Cosmetics distribution requires some strategic efforts to get your product, be it in the; skincare, personal grooming -for men & women, hair care, wigs , makeup products, and the baby care categories; Ready for the mainstream distribution channels.
Partnership is one marketing (distribution) strategy used by the leading brands to penetrate the market.
Among which includes the partnerships with:
- The supermarket chains
- Beauty outlets in the mall centers or the densely populated prime locations
- The wholesale distributors in the mass-markets
- Digital media- social media channels, online influencers, E-commerce stores, paid ads, and others.
What does this mean for you if you are a small local cosmetics manufacturer with the right products and many values to offer to your target market?
Or for you, looking for more sales channels to reach a wider audience and maximize profits in your cosmetics business?
Partnership is one marketing (distribution) strategy used by the leading brands to penetrate the market.
What are the things you'll need to ensure you leverage; Distribution advantages, market presence, brand popularity, top-of-mind customers' loyalty, and a fair market share?
Here in this guide, you will learn the nitty-gritty of starting an effective distribution (marketing) strategy for your cosmetics product business.
What Is Cosmetics Distribution?
Cosmetics distribution is the sales process a beauty product company adopts to make its products accessible to the end-users, whom the product targets.
By leveraging the different retail channels, authorized beauty stores, and sales agents, in high street retailers, supermarket chains, beauty salons, spas, local suppliers, wholesale distributors, and famous online stores like Jiji, Olist, Jumia, and Konga.
Do not forget popular international online stores like; Shopify, Amazon, Etsy, Aliexpress, and other platforms- if you plan selling to online international consumers, using these third-party E-commerce platforms.
Why You Should Leverage Distribution (Marketing)
Being a successful small brand in cosmetics sales and distribution requires some adequate financial capacity; This is essential to run a fully operational distribution, attract more sales, and conduct marketing and promotional campaigns that bring about more brand awareness.
Ideally, as a manufacturer or a qualified distributor, you'll spend countless hours, sometimes, weeks in your kitchen, laboratory, warehouse or production factory; Conducting researches, making corrections, testing product stability, and perfecting your marketing plans. To ensure your brand is safe, well anticipated, and valuable to your market -(consumers and your distribution partners).
Implementing a distribution strategy will further help you to:
- Reach a broader target market.
- Expansion opportunities into new markets.
- Improve your brand impact.
- Increase your chances of turning over your investment.
- Maximize alternatives like online sales channels.
- Generate recurring revenue to accelerate your brand growth.
- Freedom to create exclusivity or a 'no-limit' (point-of-sales) distribution strategy.
- Create Job opportunities.
- Fair competition advantage- with and amongst other competing brands in your category that can aid shoppers' buying decisions.
Type of Distribution strategy
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 best captures the three most-used types of distribution strategy adopted by international and local producers. They are:
- 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.
Involving wholesale distributors, high street retailers, product marketers/promoters, and spreading your products everywhere and anywhere your target consumers should find your product.
This approach cannot be affected by locations, sales outlets, or the number of wholesale distributors you enlist to distribute your brand.
It is an intense distribution marketing approach.
- 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.
Your overall business distribution goal could also necessitate your decision to adopt a selective distribution strategy. This approach gives you more control in managing your distributors, the amount of inventory you stock, staff size, logistics, and other operational overheads that you will have to control.
- Exclusive distribution: Is a sole distribution strategy, where you partner with limited exclusive distributors to distribute your product or brand.
It is a distribution strategy 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 with cosmetics product marketing, first, you must consider:
- Your distribution goal
- Sales structures
- Production capacity
- Inventory (Available/sellable stock)
- Finance (operational/production cost)
- and logistics structure.
I explored the two most popular distribution approaches in this guide; they are:
This form of distribution is the simplest and less complicated. It's a method where 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 numbers of go-betweens involved.
A direct-distribution strategy is most suitable for most small luxury skincare brands.
Most prominent and successful cosmetics manufacturing company 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.
Does the direct distribution strategy has a disadvantage?
A de-merit for the direct distribution method is that your expansion size would be smaller.
And it also 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 and large retailers.
And depending on a company's sales structure, an indirect distribution could be up to about three levels.
Your cosmetics production company's size relative to your customers' ordering frequency and the overall market demands will determine your initial distribution method.
Indirect distribution is a no one-size-fits-all, to create a nationwide distribution and ensure your products are available on most beauty counters' shelves. You must first engage the end-user through marketing, word of mouth, customer reviews and testimonials.
Your potential customers need to know your brand and your products' unique benefit before they eventually make a choice. Keep this top-mind!
The more the complexity involved in your sales process, the higher the likelihood of the selling price becoming inflated due to the numbers of go-betweens involved.
How To Kickstart Your Cosmetics Distribution From Scratch
To begin your cosmetics distribution, you will need to make your business legally suitable in the eyes of your state's guiding laws or the country from where you currently or hope to operate your business.
I am assuming that you have a brand name for your company?
If you don't, this resource will help you develop a proper name for your cosmetics business.
Once you have figured a name that you love, the trick is, the shorter and memorable the word is, the better.
The next steps are:
- The business name registration with the Corporate Affairs Commission.
- Trademark protection- Trademarks protect using a company's name and product names, brand identity (like logos), and slogans.
- 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 Cosmetics Line
There are three primary ways (you could combine) to own your brand range or source for finished cosmetics products:
#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.
What matters most are your formulation experience, marketing, sales, and the technical know-how of your team in providing the solution you want your products to address in the market.
#2 Own a private label product
This implies that you find a private label cosmetics manufacturer who already manufactured generic cosmetics products with his own cosmetics formulas and materials.
But unbranded, and then re-brands it, with your brand name and packaged 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.
Ensure to check the private-label business model guide; it's here . It provides valuable insight on how to harness the private label business model as a cosmetics business owner.
#3 Join a cosmetics business franchise
A franchise business model is an arrangement between a cosmetics business entrepreneur, who purchases an exclusive right, represents, and resells a parent's company or a manufacturer's products within a specific region or city.
This business model arrangement is capital intensive.
As a franchisor, you enjoy the privilege of being a sole distributor of a brand that has been tested and well known in its target market.
In essence, as a franchisor-distributor, you will be riding on the popularity, quality, and value perception that the brand represents.
Examples of makeup brand franchise in Nigeria are Mac, Inglot, Nouba, and more.
Distribution Channel Mapping
There are various distribution channels you can leverage when planning your cosmetics marketing strategy.
You can make use of a combination of one or explore all the channels. Here are some insights into the most used distribution channels.
#1 The Mass market- According to Wikipedia, a mass-market refers to a market for consumer goods produced on a large scale for a significant number of end consumers.
As a manufacturer or a qualified distributor, if you aim that as many people purchase your product as possible, enlisting a few trusted distributors in the mass market to serve as the direct link between you, the retailers, and the final consumers, is an excellent step.
These are two popular cosmetics mass-market locations in Lagos state; Balogun market- Lagos Island, the trade-fair market- Ojo, Lagos Badagry expressway.
#2 Modern trade stores- This is a market spread strategy to make your product available in the supermarkets and hyper-stores.
The modern trade distribution model is prevalent in most commercial cities in the world. It avails your target customers to be able to shop your products from the beauty sections of these hypermarket stores.
Usually, Most of these supermarkets have chains of stores with more than one outlet.
As such, you'll enjoy the privilege of dealing with a store chain that has insurmountable large customer base.
For a start, you could focus on prospecting neighborhood supermarket stores with good traffic and maybe with few branches. This is to enable you build your strategy to be able to approach bigger store chains like Spar , e.t.c.
#3 Beauty Salons/Spas- these are mostly beauty service centers where most men and women visit for their hair care, facials and body massage, facial treatments, nail care and other related beauty care need.
What is the sales volume projection for the salon & spa?
The sales volume and order requests from the beauty salon or spa clients would be relatively lower than the mass market or supermarkets.
However, you are almost sure that the class of clients that will get to know about your brand, as recommended by the salon or spa professionals, would be well-targeted clients who genuinely need to use your product.
If your product category will perform better in the salon and spa, it's viable to focus your distribution effort on this channel.
Nail care, hair care/hair growth products, skin rejuvenating cosmetics products, and beauty accessories are some products that potentially should do remarkably well in the salon and spas.
#4 Cosmetics retail shop- These are retail shops that stock and resell precisely beauty and cosmetics line in high traffic targeted locations.
Some People regard some of these business owners as high street retailers.
#5 Trade fair/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 retailers who would love to stock your brand or have a form of a partnership deal with your brand.
#6 Event sponsorship- Partnerships with other organizations in beauty, fashion, tech, campus events, banking, cultural and tourist events, etc. are useful avenues for creating brand awareness.
#7 Social commerce/E-commerce- This is a sales strategy that uses the online medium 100% to drive sales and brand awareness.
Distribution Strategy Implementation
There are three key steps to implement an effective go-to-market distribution strategy as a newcomer in the Nigeria cosmetics market:
- 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 an effective and most powerful formulation that 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, negatively at the retail points.
Creating a unique and attractive package will increase your product's positive points when convincing a distributor or an authorized beauty store to stock your brand.
It will also create a quick turnaround as shoppers' finds your brand visually appealing, which could also influence their buying consideration.
Marketing is an essential aspect of creating a well-identifiable product, regardless of the market( or the end-users) you target.
To put it simply and practical, this is the point where you map out your marketing strategy by asking obvious questions like:
- Who is most interested in your beauty products? e.g. young women, makeup artists, women in their 50s, etc.
- Where does this category of people shop for cosmetics?
- What will they consider a reasonable price?
- 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, and visibility efforts?
While you give those questions some thoughts. You also need to understand that your marketing efforts could be rendered ineffective with:
- Limited or inexistent marketing budget
- Poor knowledge of the market
- Lack of a marketing penetration strategy or direction.
What do I mean?
Suppose you are an experienced manufacturer who has been in the cosmetics market for a little while.
With a couple of beauty products already identified with your company, it won't be a challenge for you to leverage your existing distribution network and customer base assets to create awareness for your new skincare or hair products, for instance.
However, if you are a newcomer to the market, it's presumed that you have to premeditate your marketing strategy from scratch, which requires lots more effort than when you are an already known brand.
Most highly sought-after local suppliers/local supply chains, in most cases, prefer to partner with a company whose products are already well-known and in-demand in the market.
They believe it will reduce the amount of time and effort required to convince their customers to try a new brand.
Most retail owners and small suppliers who buy from the key exclusive distributors are always on the lookout try something new, which they can introduce to their customers.
Sales Planning and Logistics
- Sales strategy development- This is your approach to selling your products.
The unique ways you employ to make your product desirable to your customers.
For example, when meeting your ideal commercial retailers or major exclusive distributors, providing sample products could help get them 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.
Most retailers will want some time to consider bringing your product into their stores, so be prepared if your (distribution) business proposal does not get approved immediately.
- Rebates (Discounts)- This is an incentive mechanism used in making your offer attractive to your distributors.
So you must factor a unique discount system into your price tiers.
First, it depends on your business size and what your business 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 that rewards your distributors additional 1-4% discounts if they purchase a specific volume of products, monthly or quarterly.
- Promotional activities- offering in-store and online shoppers' promotions with your key exclusive distributors or your various sales points are effective ways to boost products' sales .
Just be strategic on the sales promotion and the execution mechanism, so it betters your ROI (Return on investment).
- 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 customers with your brand.
- Order processing- This is a system and process-based structuring.
What is your order processing procedure?
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 further mitigate against lost lead time, most especially with your order processing and delivery system.
- Distribution logistics - This entails your logistics structure on how the products leave 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 and entrepreneurs in cosmetics productions, in the beginning, leverage a partnership with reliable delivery companies like DHL, FedEx, and others, to deliver customers' orders.
And as time goes by, you could have your in-house logistics structure, resources (delivery bikes, vans, etc.), maintenance team, and delivery personnel.
- Distribution partnership- Your ability to attract committed distributor partners across the diverse cosmetics market/ strategic POS will favor your business growth and expansion plan as a manufacturer.
You will need committed cosmetics distributors for your products at the significant mass-markets like the trade-fair market, Lagos, or the Balogun market, including other strategic locations like the supermarkets and trade fair events, just to mention a few.
Key Players in the Cosmetics Business
#1 Sales & marketing people
The sales/marketing team's role in a cosmetics distribution process is to prospect for 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.
For a starter, if you are a small brand with limited staff, you must somehow fill the role; your first criterion is to have an effective distribution strategy as a small brand aiming to grow your brand awareness, distribution networks, and revenue.
These are the core businessmen and women in cosmetics and beauty businesses who help create your products' spread.
The wholesale distributors are always on the lookout for distributorship opportunities for fast-moving products they can invest in, and that's how it works.
Which they eventually create market demand for, to generate huge profit margins from bulk sales, mostly to resellers and retailers.
Distributors love to know about raving potential cosmetics products early, so they could enjoy the monopoly of selling them before other competitors get wind of it.
The distributors have a huge role in creating demands across the cities for your products, regardless of the geographical location or border.
As a cosmetics manufacturer, you must leverage your distributor partners' network and customer base to increase your market reach and revenue.
Ensure to make your findings very carefully before going into a deal with a distributor, especially in unfamiliar markets.
Some distributors are notorious for being shady and 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 terms, 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 a potential customer on what each product does, 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 they often relate more directly with providing more information about the product to the end-users on the shop floors in beauty outlets and cosmetics stores.
The Difference Between an Executive Marketer and a Retail Associate
On the other hand, an executive (brand) marketer deals directly with a wholesale distributor, a potential dealer or a cosmetics store manager to stock a vast amount of a company's products.
So these roles may seem alike, but the job functions are seemingly different.
You will need a retail associate or a beauty adviser's service to improve your product's offtakes, in-store, and in the mass-market using promotional and marketing activities.
Your retail associate's job is to educate potential customers (mostly direct end-users) on all the benefits that your products serve as against your competitors'.
Getting your sales team and the retail associates trained adequately, on product knowledge, offers, and your marketplace uniqueness is crucial to achieving your business success.
The Good, And The Bad Of The Nigeria Cosmetics Market
Regardless of the seemed non-standardized policies and operational ethics guiding cosmetics and beauty industry players' activities, the Nigerian cosmetics industry still thrives. A surprising good part, if I could say that myself.
Over the years, the cosmetics market has recorded quite a growth phenomenon, raking billions in revenue yearly.
According to this report, the increasing urbanization, the young population's growth, and the many women in the active labor force are the global cosmetics market's driven force.
There is an increased interest among young consumers, urban and feminine, for products with higher added value in many categories, including oral care, skin care, and cosmetics for makeup.- Kosmetical World.
One can quickly notice the influx and massive involvement of big international brands that want to capture more market shares and grow their market outside developed countries like the united states and Europe.
These beauty manufacturers have become aware of the Africans high interest in beauty cosmetics and personal care products to meet their daily beauty needs.
As the Nigerian cosmetics markets enjoy huge consumer demand from the teeming population, they are primarily born out of an interest in looking, smell, and feel good.
On the rise are also illegal importations and imitations of successful brands available in varying forms and packaging, making the market over-saturated with quite many untested cosmetics product formulations.
NAFDAC's Role In the Sensitization of Cosmetics Consumers
There is an ongoing public sensitization by NAFDAC- (National Agency for Food and Drug Administration and Control).
Amongst other regulatory acts, NAFDAC has a long-standing ban on the consumption of adulterated cosmetics product.
Most of these affected cosmetics products consist of harmful side effects and formulation compounds, aiding skin bleaching.
According to some reports, hydroquinone, corticosteroids, mercury/mercury compounds, betamethasone, etc. are chemical compounds considered a considerable health hazard to the consumers' well-being.
They reduce skin protection against harmful UV rays and increase skin cancer risk after prolonged use of these cosmetics items.
At a time, there were strict warnings to the public and the relevant stakeholders to submit blacklisted and adulterated batches of affected cosmetics products to the nearest NAFDAC office across the state.
Importers, distributors, and retailers were equally mandated to immediately stop importing, distributing, and selling these affected cosmetic products.
This becomes an opportunity for the well-intentioned local and international cosmetics manufacturing brands to capitalize.
By providing a well-researched beauty solution, using organic/natural ingredients to produce skin-friendly natural products is useful in treating skin-related issues using inferior raw materials and unhealthy adulterated chemical agents.
How to Sell your products in the Supermarkets and the Mass Markets (Trade fair and Balogun markets, Lagos.)
As much as a supermarket's settings can be slightly different from the traditional mass markets, the goal is similar.
Depending on your cosmetics product categories, PLEASE NOTE, not all products can be mass market-driven.
For instance, a luxury brand with a high price tag might not do so well in the traditional mass-market setting.
So do take note, make your assessment and market survey before deciding on the sales channel to create your brand awareness, and generate revenue.
Also note, the modern trade stores are slightly more organized in the areas of; operations, store layout planning, with more robust and dedicated customer service than you'll find in most traditional mass-market settings. Keep this in mind!
Here are the approaches to make a deal to sell your products in the supermarkets or the mass markets.
#1 Assessment of store/outlets - this is crucial in analyzing the potential of the store's location, popularity, and the available product categories on the store shelves, to attract footfalls and potential customers.
#2 Prospecting - this is a sales approach to determine and pre-qualify what wholesale distributor or major retailer will distribute your product to the end-user.
Your action plan is to approach cosmetics shop owners (in the market or supermarket) who are already wholesale distributors of other major cosmetics brands in your product category.
How can prospecting a major distributor help your sales volume?
Suppose you're prospecting a potential wholesale distributor in a mass-market, like the Balogun market in Lagos Island or the Trade-fair market. In that case, the customers that visit these strategic locations are mostly resellers or retailers looking to buy at wholesale prices and bulk orders.
You're in luck if the distributor agrees to your distributorship sales terms.
The distributorship deal will equally increase your chance of selling out more (especially if your product is loved!), leveraging the distributor's popularity, network and customer base.
#3 Product Presentation- This is the phase to introduce your product to the prospective supermarkets, retail owners, trade fair event organizers, outlet managers, and the mass-market wholesale distributor.
Having a good knowledge of your brand's strength, product uniqueness, your end-users satisfaction, and the overall business benefits to your distribution partners will be an excellent unique selling point to win their attention and disrupt the market trend.
It would be best to create a strong first impression and utmost seriousness towards creating market awareness for your products leveraging all the viable and most cost-effective strategies.
This way, you'll have communicated your company's commitment to making your brand more in-demand.
Therefore, giving your wholesale distributors and commercial retailers the impression that they will make their money and turn over their investment faster.
#4 An attractive profit margin- this attracts most store owners and wholesale distributors to partner with your brand in the first place.
You'll have to factor in a fair retailers' deal in terms of your product's cost and your recommended selling margin to the end-users.
If the margins are reasonable enough and profitable, it's a win-win for your distributors and you, as the product manufacturer.
#5 Credit terms - If you want to deal with your distribution partners successfully, you must be ready to avail them of a credit facility.
Usually, a 7-30 days credit term is fair enough for your high credit distributors who purchase a large inventory.
#6 Branded Display stand provision- this is an essential marketing material to help showcase and create visibility for all your product ranges in one place.
Your branded display stand's uniqueness is such to create a focused and undistracted awareness for your brand.
Branded display stand provision is an exclusive visibility strategy, compared to when your product is lumped together with other competing brands, which may overshadow yours if they have a more unique and outstanding brand packaging.
#7 Follow-ups and market visits- This is an essential aspect of your sales process, for a time to time market and consumers' feedback assessment.
Following up with your wholesale distributors, supermarket partners, and getting insightful feedback from the end-users using your products, can help you determine more market needs and potential for your brand.
The feedback you receive from your customers can better inform your strategies on equipping your distributors and sales representatives in positioning your products for more sales opportunities.
You can only implement this effectively when you fully understand the market challenges.
These are some of the things to note if you are willing to go through creating a distribution strategy that will help you sell more productively 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 gain traction with time, as long as your price is fair and within your closest competitors range.
A side note
No rules say 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.
But if you have a not-so-good product, there are pretty high chances that your product's acceptance would nosedive quickly in the long run, for the lack of effectiveness, consistency, and value for money.
As you seek distributors for your cosmetics line, offering them a deal they would find irresistible, please don't forget that your products' quality and the overall experience with your brand can either make or break your business.
There is little a great Marketing effort can do for a product that doesn't meet your customer's needs.
Please leave a comment below, love to hear from you.