Ep 149 - Private Label, White Label and Wholesale: What’s the Difference?

 

 

 

 

 

 

 

 

Ep 149 - ASCP Esty Talk - Labels_FINAL 

 

colin@abmp.com 

 

 

0:00:56.6 Ella Cressman: Hello and welcome to ASCP Esty Talk. I am Ella Cressman, licensed esthetician, certified organic skincare formulator, and content contributor for Associated Skin Care Professionals. 

 

0:01:08.4 Maggie Staszcuk: I'm Maggie Staszcuk, licensed esthetician, and ASCP's cosmetology education manager. 

 

0:01:14.4 EC: So before we get started, I do want to take a quick pause and I wanna let Diana Rainey know to get her phone out to text her Esty bestie and let her know that you both get a shout-out today, right?  

 

0:01:29.5 MS: Yeah. Hey, Diana. 

 

0:01:30.8 EC: So it was great to have you call in and let us know that you listen and that you love us and that you and your Esty bestie text while listening to episodes. What a great idea and a positive thing. And especially now because I don't know about you, but I am over doom and gloom. I watch the news every day. It's part of my morning ritual and maybe I should journal like we've talked about in past podcasts, but I don't. I watch the news and nearly every day that's harped on, it's exhausted, the economy this and the spending habits that, repeat, repeat, repeat. And I think especially now where we are in the season where they're talking about retail spending habits and what happens when this is harped on like this, I think it also influences the consumer. But when we look at our profession, I think it would make sense that it might start to scare us. I can see that. 

 

0:02:24.6 MS: I could see that for sure, yeah. 

 

0:02:26.4 EC: But I have a prediction and I wanna just let it be known right here and right now. And here it is. Most aesthetic practices, small and large, will make it through these challenging times, this pending recession, if they do the following two things. Number one, first and foremost, it's something we've talked about before, but provide a thorough and great service, right?  

 

0:02:51.7 MS: Totally. 

 

0:02:51.8 EC: Starting with consultation all the way through the end. And speaking of the end of a service, sell retail. 

 

0:03:00.0 MS: Do it. 

 

0:03:00.5 EC: Do it. Sell retail. I know it seems scary, but do it. It's how you're gonna make it through. And how do we know you're gonna make it through? Because both Maggie and myself have made it through a recession successfully. 

 

0:03:12.9 MS: Yes, that is so true. And I think it's important to note selling retail is how you increase your income. 

 

0:03:21.1 EC: Think about the pandemic and when it hit, what really got us through that was creating these home kits or really upping our home treatment game and selling retail, still is having that connection where they were buying from us and not other retail outlets. But that being said, I've got some good news and I've got some better news. Are you ready?  

 

0:03:43.2 MS: Love better news. 

 

0:03:44.0 EC: Okay. So blah, blah, blah, everything's going down. They're even talking about electronics, they're gonna start discounting 'em 'cause they don't think they're gonna sell because people's spending habits are changing. However, spending in the category of beauty has historically seen small to large increases during recessions. In fact, at the top of the list of recession-proof businesses, guess what?  

 

0:04:07.6 MS: Tell us. 

 

0:04:08.9 EC: Hair, skincare and makeup, it's number one. It's called the lipstick effect. And the lipstick effect is based on the observation that in challenging times people tend to spend money on small indulgences. And small indulgences I think is up for interpretation, but it definitely falls into the category of something that's gonna make you feel better, a lifting serum, a beautiful hydrating cream, something like that versus a large indulgence like a car that maybe you don't need or a large computer that maybe you don't need yet. 

 

0:04:42.0 MS: Right. Or that you can't afford. 

 

0:04:43.8 EC: Yeah. But I can afford this $80 cream or even $150 something if it's gonna make me feel better. I will always find a way to afford that. 

 

[laughter] 

 

0:04:54.0 MS: Well, yeah, we're in the business. 

 

0:04:55.2 EC: So let's talk about it. Today, let's talk about retail, but not just retail selling, but what type of retail you could offer. Let's explore the difference between private label, white label and wholesale. Maggie, what have you heard? Like we hear a lot about private label, especially with some of the business coaches. 

 

0:05:14.2 MS: Yeah. I think you see a lot of estheticians these days that are getting into private label and/or white label. 

 

0:05:20.9 EC: Yeah, I like that you said that. 

 

0:05:22.6 MS: So with a private label and/or white label, this is going through a lab and/or a company. Private label, you can have your own product created by that lab, whereas white label is almost like having, say you have a favorite manufacturer out there and they're literally taking their product but putting your label on it. So a little bit of variation there. Private label, you think you have a little bit of more say or pull in changing up that recipe. But let's talk about it. Let's go in-depth a little bit. So private label sold exclusively in one retailer created by third-party manufacturer lab. So there's a lot of pros and cons here. Pros, it's a unique product customized to your business and philosophies. There's large profit margin, like 300%-600%. And you're excited and proud to sell this retail. You've had, like I said, a lot of pull and a lot of say oftentimes in what that product looks like. 

 

0:06:19.4 EC: I think the cons of this too, I think those are all right on, spot on, that it sounds very exciting too when you're doing this, because what, 300%-600%, in our ROI. But the cons. You're gonna be the good news, I'll be the bad news. [chuckle] The cons is that there's a high MOQ. So MOQ stands for minimum order qualifications. So, when you have MOQ set by a private label usually, when you're dealing with a custom formulation, you're required to buy at least X amounts. It's different than a custom formulation because it's you've got a base and then you're slightly tweaking it and making it unique for you. Where a custom formulation, it's all you, it's all brand new you and you own the rights to that recipe for X amount of years or forever. So, MOQs on custom formulations are usually at 10,000 units each. So if you custom formulate a cleanser, let's say, you have to buy 10,000 cleansers, if you're doing custom formulation. On private label, it could be a 100 or more, before you're seeing that kind of a price break. So that's the difference. You gotta be ready for that. Sometimes it's 50, it just depends on the manufacturer. If it's less than that, I would definitely ask if it's white label. So let's talk about white label. 

 

0:07:39.2 S1: Hold that thought, we'll be right back. 

 

0:07:41.1 EC: Do you wanna give your client's clear glowing skin for good? Look no further than Face Reality skin care. Three-time winner of Best acne line in ASCP's Skin Deep Readers' Choice Awards. As the number one professional acne brand, Face Reality offers estheticians the most comprehensive online acne training to learn how to identify and treat even the most stubborn acne cases. Learn to use Face Reality's holistic treatment protocol, which includes in-clinic treatment, customized home care and lifestyle guidance. Visit pros.facerealityskincare.com today to get started. 

 

0:08:27.4 S1: Okay, here we go. Let's get back to the podcast. 

 

0:08:31.1 MS: Yeah, so white label, this is third-party manufacturer, it's mass manufacturing and customized slightly. So this gonna be like with your logo or brand name, so like I said, it's essentially just putting your label on something that's already been created. So, pros here, it's semi-unique product, it's a lower MOQ and it's good profit margin. 

 

0:08:51.5 EC: Yeah, when we're talking good profit margin, we're talking more 200%-300% markup here, and that's because you're paying for the convenience of having a formula already done, but you're just putting your label on it, so there is an opportunity for a higher profit margin. The con is, that you're essentially sharing these recipes, and usually it's the same packaging, even as the original vendor. So, you're at this side of town, but somebody else on the other side of town, you have, let's take my business, Ella Cress Skin Care Serum, and over there, there's light, beautiful, fluffy, facial serum, [chuckle] they're the same thing, just two different labels. So I think that is not as unique, even though you're selling it in a unique way. So if it doesn't bother you, that's cool. 

 

0:09:42.5 MS: Yeah, and you do see that a lot in the industry, I think. It's a small world, the beauty industry? And it's often that I have seen, "Wow, I know this product under XYZ label." 

 

0:09:52.1 EC: Yup! Absolutely!  

 

0:09:53.8 MS: Yeah, it happens for sure. 

 

0:09:55.5 EC: Wait a minute, this looks very familiar. 

 

0:09:57.3 MS: Yeah. 

 

0:09:57.5 EC: And you even see that at the grocery store like... 

 

0:10:00.8 MS: Oh totally. 

 

0:10:00.9 EC: I was buying my husband a coffee creamer 'cause I just use the same thing. He wants a certain kind of fluffy-fluffy coffee creamer, and there's the store brand and the name brand, same shape of packaging, just a different label. So same thing here because it's notorious in grocery stores, this white labeling. The other thing is marketing challenges, and I think this is true for both private label and white label, is now you've got Maggie Staszcuk skin care, but your clients know, but beyond that, who knows? So there is marketing challenges there. So yes, you have these higher profit margins, but how much of that money is going to go beyond the reach of your current client list on to bringing more people into buying your products?  

 

0:10:47.0 MS: Totally, I think you make a good point. Your clients coming through the door are gonna use the product 'cause they know you and it's being recommended by you, and also even with the private label, you mentioned having a buy-in of like 10,000, you have to be prepared to be able to sell something like that. 

 

0:11:01.5 EC: Absolutely, and so some people have a platform like that, so you look at a larger spa or a chain spa, that would make sense to have private label. We're looking at an individual practitioner, and you have the white label, that's fantastic, that's great, that is the way to set you apart. And I think a lot of people are sold on this because they're saying, "Wait, you're not gonna find this on the internet." Which is kinda true. You're not gonna find it labeled this way on the internet. 

 

0:11:28.5 MS: Right. 

 

[laughter] 

 

0:11:30.2 EC: I think that's the difference. And then let's talk about wholesale. Wholesale is great because these are recognizable brands that sell to a retailer. What the pros are, is that the company markets for you as opposed to white label, there is a brand recognition. So whether their efforts are focused just in the professional arena, or if they're noticed by the retail arena, then at least that there's a reach, there's a recognized thing there. So I have that happen with some of the brands that I carry like, "Oh, I saw this at my doctor's office." Or, "I saw this in this magazine and I've been curious about this." The other thing that happens with some of the brands that I carry is I get calls like, "Hey, I saw on their website that you carry this product. Can I come pick some up? Do you have this product? Can I pick it up?" And inevitably, I get them to come in to see me. Well, that's the hope, right? Not all of them, but a lot of them. And otherwise, I just get to sell 'em retail, [chuckle] which is no work at all. And the other thing is with the wholesale option is that they do ongoing product development, so it can be quite expensive to do white label or private label and then to continually up their game or change and add a new product, add a new product, add a new product, where a traditional wholesaler would be doing ongoing product development. 

 

0:12:52.9 EC: Maybe adjusting a formula to keep up with the times, or introducing a new formula, and then you have more control over the quantities you order. So maybe you only wanna do six, just to see how it goes and then go that way. And then also at the end, when you're working with a recognizable wholesale brand, they have the opportunity to provide you with ongoing training, which is sometimes really valuable even for seasoned, even and especially for seasoned estheticians. 

 

0:13:25.5 MS: Totally. Yeah, they're keeping you fresh. I think that's one of the biggest pros with wholesale, is that you're getting that continuing education. 

 

0:13:32.6 EC: Absolutely. And sometimes too, it's the re-introduction of initial education. [laughter] I think I learn something every week. Some things I'm like, "Oh wow. Yeah, I guess that makes sense. I never thought of it that way. Well now, it all connects." And honestly, glycolic acid is a great example, we learned about it in school, we can recite the definition of it. But I really didn't click on what it was or how it worked within the skin until I was an esthetician for about a year and a half. So what do you prefer? If you had your own business, Maggie, what would you do? Would you have private label, white label, wholesale? What do you think?  

 

0:14:11.1 MS: I think I would go with wholesale. I don't know that I would go private label or white label. And that's for all the reasons that we just said in terms of really you're just creating the label when it comes to white label and private label. I do see the benefit in saying, "This is my product and I'm recommending it for you." But you're not getting the benefits that you get with opening an account with a wholesale company. 

 

0:14:34.0 EC: I think so too. I think maybe if nothing else, is there a marriage? Is there product that's missing from your wholesale distributor? Is there something that you would want to customize? For example, we live in a dry climate, do we want a ski balm? You know, like a balmy SPF that they can take skiing with them because that's something that could be used here, and that's niche, and they're taking it with them. And "Oh, I get this from my esthetician. She made it." Whether she made the label or the product. [chuckle] 

 

0:15:02.3 MS: Right. 

 

0:15:03.0 EC: Or he, whether he made the label or the product. I think that there could be enough as an opportunity for both. But I think my final thoughts are, that all of the product retail options we have discussed today, you really are the only one who can decide which or which combination is right for you in your business. The important thing is that you're selling retail, right, Maggie? Let's repeat that again. The important thing is that you are selling retail, and why? It's because that is the way to foster long-term relationships with clients and to sustain the efforts from your treatment rooms. So everything that you're doing in clinic or in your spa facial room, continues on at home. But now, listeners, we really wanna hear from you. Do you private label? Do you white label? Or do you partner with industry trusted line? Be sure to comment on our social media platforms, especially Instagram and Facebook, or reach out via email at getconnected@ascpskincare.com. We wanna know all the details. In the meantime, thank you for listening to ASCP Esty Talk. For more information on this episode or for ways to connect with Maggie, or myself, or to learn more about ASCP, check out the show notes. And stay tuned for the next episode of ASCP Esty Talk.