Having control over the price and distribution of product is important for clinics. They often invest time and effort into getting a client to buy product, only to lose the sale to the clinic down the road or to the internet. This frustration has led many clinics to seek out private label brands.
The cost of developing a private label brand is often very low as product will have been pre-tested. Minimum order quantity for products should not involve much (if any) outlay of money or effort. A number of our clients only spend roughly 5-10 percent of total sales toward promotions and awareness. Therefore, there is potential to earn higher margins without paying for a brand that has to market heavily (with costs that, in part, are worn by the retailer).
Another benefit is in being able to tailor your product offering to your clientele more effectively than a brand that has to have broad appeal and a prescriptive management style. Established brands are happy to have their product stocked in a clinic because clinicians are actively selling them versus sitting on a retail shelf amongst many other brands with no retail staff to push the product. For that, clinicians will be paid in the form of a lower wholesale cost than that of a retailer. If and when (through the success of your efforts) the brand becomes well-known, however, the value of having clinics sell the product is reduced where selling to you at a lower wholesale price is not as attractive anymore. That can set up an uncomfortable relationship between brand and clinic. When managing a brand that, as most will, start selling direct to consumer, an internal wrangling is often created around who bears the cost of product faults, replacements or refunds. These issues can create infrequent headaches that could drive you to distraction.
This article first appeared in the July issue of Professional Beauty magazine. Download the issue here.
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