The global market revenue for the makeup industry stands at USD80.5 billion in 2022 and is expected to grow by 5% annually until 2026. When considering the broader cosmetic industry, makeup products are highly valued, accounting for about 18.2% of the total cosmetic market.
The makeup market thrives in every corner of the world, with customers spanning from teenagers to older adults. Recently, the market has been expanding to capture male customers with the gradual revival of makeup for men.
Even at the height of the COVID-19 pandemic and lockdown, the makeup industry continued to boom worldwide, leading to over USD5 billion growth in revenue between 2020 and 2022. As a result, many entrepreneurs and industry experts consider the makeup business as one that is worth going into in recent times.
Away from all the statistics, what does makeup business mean to you? What do you know about makeup business?
In this post, you will learn the titbits of the makeup business and how to set one up profitably.
Understanding the Makeup Industry
Makeup businesses make up one of the most profitable segments of the cosmetics market, and if you are already on the journey to make your mark in the industry, you are probably on the right track.
However, you must know a few things about makeup businesses before you jump into the market. Otherwise, it might be a wild and chaotic venture for you, especially if you don’t have a lot of capital to go on.
The Makeup Industry Is Dominated by Big Brands
There are few big brands dominating the industry. You see them everywhere you go—from malls to saloons. In most cases, clients are more comfortable going for these big brands due to their popularity.
Now, this should not intimidate you. Despite these big brands holding the larger market share, the small brands are still thriving in their midst and making good profits.
Sometimes, all you need is to capture a local market, and your makeup business will excel.
Also, the industry is having a wave of awareness where people are demanding better quality, ethically-sourced products.
In most cases, people are more confident in small brands providing such products than big brands interested in mass production.
The Makeup Industry Is Very Diverse and Progressive
There are lots of profitable niches in the industry, and some of these niches come and go as people’s makeup needs change.
Small brands are more likely to excel when they focus on a niche and work towards excelling in the said niche.
This method is often better if you have limited resources; it is better than spreading your resources in an attempt to cover many market segments.
Also, you can pick one and then transition or incorporate other segments as you improve.
Some trendy makeup businesses in 2022 include:
- All-natural or organic makeup: People are becoming more health-conscious and wary of using products with loads of chemicals. Clients are more confident in makeup brands with natural ingredients instead of hard-to-pronounce chemicals. Additionally, it helps if your ingredients are cruelty-free or ethically sourced; this could quickly put you on the radar. The media loves such brands, and big brands often try to buy out such small brands and make them one of their product lines.
- Luxury makeup: Small business owners often think that they can’t be a luxury makeup brand because they are operating on a small scale. However, sometimes it is mostly about offering an exclusive product. For instance, an all-vegan makeup brand can easily scale as a luxury brand, as clients appreciate the cost of making a makeup brand all-natural.
- Traditional makeup: Traditional makeups are still on top of the trend table, as sometimes, people just want to throw on the good old traditional makeup products and go on with their business.
With these out of the way, let’s take a look at how to start a makeup business.
Guide to Starting a Makeup Business in 2023
We know it is profitable to start a makeup business. However, turning a profit might be very hard if you don’t do it right.
Here, we provide a step-by-step guide on how to start a makeup business.
1. Market Survey
Before every other thing, you must study the market to know what people are looking for in your locality and on online platforms.
This survey would help you form an idea of what is likely to sell the most; then, you can choose the product line you want to develop.
Image: questionpro.com
Also, if you already have a type of makeup product in mind, a market survey would help you gain people’s perceptions of the product. Then, you can know if you need modifications to make your product better than what existing competitors are offering.
Additionally, you want to know the best suppliers and create a relationship with them. Which supplier is more affordable, steadily available and accessible? You don’t want to end up with an unreliable supplier.
2. Create a Budget
You probably have some money already mapped out for the business, but now you know what people are looking for and what you need to do to compete in the market. At this point, you need to take a step back to create a well-tailored financial plan.
What products do you need to make your business on par or better than your competition? What quantity do you need? What is the estimated total cost of production? What would be the final price of your products?
Do you need to advertise? What is your sales strategy? What are your distribution channels? Would you need Storage? Would you need a website? What would it cost? Do you need to take out a loan or seek investors?
These are some of the things to consider when budgeting.
3. Define Your Brand
You need to create or envisage a brand principle, logo, packaging, and operating model. It would be a guide that portrays your unique selling point, directs how you pursue your business, and endear customers to the brand.
Image: ebaqdesign.com
Are you an all-natural, luxury, or traditional brand? Do you need to brand it as an environmentally sustainable product? Who is your target audience?
Many small makeup businesses fail to consider this, so it becomes hard for them to maintain a steady direction, as they are mostly just winging it. Also, investors want to know you have everything in order, mapped out, or projected before they invest.
Defining your brand will also help ease your business registration.
4. Go Legal
Before fully establishing your business, you need to ensure that all your business processes are compliant with state and national laws.
Register your business with the relevant legal bodies, get your tax identification number (TIN), and seek approval from relevant regulatory bodies.
Going legal would ensure that in the occurrence of certain events, your business is on the right side of the law.
5. Start Developing Your Product
Are you producing by yourself with a small staff? Or are you outsourcing production to another company? Whichever way you go, you need to ensure that all the nitty-gritty of production is well-specified and followed to the letter.
You want a product that is of high quality and highly consistent. If your customers notice that your products are inconsistent, they will likely abandon them immediately.
Your product should clearly reflect what your brand portrays; luxury products should not come in obviously cheap packages, and eco-friendly products shouldn’t come all wrapped in plastics.
6. Test, Test, and Test Your Products
You can do this with your friends and relatives who volunteer to try on your products. Asides from the appeal and durability of your products when applied, you also want to know if your products trigger any skin reaction.
Do not shy away from inviting a lab or a regulatory agency to test your products for quality and effects. If your products fail in a certain aspect, modify them, and test them again.
Testing your products with established labs or regulatory agencies helps boost your brand’s credibility among customers contemplating trying your product for the first time, especially if the agency allows you to indicate that they have tested and certified your product on the product package.
7. Set Up Shop
We are in a digital age, so it helps for your product to be both offline and online. Some makeup businesses prefer to operate entirely online in their first year and maybe consider getting a physical store when they have a steadily growing customer base.
If you are launching your products online, then it helps to have a user-friendly website with a very secure payment gateway. While there are various tools you can use to create your own website, we recommend hiring a professional if you need a secure, user-friendly website. A poorly built website can turn prospects away from your business.
You also need to have an elaborate marketing strategy that applies across your social media platforms and website. At CoverClap, we help beauty brands handle the marketing side of their business with assured customer conversions. From paid ads and SEO to social media marketing, we have you covered.
8. Launch Your Product!
Now that you have the promotions and your online or physical shop set up, it is time to launch your products. Make your products available to your customers across all platforms, or redirect them to your website for checkout.
It helps monitor your products’ performance across the internet, gather customer perceptions of your products and online presence and know how to improve customers’ experience.
We can help your journey by keeping track of your brand’s performance and providing insights for areas of improvement while you focus on ensuring your products are of the best quality.