Regardless of whether you are expanding your cosmetics business or planning to enter the beauty retail industry, it is imperative that your products (skincare, make-up, etc) are available in mainstream markets and modern trade stores as a manufacturer.
The more you develop a strategic distribution plan and get visibility at the places your targeted audience (retailers and the end-users) shop, the more likely they are to discover your product.
How to reach a wider market with your cosmetics product line
For your target audience to experience your product, first, you need to know that, unless you already have deep pockets or a group of investors bankrolling your cosmetics business, you will need to leverage what I called ‘the partnership distribution strategy‘.
What does this mean for you, if you are a small local cosmetics manufacturer, starting from your kitchen or if you have an expensively glammed office space?
Having the right products but limited brand visibility to aid you in scaling your business or maximizing profits, oftentimes diminish the potentiality of your brand’s success faster, in the areas of market share opportunity, market presence, brand popularity, and customers’ loyalty.
Here in this guide, you will learn all there is to know about starting an effective cosmetics distribution within Lagos state, and across Nigeria.
Type of Distribution strategy
Your ability to attract committed distributor partners across the diverse cosmetics market or strategic points of sale will favor your business growth and expansion plan as a manufacturer.
This synergy includes:
- The supermarket chains
- Spa service centers, salons and cosmetics shops
- The wholesale distributors in the mass-markets like Balogun,
- Online influencers
- Beauty fair and event promoters
- E-commerce markeplace e.g Konga etc
To decide on the most suitable distribution strategy for your cosmetics business, having a clear revenue goal is a crucial determining factor.
Put also into consideration your human resources and logistics capacity readily available, to aid a more intense market spread.
This article with key points summarized below, best captures the three most-used types of distribution strategy. They are:
#1. Intense distribution– This is a distribution strategy where you plan for mass distribution. It involves mobilizing your sales teams to go all out, creating demands across the mass markets.
By enlisting wholesale distributors, high street retailers, product marketers/promoters, and spreading your products everywhere and anywhere your target consumers can find your product.
#2. Selective distribution is about creating your products’ market spread by streamlining your distribution to only selected locations, stores, and among selected major distribution partners.
Selective distribution is pivotal to your brand’s growth, especially when you have a brand that focuses on a particular market segment.
#3. Exclusive distribution is a sole distribution strategy, where limited partners are enlisted as distributors.
It is popular with luxury cosmetics brands like Channel, Essenza, Elizabeth Arden, Mac, and others.
What Distribution Method Should You Use?
For the best part, deciding on a distribution method to use when starting to plan your marketing, first, you’ll have to consider:
- Your distribution goal
- Sales structures
- Production capacity,
- Inventory (Available/sellable stock)
- Finance (operational/production cost)
- and logistics structures.
Let’s explore the two most popular distribution approaches; they are:
This form of distribution is the simplest and less complicated. It’s a method when the product manufacturer sells directly to the end-users whom the product targets.
Some of the advantages of a direct distribution strategy are:
- Immediate feedback allows the manufacturing company to get direct and appropriate input from the customers. Quickly improve the product quality and other desired expectations communicated directly by the end-users.
- Fair pricing makes it possible for the end-users to buy at a reasonable markdown price. Middlemen (distributors and sales agents) also get a commission or profit from each sale on the sales chain.
The more the complexity involved in your sales process or distribution chain before a product reaches the final consumer, the higher the likelihood of the selling price becoming inflated due to the number of go-betweens involved.
Who Should Use Direct Distribution?
A direct-distribution strategy is most suitable for most small luxury skincare brands. The most prominent and successful cosmetics manufacturing companies you see today started this way, using the direct sales method.
They only became popular with more brand awareness and an increase in demands for their products.
A demerit for this distribution method is that your expansion size would be smaller, which means more work than involving distribution partners.
Indirect distribution is a scenario where a manufacturer involves intermediaries before the products reach the final consumers.
The middlemen in this regard are the distributors, dealers, large retailers, etc.
And depending on a company’s sales structure, an indirect distribution could be up to about three levels.
Indirect distribution is not a one-size-fits-all method for creating a nationwide distribution. It is imperative that you engage the end-user first through marketing, social media, influencers, and customer testimonials.
Your potential customers need to know your product’s unique benefits before they eventually make it a choice above other brands on the market.
Cosmetics Distribution Planning (From Scratch)
To begin your cosmetics distribution, you will need to make your business legally suitable in the eyes of government guiding laws.
I am assuming that you have a brand name for your cosmetics company? And, If you don’t, this resource will help you develop a proper name for your cosmetics business.
Remember- the shorter your business name, the memorable it is for branding purposes.
The next steps:
- Business name registration with the Corporate Affairs Commission.
- Brand-name trademark protection– Trademarks protect using a company’s name, product names, brand identity (like logos), for an initial 7years and subsequent renewal of 14years intervals.
- Begin the application for NAFDAC registration and approval of your cosmetics products.
The faster route is to use a NAFDAC consultant to fast-track and simplify the whole process.
Owning A Beauty Product Line
There are three primary ways (you could combine) to own your cosmetics line.
#1 As a cosmetics manufacturer, here, your organization’s size doesn’t matter when you are just starting. It could be a family business or owned by partners with product formulation background or interest.
As a team, it is crucial that your formulation expertise, marketing knowledge, sales skills, customer service know-how are geared toward addressing a market need.
#2 Owning a private label product– this business model implies that you find a private label cosmetics manufacturer who already manufactured generic cosmetics products with his own cosmetics formulas and materials.
The manufacturer then re-brands it with your brand name, and packages it as yours, to sell to your target customers, without the need to own the production factory or the whole production value chain, which can be fund-intensive.
#3 Join a Franchise– A franchise business model is an arrangement between a cosmetics business entrepreneur, who purchases an exclusive right, to represents, and resells a parent’s company or a manufacturer’s products within a specific region or city.
This business model arrangement is usually very capital intensive. Examples of makeup cosmetics franchises in Nigeria are Mac, Inglot, Nouba, and more.
Strategic Distribution Channel Mapping
There are various distribution channels you can leverage when planning your cosmetics business marketing strategy.
You can make use of a combination of one or explore all the channels.
#1 The Mass market
This refers to a market for consumer goods commodities produced on a large scale for a significant number of end consumers.
A manufacturer that wants to maximize sales by including a qualified distributor to serve as a direct link between the manufacturer, the retailers, and the end-users is a good strategy.
These are the few popular cosmetics mass-markets in Lagos; Balogun market– Lagos Island, the trade-fair market– Ojo, Lagos Badagry expressway.
#2 Modern trade stores
The modern trade distribution model is common in most commercial cities in the world, Nigeria inclusive.
It avails your target customers to be able to shop your products from the cosmetics or beauty sections of most modern trade stores.
As a product manufacturer, you enjoy the privilege of dealing with a large customer base within a large store chain.
Usually, Most of these supermarkets have chains of stores, thus making it a preferred channel for distributing more than one product category.
Therefore, providing supermarket shoppers with options of what best suits their needs at a given time.
#3 Beauty Salons/Spas
These are mostly beauty service centers where most men and women visit for their hair care, facials, body massage, skin-care treatments, and other related beauty care needs.
Note>> The sales volume and order requests into the beauty salon or spa may be relatively lower than the mass market or supermarkets.
If your product category will perform better in the salon and spa, then it’ll make a good strategy to focus your distribution effort on this channel.
#5 Cosmetics retail shop
These are retail shops that stock and resell precisely beauty and cosmetics lines in high-traffic targeted locations. Some People regard some of these business owners as high street retailers.
#6 Trade/beauty fair events
Trade shows are also a great platform to showcase your brand’s unique offers. It gives you an avenue of meeting potential distributors and commercial retailers who would love to stock your brand, and have a form of a partnership deal working with your brand.
#7 Event sponsorship- Partnering with other organizations in beauty, fashion, tech, campus events, banking, cultural and tourist events, etc. is useful for creating awareness and also aids brand visibility.
#8 Social commerce/E-commerce- This sales strategy uses the online medium 100% to drive sales and brand awareness. This is mostly achieved by setting up online stores, or via Facebook, Instagram or selling solely on a third-party e-commerce website- like Aliexpress or Jiji
Distribution Strategy Implementation
There are three key steps to implement an effective go-to-market distribution strategy.
- Market research– this is an essential aspect of your product and brand development. It helps foster a better understanding of your target market’s needs. To be able to create a valuable product hat addresses the consumer pain point.
- Quality control– You would need to carry out a thorough quality analysis for a safe and effective product before launching into the market, using selected consumer testing groups or other measures.
- Stability test– These are a series of tests during product formulation and post-development for the cosmetics formulas’ quality and consistency.
- Branding– Deciding on your finished product outlook or it’s differentiating factor on the shelf of a retail store or an E-com website is where branding comes in.
Branding is generally the impression you want people to make of your product whenever they come in touch. It includes the product name, symbol, or design that is easily identifiable as belonging to your company, etc.
- Packaging– If branding is creating a unique identification for your product, packaging, on the other hand, is the product container, wrappers, boxes, stickers that you will place your product in to sell.
If you poorly execute product packaging, it can negatively impact your product’s success. Creating visually appealing packaging will also increase its value when convincing a distributor to stock your brand.
Marketing is an essential aspect of creating a well-identifiable product. To begin, start by asking obvious questions like:
- Who is most interested in your beauty products?
- Where does this category of people shop for cosmetics?
- What will they consider a reasonable price point?
- What is the competitors’ selling price?
- How best do you communicate your brand strength? What is your product fair advantages?
- What are your brand weaknesses that may threaten your marketing, distribution efforts?
While you give those questions some thoughts, note that your marketing efforts could be rendered ineffective by:
- A limited or inexistent marketing budget
- Poor knowledge of your market
- Lack of a marketing penetration strategy or direction.
What do I mean?
Suppose you are an experienced manufacturer with a number of successful beauty products already identified with your company, it won’t be a challenge for you to leverage your existing distribution network and customer base to create awareness for your new skincare or hair products, for instance.
However, if you are a newcomer to the market, you will begin your marketing campaigns from scratch, which requires lots more effort than when you are an already known brand.
In most cases, an established qualified distributor prefers to partner with a company whose products are already famous and in demand in the market.
He believes this will reduce the number of efforts required to convince customers to try a new brand.
In spite of this fact, a retailer who purchases from key exclusive distributors would always be on the lookout for new products to offer customers. Provided the price and perceived value match his expectations.
Sales and Logistics Planning
- Sales strategy development– This is your unique approach to selling your products.
For example, when meeting your ideal commercial retailers or major exclusive distributors, key supermarket managers; providing sample products could help get them to get acquainted with what it looks like, to have your products on their shelves.
- Sell sheet provision– A sell-sheet is your product brochure designed in a clear and concise presentation; Stating the benefits and value of your product.
When prospecting a major retailer or some viable local stores, endeavor to leave a sell sheet (product brochure) with your contact information for brand acquaintance.
Note- Retailers need some time to consider your product for their stores, so be prepared if the manager or store owner does not approve your product proposal right away.
- Rebates (Discounts)– This is an incentive mechanism used in making your offer attractive to your distributors.
It depends on your current business size and what it can afford to give as a discount, so it doesn’t become a strain on your business in the long run.
Tip: you could design a sales term within your sales process planning that rewards your exclusive distributors additional 1-4% discounts if they purchase a specific volume of products, with a month or in a quarter.
- Promotion planning– offering in-store and online shoppers’ promotions with your key exclusive distributors or at your various sales points are ways to boost your products’ offtakes.
Your sales promotion and execution mechanism should be strategic, maximizing your ROI (Return on investment) and compensating your efforts.
- Inventory/stock availability– Ensuring you have a reliable system in place that helps reduce the out-of-stock frequency to the barest minimum is a factor that fosters consistent patronage and loyalty of your brand.
- Order processing– This is a system and process-based structuring.
What is your order processing procedure? How long does it take you to supply orders?
The faster you can process your orders, the quicker the supplies get into the market, so it’s essential to put in the structure to reduce lost lead time.
- Distribution logistics – This entails your logistics structure on how the product leaves your warehouse to-and-fro the various mass markets, modern trade stores, and the high street outlets where the product point of sales is situated.
Most small producers in cosmetics productions, in the beginning, leverage a partnership with reliable delivery companies like DHL, FedEx, and others, to deliver customers’ orders.
Key Cosmetics Distribution Players
#1 Sales & marketing people
The sales/marketing team’s role in a cosmetics distribution process is to prospect potential customers, follow up, and close the sales.
This role also includes building trust, managing a beneficial relationship with your existing customers and distribution partners.
These are the core businessmen and women in the cosmetics business who help create your products’ spread.
The distributors have a huge role in creating demands across the cities for your products, regardless of the geographical location or border.
The wholesale distributors are always on the lookout for distributorship opportunities for fast-moving products they can sell in bulk sales at wholesale price to retailers to maximize profits.
As a cosmetics manufacturer, you must leverage your distributor partners’ network and customer base to increase your market reach and revenue.
Make sure you do your research before you consent to a partnership with a distributor, especially when he demands long credit terms and no down payment before he agrees to distribute your product.
Some are notorious for being untrustworthy. PLEASE BEWARE!
#3 Retail associates/Beauty advisors
While there are many appellations for the retail associate’s role, some tag this role as beauty advisers, product promoters, and in some supermarket/ department stores settings, they are regarded as product merchandisers.
For the simplicity of the term, let us stick to the retail associate.
Retail associates are part of the sales team. They are responsible for in-store sales, offer product advice to customers, and how best they could get maximum results from the product.
The retail associate’s role is similar to that of a marketer.
The slight difference is that retail associates often relate more directly with providing more information about the product to the end-users on the shop floors in beauty outlets and cosmetics markets.
On the other hand, an executive marketer deals directly with a wholesale distributor, a potential cosmetics dealer, supermarket managers to stock a huge line of a company’s products.
There you have it, some of the things to note if you are ready to create a distribution strategy that will help you expand your cosmetics business reach into the mass markets and the supermarkets.
It’s one thing for your profit margin to be fair, and it’s another for your product to be known for being quality. If your product’s quality is consistent, then, there is more assurance that your brand will get popular with time.
As long as your selling price is competitive, and you have visibility in leading shopping locations of your target customers.
There’s no rule that says you cannot sell your products over your competitors’ price range, only ensure the value your customers get from your brand is second to none other.
As you plan your cosmetics line distribution, you should offer wholesale distributors and major retailers a deal that they would find irresistible, keeping in mind that the quality of your product and the customer experience with your brand, effectively determine whether or not you are successful.
A lack of proper training of your in-store and sales staff, on the other hand, can also lead to your product not being accepted over time, in terms of inefficient sales processes, lack of quality customer service, inconsistent branding, and absence of perceivable value for customers.
If your product does not meet your customer’s expectations, no matter how great your marketing efforts, they will not change that.
Thanks for reading!
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