Private Label Cosmetics in Export: Variety vs. Quantity

by Alex Cosper on December 21, 2017

Market access is one of the primary reasons to engage in private label cosmetics. When small firms that cannot afford to export beauty products go out of business, it creates opportunities for players that are able to capitalize on private label cosmetics and exports. Here are considerations for weighing between variety and quantity of cosmetics.

How Private Labels Increase Export Volume

Private label brands provide an extra marketing channel that accesses the export market. While this marketing concept can potentially increase export volume of home country companies, it also influences and creates competition with direct exporters, as they consider shifting to private label products or exiting the market. In order to compete in this market, a firm must analyze the fixed and variable costs of trade with an emphasis on direct and intermediated exports.

An increase in variable costs favors higher brand equity exporters more than direct exporters. This situation would likely not affect individual firms that provide products for private label retailers. It will likely influence the remaining direct exporters to expand the range of products it exports. It will likely also increase the number of private label exporters. Studies show that the more fixed costs of trade rise, the more likely private label exporters will increase the number of exports while direct exporters decrease the number of exports.

Due to these market dynamics, independent exporters can add variety to the marketplace with better opportunities to reach foreign consumers directly. The advent of direct e-commerce opens the door for producers to connect directly with foreign consumers. Matching services such as Ebay, Etsy and Amazon Marketplace have allowed sellers to engage in global trade, finding bargains that may not exist in local physical stores.

Economic Factors

Private label cosmetics brands can thrive under certain economic conditions. A decrease in trade costs opens the door for increased competition among low-end private label cosmetics suppliers. The result would be an increase in volume that would bring down prices of private label products. Analysts can expect a pattern of increased exports as trade costs fall, while direct exporters experience rebounding market shares. This scenario is attributed to lower quality brand products entering the market.

Marketers of private label products need to ask themselves a series of questions to determine business survival strategies, such as the following:

  • to what degree is there exposure to trade shocks?
  • how does data from private label vendors compare with wholesalers?
  • what are the emerging markets in which private labels can compete?

Significance of Product Differentiation

Researchers have found that product differentiation may be affected by methods of accessing global markets through trade intermediaries. Balancing between equilibrium variety and trade volume is an often overlooked technique that can elevate a private label brand competing on the global market. It's important for new players to research market holes where there may be room for variety.

Private label products tend to be generic in nature, making it difficult to sell them based on uniqueness, other than the brand design that appears on the label. Marketing a variety of products gives an edge to an exporter that can offer consumers quality at affordable prices. Many consumers around the world specifically look for deals on the international market for budgeting reasons and favor unique items that they cannot find in mainstream retail outlets.

Conclusion

Private label cosmetics are viable in the export marketplace if a company provides a wide enough selection of products. Trade costs play a huge role in the success of marketing global products. In order to compete on the international market, a seller of private label cosmetics must be ready to ship a high volume of various cosmetics products that can be purchased by consumers in foreign countries at pricing comparable with wholesale levels.

Product-Catalog

References and Further Reading

Topics: Private Label Cosmetics, Cosmetic Packaging

EN Blog Sidebar CTA