Cosmetics Provide Chain: Insights from a Manufacturing facility Proprietor

On this weblog put up, we unravel the intricate world of the cosmetics provide chain by means of the eyes of a manufacturing unit proprietor, Youyou. Drawing from her experiences, we study the enterprise mannequin, price construction, and the challenges that form this dynamic trade. Central to our exploration is the vital function of belief and buyer relationships in navigating a market that’s always evolving.

The Enterprise Mannequin: From Manufacturing facility to Alibaba

The Manufacturing facility’s Origins and Funding

Youyou, a 77-year-old entrepreneur, based an offline cosmetics model. In 2017, she and her associates invested in a manufacturing unit to provide cosmetics for each home and worldwide markets. This manufacturing unit is integral to their enterprise mannequin, enabling them to leverage their manufacturing capabilities to serve a various clientele. The manufacturing unit primarily focuses on producing inventory for numerous manufacturers, demonstrating their dedication to a dependable provide chain within the cosmetics trade. Their aggressive pricing technique, equivalent to producing samples at 21 yuan every, makes them a lovely choice for manufacturers testing new merchandise.

Past manufacturing, the manufacturing unit has established a strong on-line presence by means of Alibaba, the place they handle a number of accounts. Changchang, a group member, oversees the Alibaba platform. The manufacturing unit makes use of Alibaba as a major channel to achieve a broader buyer base, showcasing their adaptability to the digital market. Their success on Alibaba is clear in excessive gross sales volumes, with some listings exceeding 190,000 items, together with reductions. This displays robust demand for his or her merchandise and efficient use of on-line platforms.

Gross sales and Buyer Acquisition Methods

The manufacturing unit’s gross sales group is essential for enterprise development. Comprising 80 people organized into 4 teams, every group has a selected focus: increasing the shopper base or managing present relationships. The gross sales group employs a multi-faceted method, focusing on magnificence salons, chain shops, and established manufacturers. In addition they use instruments like Qichacha to establish potential prospects by means of enterprise info and cellphone numbers. Social media platforms like Douyin (TikTok) are leveraged to draw new manufacturers, demonstrating their adaptability to evolving advertising developments.

The gross sales group’s effectiveness is mirrored within the manufacturing unit’s annual income exceeding 200 million yuan. This highlights their profitable gross sales and advertising methods, significantly in attracting and retaining prospects. The energetic enterprise improvement (BD) group contributes considerably, accounting for over 70% of gross sales. This emphasizes the significance of proactive outreach and relationship constructing in securing new enterprise.

Income and Staff Construction

The manufacturing unit operates on a commission-based mannequin for bigger orders, significantly these exceeding $15 million. The fee construction is versatile, usually “bottomless,” that means no cap on commissions. This means a willingness to barter and collaborate with shoppers for large-scale tasks. The group construction is meritocratic, with workers incomes a wage of 90,000 yuan primarily based on their contributions. The manufacturing unit emphasizes particular person efficiency and functionality, fostering a tradition of accountability and reward. Staff who fail to satisfy expectations could not obtain a wage for a number of months, resulting in their departure. This method ensures that solely probably the most succesful people stay on the group.

The manufacturing unit’s profit-sharing mannequin is one other key side of its monetary construction. All earnings are allotted, with 37 factors going to the corporate and the remaining portion distributed among the many group. This mannequin incentivizes workers to contribute to the corporate’s success, fostering a way of possession and shared duty. The manufacturing unit additionally maintains a 3-yuan reserve for enterprise operations, guaranteeing monetary stability and constant money circulate. This method demonstrates a transparent understanding of managing funds and prioritizing long-term sustainability.

The Price Construction of Cosmetics

Understanding Uncooked Materials Prices

The manufacturing unit’s manufacturing course of depends on a various array of uncooked supplies, equivalent to oils, preservatives, emulsifiers, and plant extracts. The price of these supplies fluctuates primarily based on the precise components and their origins. As an example, a serum formulation necessitates a exact mix of oil, salt, meals coloring, sugar, plant safety brokers, and a clear spray. The water used on this course of is heated to 85 levels Celsius, underscoring the complexity of the formulation course of and the need of sourcing high-quality components to attain desired outcomes. The manufacturing unit boasts a devoted laboratory staffed with roughly 10 researchers and a specialised physician, who’re essential in creating and refining the manufacturing unit’s intensive vary of formulation. With tens of 1000’s of formulation, together with at the very least a thousand for family merchandise, the manufacturing unit can swiftly adapt to buyer requests and replicate present merchandise with excessive accuracy. The manufacturing unit claims to duplicate competitor formulation with a 95% similarity fee, showcasing their experience in reverse engineering and formulation improvement.

Packaging Prices and Choices

Packaging represents one other important price issue within the cosmetics trade. The manufacturing unit maintains a showroom displaying a wide selection of packaging choices, together with glass and plastic bottles and smooth tubes. The price of packaging varies broadly relying on the fabric and design. Plastic bottles, probably the most generally used, usually price round 5 yuan per unit. Glass bottles are the most costly, with costs starting from 4 yuan every. The most affordable choice is the smooth tube, which might price as little as 2 cents per unit. The manufacturing unit additionally gives customization choices, equivalent to embossing or printing on the packaging, which incur an extra processing price. This flexibility permits prospects to create distinctive and branded packaging for his or her merchandise.

Manufacturing Prices and Manufacturing facility Capabilities

The manufacturing unit has invested closely in its infrastructure, spending 80 million yuan to assemble a state-of-the-art facility. Outfitted with high-temperature melting tools and large-capacity mixing tanks, the manufacturing unit can produce a variety of beauty merchandise. This funding underscores their dedication to high quality and effectivity. The manufacturing unit can manufacture numerous merchandise, together with milk-based lotions, masks, and serums. For instance, they will produce milk-based lotions in batch sizes starting from 50 kg to a ton. The manufacturing unit’s capabilities prolong to high-end masks with carbon fiber and luminous paper components, that are bought in the marketplace for 49,000 to 59,000 yuan however price solely 7 cents per unit to provide. This important cost-to-selling value disparity highlights the potential for revenue inside the cosmetics trade.

The Significance of Constructing Belief and Relationships

The Salesperson’s Mindset and Strategy

The manufacturing unit proprietor underscores the importance of cultivating belief and relationships with prospects. This philosophy is mirrored within the gross sales group’s dedication to understanding buyer wants and providing customized service. The proprietor’s background in gross sales, starting with an internship at a leather-based clothes retailer, emphasizes the significance of greedy buyer psychology. Throughout her internship, she realized that fostering relationships and making prospects really feel relaxed are essential for closing offers. This expertise taught her that aggressive gross sales ways are much less efficient than making a optimistic and interesting buyer expertise. She developed a particular gross sales method that concerned interacting with prospects, helping them in attempting numerous merchandise, and making them really feel valued. This technique, which prioritizes constructing belief and rapport over pushing gross sales, resulted in elevated gross sales and demonstrated the ability of robust buyer relationships.

The Lengthy-Time period Worth of Buyer Relationships

The manufacturing unit proprietor asserts that nurturing long-term buyer relationships is important for enterprise success. She emphasizes the significance of communication and interplay, suggesting that participating with prospects a number of occasions can forge a robust and enduring bond. She believes that if she will be able to impress a buyer over three years, that buyer will develop into a lifelong consumer. This attitude highlights the manufacturing unit’s long-term dedication to relationship constructing. Moreover, the manufacturing unit proprietor goals to ascertain a strong model id that resonates with its prospects. She envisions making a neighborhood of loyal followers who establish with the model’s values and merchandise. This method underscores the significance of constructing a model that transcends merely promoting merchandise, fostering a way of neighborhood and belonging.

Challenges and Future Instructions

The Rise of New Shopper Manufacturers and Advertising and marketing Methods

The cosmetics trade is witnessing a surge in new shopper manufacturers, a lot of that are leveraging on-line platforms and aggressive advertising methods to realize market share. These rising manufacturers usually safe funding and make investments closely in promoting throughout numerous platforms, together with social media and e-commerce websites. In addition they make use of methods like buying massive volumes of merchandise to spice up their visibility and set up a robust on-line presence. This pattern poses a problem for established gamers like Youyou’s manufacturing unit, which has historically relied on a extra natural method to development. The manufacturing unit has not invested closely in advertising prior to now, however they’re now going through strain to adapt to the altering panorama. The manufacturing unit’s management acknowledges the necessity to evolve and enhance their advertising efforts to stay aggressive.

The Offline Expertise Retailer: A Distinctive Strategy

In distinction to the pattern of online-focused advertising, Youyou’s manufacturing unit has chosen to deal with constructing a community of offline expertise shops. They consider that offering a bodily area the place prospects can work together with their merchandise and obtain customized service is a key differentiator. This method emphasizes the significance of human connection and constructing a neighborhood across the model. The manufacturing unit believes that having a bodily presence permits them to attach with their prospects on a deeper stage, fostering a way of belief and loyalty. They envision a future the place their model is synonymous with customized service and a heat, welcoming surroundings. This technique is a departure from the prevailing pattern of online-centric advertising, nevertheless it displays a dedication to a extra human-centered method to enterprise.

Overcoming Anxiousness and Discovering Your Path

The manufacturing unit proprietor acknowledges the anxiousness that comes with navigating a quickly altering market. She skilled a interval of extreme insomnia whereas grappling with the challenges of on-line advertising and model constructing. Nevertheless, she discovered solace in her father’s knowledge, which emphasised the significance of staying true to 1’s core values and discovering one’s personal path. This expertise highlights the significance of sustaining a robust sense of self and goal within the face of adversity. She encourages others to let go of tension and deal with constructing a enterprise that aligns with their private values and beliefs. She believes that true success comes from working inside one’s consciousness and understanding of the world. This message emphasizes the significance of authenticity and integrity in enterprise and life.