As chemists I know this question won't have a direct impact on you, but I consider the cosmetic chemist community to be "insiders" so I assume you've seen a lot of cosmetic startups crash and burn.
From the surface, this is what I see and why I feel like starting a cosmetic brand is not a smart business move now vs say a decade or two ago:
- The market is completely flooded with brands of all kinds. Unless you have something ground breaking to offer like Olaplex, it will be difficult if not impossible to gain enough market share to survive.
- It's virtually impossible to protect your market share if you manage to secure any because cosmetic products are easy to duplicate. As cosmetic chemists, you're trained to do exactly that. For safety, a product's formula is required to be placed on the bottle (ingredients lists are easy to extrapolate into an actual formula).
- Unless you decide to market your products as Only For Professional Use, the only distinguishing features a product really has is marketing and scent. Also, the ingredients are readily available to anyone who can buy them online. So what are you selling in the end? Convenience so someone doesn't have to mix it up themselves in their own kitchen?
- In a flooded, super competitive market, it requires exorbitant amounts of money to advertise a startup brand enough to grab new customers' attention. For a new small to midsize brand, I saw a quote of $100k to $500k being required for a competitive launch. Social media use to be an affordable super effective way for small brands to gain traction, but once big brands caught on, that has become less of a truth since they drove up the cost of advertising.
Given all this, my assumption is that a small start up with a single cosmetic product, a relatively simple ingredients deck and only $10,000 in start up money should really give up the pipe dream of having a successful product, and instead maybe invest that money in an index fund.
Do you agree? I appreciate any thoughts on the above assumption.