The impressive growth of the cosmetics industry in India has changed the industry in many ways. From growing affordability and flooding of high-end products to the branching of the industry in various specialized markets and manufactures? One such by-product is the growth of the contract cosmetic manufacturers.
These manufacturers carry out production facilities on behalf of a cosmetics company. Such manufacturers may works with multiple companies. The cosmetic company can lease these services for a fee. They can brand the product as their own, selling the ready made product. There are many benefits for the buying company here. Some of these are:
Setting up a new cosmetics products business from scratch can be an expensive business. You have to source the right premises, equip it with the latest machinery and source raw material from various suppliers. The machinery involved in cosmetics manufacturing today is quite sophisticated and consequently, quite expensive. This requires considerable financial input. The tough part is that it will be sometime before this investment pays off and that is providing that your product will do well from the beginning.
A contract cosmetics manufacturer works with a number of other businesses. Hence, they are able to offer a much more economical deal where you have to pay for the product. Their unit is already established and in most cases you will only be required to pay a fraction of the actual cost. So, this makes it ideal for people who cannot afford to make a heavy initial investment.
Most new manufacturing businesses have a few months, if not years, of hit and miss with their products. No one can quite say what will work and what won’t. New units may also falter in the manufacturing business. This is a learning process. Unfortunately, not everyone can afford to spend time, effort and money in this. Contract cosmetic manufacturers have already gone through this learning curve. Their production process and the product has been refined and they know what they are doing. In fact, you can check the product during selection process and gauge how popular it is likely to be.
The cosmetics industry has pretty stringent quality standards. This is a fiercely competitive market where any fall in quality will be swiftly punished by consumer withdrawal and lack of interest. Not just that, the quality must be maintained at all times. Apart from ensuring top class products, there are also concerns about maintaining sanitation standards. Production, machinery, equipment and other paraphernalia in the manufacturing unit must meet the highest levels of sanitation. For this we need QA at every step. These are rules that new units often find difficult to follow.
Understanding the local market:
For overseas companies that are looking to invest in India, contract cosmetic manufacturers can be the best solution. These manufacturers are usually picked from local manufacturers because of their knowledge and expertise of working in the local environment. They understand sourcing issues, the types of products preferred by the local market and the regulations.
Access to different type of products:
Cosmetics industry is today a multifaceted space with different specializations. So what happens if you want to branch out in something new? In fact, we are seeing this quite often as a number of cosmetics company try to cash in on the growing interest in herbal and Ayurvedic products. But branching out in new directions can be difficult if all your processes are centered on products made from chemicals. It needs different sourcing and manufacturing process. A contract manufacturing firm offers a short-cut to this, giving us a chance to dabble in a new market and product.
Working with small output:
Many contract cosmetic manufacturers will work with small output. This is especially handy when you want to try out a batch of products in a new market. Test runs like these are held by small and big businesses. Small businesses prefer it because it has the least amount of risk for a very low investment. Big businesses prefer it so as to run a small test batch when they are planning to expand, but cannot afford to divert resources for uncertain returns.
So, we see that contract cosmetic manufacturers are especially good for small businesses. Big cosmetics companies may also hire contract manufactures when they want to do a test run, try a new market, product stream or cannot afford to do it on their own.