A good friend of mine recently approached me seeking advice for starting her own business in the beauty industry. Emily is already a popular beauty and lifestyle blogger with an amazing network but is looking to ramp it up by launching her own beauty product. She was after some general advice about the ins and outs of importing, packaging, Australian standards and any other learnings I had experienced from starting my own beauty product a couple of years ago.
Although I recently sold my business toffey (gel polish brand) there was so much I learnt along the way and so much I would do differently if I were to take the leap again. Here are just a few of things you need to keep in mind if you are thinking about turning your idea into a profitable business.
1. Start Small
This would have to be my most important tip. I can’t urge this enough. We spent $40,000 on toffey in hope that it would take off. We did well enough to get most of it back with the sale and sales over the two years but we still fell short. It is much harder than we thought it would be. People seem very interested in your product when it’s a giveaway, or just about to launch – but when it comes to actually spending money – it’s a whole other story.
2. Understand Your Future Customers
Which takes me to the next point, understand what your potential customers actually want. I had as many blue and green nail polishes as I did pinks and purples. Needless to say hardly anyone actually liked wearing the blues and greens which left us with so many leftover shades. I thought I needed to cater for everyone, but I should have just focused on the majority.
3. Be Aware of Potential Expiration
Keep in mind, most beauty products tend to expire, so if you have large amounts of stock you can risk them expiring before you get the chance to sell them. I was always nervous that the product I was selling wouldn’t last for my customers.
4. Register for NICNAS
If you import products from China (or anywhere overseas) you need to register the ‘chemicals’ with NICNAS (the Australia chemical board). It wasn’t too much of a process but just something you need to be aware of, the fines aren’t worth it.
5. Cover Yourself
Get relevant business insurance. You don’t want to have a law suit against you if someone has an allergic reaction to your product or if your house burns down and your products go up in flames. It is quite expensive but you most likely won’t be covered under normal home & contents insurance.
6. There Will Be Taxes and Fees
Keep in mind if your orders are over $1000 worth of products you will need to pay an import tax and there is also a separate customs fee on top of that when it arrives in Australia. They won’t release your products to you until you pay this.
7. Packaging Needs & Costs
Packaging is so important for your brand, but for us it cost almost as much as our product. So don’t underestimate this aspect of your business. Think logically about the type of your packaging you will need (can your products potentially break during postage, will a gift bag get crumpled from the postage and handling?) These type of questions are important to answer before you dive too deep into the appealing pretty (yet impractical) packaging solutions out there.
8. Know Shipping Requirements
Some beauty products are annoying to ship because of their chemical make up. Consider how you will post your goods. We found Australia post was the most affordable and reliable but with our product we weren’t allowed to send it express post (even though our competitors did – we didn’t want to risk it). This was because it was considered ‘flammable’ and should be transported by road. Customers want things quickly so this wasn’t quick enough for some peoples needs.
9. Get an Intermediary Working on Your Behalf
If you do plan on getting your product from overseas – I would recommend going through an intermediary. They are generally based there and speak both English and the language of the factory (in our case Chinese). This means they can facilitate a lot of the negotiations on your behalf. Again – costs a bit but is worth it. We used Easy Imex.
10. Negotiate with the Manufacturers
Choose a manufacturer who allows you to order small quantities. We got stuck with a minimum purchase order of 120 qty of each colour. This meant we had WAY too much stock and that meant we wasted a lot of money on colours only a few people actually liked.
11. Choose a Profitable Product
If you haven’t got a specific product in mind yet, try and think of one that is cost effective for you (factor in ALL costs in the calculation) and then test to see how much you can charge for the product. The best product will be one that is low cost and with a high perceived value. A good example of this would be makeup brushes. For us, it was hard to get people to pay $14.95 for gel polish. So the margin didn’t end up being that great when we lowered the price for sales. It also meant we had to sell a high quantity of gel polish to make any decent profit. So the marketing effort for gaining one new customer (especially if they only bought one gel polish from us) simply wasn’t worth it.
12. Realise Exactly What Time You Will Need To Put In
It seems so much easier at the onset. You not only need to invest money but you have to invest so much time. Ridiculous amounts of time with no guarantee it will be worth it. Take into consideration not just the packaging time for each order, but think about the ongoing customer support and marketing (especially social media, collaborations and blogging). Also, having a physical product to send to customers meant we always had to be on hand. So even when we weren’t working we were on stand by. This is actually a big mental drain, even if you don’t realise it. For example, even when we were on holidays we had to take stock with us just in case we got orders. With 33 different colours originally and lamps, nail files and all the packaging.
13. Make Realistic Promises To Customers
For us we realised that same day shipping isn’t always realistic. It’s a big commitment. We found promising same day delivery a big mistake. It was too much pressure on us. In the end we decided to always ship the next day so we could still do things during the day. We used to just until 2pm before we could leave the house ‘just in case’ an order came through.
14. Think Big Picture
If you can, choose a product that will be easy to put into a fulfilment centre one day (a shipping warehouse so eventually you don’t have to do it anymore). For us, it was again too complicated and expensive with a large variety in potential customer orders. A good idea is to think of a product that only has a few varieties, is pre-packaged and doesn’t require too much personalisation at the packaging end.
15. Get a Good Website
You can do it yourself but don’t skimp out on too many things. People want to buy on websites that look like they have been designed well. When putting in credit card details customers have to trust you, so it’s always a good idea to include Paypal as a payment option. Think about future marketing endeavours, make it easy to sign up to your email list, find you on social media and refer your website/products with friends.
These are just a few of the many considerations you need to realise before diving in too deep with your latest idea. If you can answer/make notes of all the above points and have the drive and commitment to put in you will find success. Everyone will measure success differently. While I did not find financial success, I can say that I learnt so much more than I could ever have imagined and therefore reached a personal growth success. I know that next time I will apply everything I learnt from toffey and will be closer to finding the secret formula of what makes a successful business. It is tough start your own online business and when you combine that with creating your own product it can feel like a bit of an uphill battle. I promise though, the buzz you feel when someone puts in an order or leaves you a positive review will make the late nights and tears worth it.
If you have any questions at all I’d be happy to help. I will also be trying to write more advice in this space soon.