While $2 million in sales is nothing to a big company, to a small company that is huge! Small companies can dominate small markets because big companies aren’t competing. And if you are a small company you can make a great living in a small market.

Niche markets

One problem with big cosmetic companies is that they try to make products which will appeal to as many people as possible. This means that they are going to ignore niche consumers who have needs that are different from most everyone else. Just as a small company can dominate a small market, a small company can dominate a small consumer niche.

Experimental products

Big companies need successful products. They need to justify to their management why they are launching a specific sku and also need to show data supporting the launch. This means that the products they launch are going to be very similiar to other successful products in the past. This is why there has been only incremental change in the cosmetic industry in the last 20 or 30 years. New, innovative products are risky and most of them fail. Big companies don’t like to fail so they try not to.

Small cosmetic companies are in a better position to try new innovations and off-the-wall products. Products like dry shampoos and no foaming shampoos would not be launched by big companies but small companies can do it. This is a big advantage.

Faster development

It takes a big cosmetic company at least a year and a half to develop an idea into a product and get it on the store shelf. Small companies can do this much more quickly. If they have a good idea, they can have a completed product available for sale in 6 months or less. A big cosmetic company can’t.

Online distribution

Right now the Internet has created an even playing field for small companies to compete with big companies. Big companies are good at traditional distribution but they are not good at online sales. A small company can compete and even beat the big guys on things like Search Engine Optimization, Social Networking, and online distribution. Big companies can not afford to put too many resources towards this area of distribution because they have to maintain their presence in big box stores and drugstores. This area is wide open for small cosmetic companies.

Should you start your own cosmetic line?

Ultimately the answer to this question is a personal one and there is no guarantee of success if you do start a cosmetic company. It’s likely that you won’t develop the next Burts Bees or Aveda. However, it is not difficult nor excessively expensive to create your own line of products. It’s also not hard to make products that perform every bit as well as the ones created by the big guys. And it’s not hard to build your brand to a point where it makes enough money for you to pay all your bills and make a decent income.

So, if you have an idea for a cosmetic brand don’t let the fact that the big cosmetic companies have significant advantages over you. Learn what’s involved in launching a product, decide if you have the energy & passion, then go ahead and try.

You just might be successful.

One of the best books on marketing by Seth Godin is his book The Purple Cow. It’s an easy read and I recommend it to anyone who is interested in launching their own cosmetic line. It’s also great for cosmetic chemists who just want to get a better understanding on how you might help improve the marketing of your own formulas.

Being different

The basic thesis of The Purple Cow is that to succeed in business, you have to stand out. And figuring out how to make your brand, your product or even yourself stand out from the crowd is the way to success.

In the cosmetic business, standing out can be difficult. There are thousands of brands and tens of thousands of products. Just getting your product in a store to compete with others is going to be tough. Worse, consumers are not very good at picking up actual product performance differences. So, even if your formulas work better than someone else’s, you’ll have a hard time getting consumers to understand it.

How big brands stand out

The big mass market companies are always looking for ways to differentiate themselves from their competition. Their biggest weapon is money spent on advertising. This allows them to “tell their story” to hundreds of millions of people. The simple exposure of their story to this many people is going to result in sales. It’s no coincidence that the biggest selling cosmetic brands also spend the most on advertising.

Some big brands that don’t compete with advertising try a different tact. They compete on price. White Rain, VO5 and Suave all shoot for the least expensive products they can create while still getting a decent profit. The profit margin isn’t great but when you are selling 100 million bottles a year, you can still make a lot of money.

How small brands can stand out

For the most part, small brands and independent cosmetic makers can not copy the tactics of big brands. They will not be able to out spend big companies in advertising and also can’t win a price competition.

However, there are still a number of ways that a small cosmetic product / brand can stand out.

1. Unique story. The best way to create a stand out brand is to come up with a unique story. Burts Bees did an excellent job of this and built their brand so large that it got bought for a huge amount by a large company. It should be noted that Burts Bees didn’t simply go for an “all natural, organic, chemical free” marketing position. They had a compelling origin story, a likeable character, some savvy marketing, and fortuitous timing. Beeswax lip balm wasn’t unique at the time but Burts Bees made it unique.

Here’s a company that is trying to stand out. They’ve created a line of nail polish inspired by things like menstrual blood, bruises and famous painters. The kicker is that they sell the polish for $80 a bottle and they are sold out (at least they claim to be). That is impressive marketing.

Action – Find your unique story.

2. Niche consumer group. While it’s critical to have a unique story, it may be easier to stand out by starting with a niche consumer group and creating products specifically for them. The age of the Internet makes it much easier to identify niche groups. These groups are still going to be too small for the big corporations to go after but for small brands, you can make a great living catering to a smaller group.

So, what would be an example of a niche consumer group? Groups like

a. People allergic to Gluten containing products
b. People with psoriasis
c. People who are religious
d. People with a political ideology
e. People who ride motorcycles

Action – Find your nich consumer group.

3. Noticeable differences. The most satisfying way to stand out is to create a cosmetic formula that is noticeably different from all other ones out there. This is exceedingly difficult to do as the cosmetic field is “mature” science and there aren’t a lot of breakthru technologies. But don’t stop looking because you may find something. To create a product that performs better than all others you need to first identify the market leaders. Do some research to find out who actually has the best performing technology. And test it yourself. Then start creating formulas that work better.

Action – Figure out what the current best technology is and work to best it.

4. Novel marketing. The final way to stand out is to come up with some novel marketing methods. Big brands do things like create viral commercials, do public stunts, or wine and dine magazine editors & bloggers. You can do some of those things but don’t stop there. Brainstorm some ideas how you can get people talking about your brand. Then try them out. An excellent book on this subejct is Guerrilla Marketing.

Action – Determine a novel marketing strategy for your product.

Remember, you don’t have to be the biggest brand in the cosmetic business to be successful and make a good living. You just need to be unique. Figure out how you can stand out from the crowd of competitors and you will be able to earn a living from your cosmetic brand for life.

Many followers of this website have a desire to create and sell their own product. We continue to work on a training program that shows you just how to do that, but in the meantime it would be helpful if you knew exactly the type of testing you have to do prior to selling your product. Note this information applies to US cosmetic products. Other countries may follow slightly different rules.

There are four types of testing you must do before selling your own product. These include micro-testing, stability testing, safety testing and performance testing.

Microbial Testing

This could really be put under safety testing but it is so important that it deserves its own category. Whenever you create a new formula you need to ensure that the preservative system you are using is adequate for preventing dangerous microbial growth. There are two primary types of testing you need to do.

• Micro Challenge Testing – This is a test in which you purposely introduce microbes into your batches, then watch the samples over time to see whether your preservative system is good enough to kill off the microbes. If it’s not, you need to improve your preservation system.
• Contamination test – This is a test you need to do on every batch of product you sell! It is a simple matter of taking a sample and testing to see whether it is contaminated or not. If it’s not, then proceed with packaging & distribution. If it is, don’t sell it!

Stability Testing

Cosmetic stability testing is a study run to determine whether your product will last on store shelves and on your consumers bathroom counter. Stability testing is an important quality test that you need to run in order to sell your products in the US. It is also useful to ensure that when people do buy your product they won’t be dissatisfied with a foul odor, ugly color, or separated formula.

Safety Testing

You can’t sell a product that is not safe. If you do, you open yourself up to litigation which could pretty much ruin any fledgeling cosmetic manufacturer. Safety testing includes things like patch testing, eye irritation tests, and a host of other procedures that ensure consumers will not become serious ill after using your product. The amount of safety testing done depends on the type of product you are going to sell and how different the raw materials are. If you are making something that uses standard cosmetic raw materials, less testing would be needed than if you are using raw materials that are new to the cosmetic industry.

Performance testing

The type of performance testing or claims testing that you need to do depends on the specific advertising claims you’re going to be making for your product. In the US you are bound by the rules of the FTC which state that you cannot promote false advertising. This means if you say your product is going to clean hair, you have to demonstrate that it does. If you say your lotion will moisturize skin, you have to show it does that. There are some industry standard tests but in many cases as a cosmetic chemist, you’ll have to come up with your own reasonable test to demonstrate that what you say about a product is true.

It is not necessary to show the results of any of these tests to the government prior to launching your product. In the US, the industry is self-regulated. However, this does not mean you can skip testing because the FDA can inspect your facilities and levy huge fines on companies that do not have the proper paper work. Be sure to keep track of all your testing procedures and results of any product that you sell.

Testing can be an expensive obstacle to many small cosmetic company launches but it is a crucial step that you absolutely must do before launching any new product.

I’ve always believed that the smartest people in the cosmetic industry are the scientists who make and test the products. Which has always made me wonder why more of them haven’t gone out to start their own companies. It’s easier to do now than ever before, only a small investment is required and it can be done in your spare time.

This story about a YouTube user who got so popular that she was able to start her own cosmetics company might be just the inspiration you need.

Of course, this is not to suggest you must go out and start your own company to be a successful cosmetic scientist. But if you’ve ever thought about it, why aren’t you doing anything about it now?

What do you think is holding you back?

As formulation chemist, it can be fairly easy to spend your days executing projects your marketing & sales people think are worthwhile.  This will usually involve taking a formula that already exists and tweaking it with color & fragrance changes or adding some “magic” ingredient to help make a better story.

It’s easy to do this because to the people on the business side of things, this is complicated work.  They appreciate you and your brilliance for being able to get it done.

In fact, this kind of formulation can be challenging.  But there will be times when you’ll find yourself wondering stuff like “I made it through P. Chem and Advanced Inorganic so I could change the dye in a formula?”

Innovation is up to You

Well, it doesn’t have to be that way. Yes, you’ll have to work on a lot of less-than-meaningful projects but you should also be coming up with your own innovations/formulas. Your boss or marketing department are not going to give you great projects. You’ve got to make them yourself. Start doing a daily review of the following innovation resources to help you come up with the next big idea that will change the cosmetic industry.

Marketing people can come up with new stories. Only scientists and cosmetic chemists can come up with new products that will actually bring new benefits to consumers. Remember, you are the future of the cosmetic industry.

Favorite Innovation Online Resources

Blue Ocean Strategy – An extension of the excellent book Blue Ocean Strategy. Gives practical tips and techniques for generating & developing breakthrough ideas.

Innovation Tools – One of the best resources for all things innovation. The Innovation Blog keeps you connected with all the latest thinking in innovation & idea development.

Innovators Digest – Site that helps you learn innovation techniques and connect with other innovators.

Killer Innovations – The BEST innovation podcast anywhere. Phil McKinny provides practical advice about innovating at companies both big and small. He also re-blogs lots of the best innovation information being published.

Seth’s Blog – The blog of Seth Godin. He is one of the clearest innovation thinkers of our time. Author of bestselling marketing books The Purple Cow and The Dip. Speaks in a practical way that even chemists can understand. Extremely useful ideas.

The Heart of Innovation – Dedicated to inspiring and nurturing the spirit of innovation. You’ll find some useful information here.

Unusual Business Ideas that Work – A source for wacky inventions and stories about how they were developed. Great way to inspire yourself to think more creatively and get going on developing your own ideas.

Inventor Spot – Interesting inventions, innovations and weird/inspiring ideas. An excellent resource for inventors.

Ted Talks – You need inspiration to go change the world? Look no further than Ted Talks. Some of the best minds in the world talk about great ideas. You could get lost for days listening to these important talks.

Certainly, there are more but this is the list of innovation websites that are currently on my RSS feed.

Do you have a favorite that we missed? Leave a comment below and let us know.