If you want to start a retail cosmetics shop this year, this could be your best chance of learning very insightful secrets of starting a cosmetics shop. This guide is written to help you from scratch.
I will also answer the most common questions anyone who desire to setup a retail cosmetics shops would ask. Like, is this business profitable? What does it cost to start a retail cosmetics shop? Where can one buy cosmetics at bulk prices for a retail shop?
I have provided you with the right answers and the best advise you can follow to achieve success. As a consultant, I’m also available for enquiries if you have questions. But also know that some enquiries may attract consultation fee – just tokens to help me help you better.
How Retail Cosmetics Shop Works
A retail cosmetics shop is the last line of the cosmetics business before the products ends up in the hands of the end users. There are different lines of action in cosmetics business, from manufacturers, importers, distributors, wholesalers, to retailers. The retail shops is the end-point for cosmetics products.
In a nutshell, a retail cosmetics shop buys products at a hugely discounted price from either the manufacturers, importers, distributors, or wholesalers and sell at retail prices to end users.
Apart from retailing cosmetics products, a retailer should have a better understanding of both the products and the needs of the consumers. That way you can prescribe the right cosmetics to help your customers solve their beauty problems.
Is Retail Cosmetics Shop Profitable?
The first question you must find answer to when starting a retail cosmetics shop is how profitable can the business be? And also how you can make it profitable for yourself. It’s one thing to know if a business is profitable, which in most case is usually the situation. Like, every business is profitable, but a business may not be profitable for someone for some reasons.
So, finding how to make the business profitable for you, should be the right question that you must find answers to. That is one of the things I have provided you answers within this guide.
Cosmetics business is profitable generally. How profitable it can be for you depends largely on certain factors, your location, target market, product efficacy, and price point. The best way to understand the profit potential of retail cosmetics shop is the markup, which is between 30 percent to 300 percent. I will explain it well in my conclusion. Now, let’s finish with the steps first.
Be An Apprentice For Few Months
Make no mistakes, what you know about cosmetics business will be the only reason you will start off successfully or not. And it’s not this article that will teach you that. What you will get from here is the know-how, but it won’t be dealing with the current market realities of the business at the time you are setting up your retail cosmetics shop.
So, I recommend you become an apprentice to another retail cosmetics shop to learn more about the business, especially regarding the location you want to start the business. What you will learn as an apprentice will help you understand the business dynamics much better.
You may need to pay to become an apprentice for just a few months, like 3 to 6 months period. But know that the mentor may not want to teach you everything he or she knows about the business. Be smart to learn even when no one is teaching you. Also be aware that most of what you learn as an apprentice is based on what you saw or experienced. Take note of these two events as you learn.
Make A List Of Suppliers
While you are learning as an apprentice, one of the things you must endeavor to do is find where your boss is buying cosmetics products from. These contacts would help you when you want to start. It will also help you to learn how much your boss buys and how much he’s selling to make profit. It gives you an idea of the profitability of the business based on markup.
Your boss may not want to give you these contacts, but pay attention to details, listen in into phone calls when he is ordering or enquiring from suppliers. Ask others who are in the business to know where they buy from too. And visits some of the markets listed in this articles to meet with suppliers.
Write A Business Plan
Now that you have undergone apprentice for some months, you should have a grasp of how this business works and how you can make your cosmetics shop profitable. So, it’s time to write how you want to do your business differently.
Your business plan should address important aspects of your retail cosmetics shop. It should help you articulate the types of cosmetics you want to retail, who your target customers should be, where to locate your shop, how much you require to get started, what your retail prices should be like, how you intend to market your products, etcetera.
Pick Your Niche
If you have decided almost everything in your business plan, it’s time to take the plunge. Define your cosmetics shop niche. As a startup, don’t make business complicated for you. Pick a niche to start and add more as your grow, or as market demands.
For example, you can choose to start with a particular brand or with just creams and soaps, or with perfumes, or makeup kits, etcetera. Start with the one you know and understand the most. Once you are in the business you will learn more and be able to move to what sells the most for you.
Plan Your Setup Cost
Your setup cost is a product of your plan. This cost is personal to you. You must put it together. Nobody knows what you want to do more than yourself. But this is how I can help you know what your setup cost should be.
Start by inquiring on the cost of shops in your target location. That’s your first cost. Write it down as cost one.
Also, you should have made a list of cosmetics products, based on the products that are either selling more during your apprentice days or have better market potentials. In your list you should have both their retail prices and cost prices. Add carton orders to each product to get the total. And that’s your second important cost.
Other things you need to put into your cost consideration includes:
- Interior decor cost
- Power supply generator cost
- Marketing and advertisements cost
- Staff requirement cost
These things you can find out and at a cost prevalent at the time of starting your retail cosmetics shop.
Find A Shop
Once all the cost have been put together. You know what all that’s required would cost, it’s time to start implementing each of them. The first step here is finding a shop in the target location defined in your business plan.
Your shop will be where most of the sales take place. Retail cosmetics shop is a location based business. So, the best location must be your goal when looking for a shop. Here are a few tips to help you pick the right location for your retail domestics shop.
- Know your target customers too well
- Pick a location that’s easily accessible to them
- Pick a shop that’s visible from the road
Buy Products In Bulk
For a retail shop, you will be buying stocks in bulk to sell at a good profit margin. That means you should know the contacts of either the importers or wholesale distributors. These are suppliers to buy your cosmetics products from.
However, if you know the distributors in your city that might be helpful to save you cost and time, try to connect with them. If you did the apprentice I advised you to do, this would have been sorted out while you were an apprentice. If you didn’t, then you have to do it the hard way.
Trade fair complex in Lagos is a major business hub for cosmetics importers and wholesale distributors. You can start your search from there. Other major markets for cosmetics are Onitsha main market and Cemetery road in Aba. Suppliers abound in these markets.
Pick Profitable Cosmetic Products
No matter what products you stock, there are those that would make you profit and there will be those who would just seat on your shelf and gather dust. Pick your products wisely.
During your apprentice, make the list of the best top 10 or 20 selling cosmetics in your target market. They should be among the products in your list for startup. It’s not the wisest decision but a good place to start.
Another thing to consider when buying cosmetics products is the product and the retail margin. It’s okay to just stock every well known products, but it’s smarter to pick some unknown products that can deliver on their promise. New products have higher profit potentials than already known products.
Marketing And Advertising
Sometimes it’s difficult to try promoting a retail cosmetics shop, if you sell the same products with other competing shops. But you should not discount advertising from your business. I built my retail cosmetics shop on Facebook advertising.
My secret is simple, I have a new cosmetics products, and I was also the distributor in the city. I leverage on it. Although, it wasn’t the idea from the beginning. My target customers, which are other retail shops were not patronizing me because the product was new. I had no choice than to try to sell directly to the end users.
Advertising worked best for me. From no sells I moved to 3 customers per day, and then 5 per day, until I started seeing much customers per day.
Don’t discount marketing and advertising. Find a way to leverage it for your retail cosmetics shop.
In summary, if you subscribed to apprentice you would be well informed about the profitability of retail cosmetics shop. When I started cosmetics, my best idea was to become a distributor for a cosmetics company in my city. But when I got one, I realized while I was making N1,000 per carton of cosmetics I sold, the retail shops were making as much as N20,000 from the same carton.
Although, it takes me little time to sell a carton, but until those retail shops sell off the carton they won’t be coming back for more. So, I wasn’t in a better position than them.
Also, your shop location is a major key. If you make this mistake, the business will struggle until it will eventually shut down.