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How to Start a Wholesale Beauty Business

Starting a wholesale business can be a great way to branch out, try something new and start a lucrative new business.  Discover our guide to starting a beauty supply business to find out all you need to know about the wholesale industry and how to make your beauty supply business a success.

What Does a  Wholesaler Do?

A wholesaler is essentially the middleman between the manufacturer and the retailer, they buy the finished product in bulk from the manufacturer before selling it onto the retailer, whereas retailers sell directly to the consumer.

There are a number of benefits to selling wholesale that may persuade you to make the move into wholesale distribution. Wholesalers buy products in bulk, which means they have a larger quantity of products to sell and therefore potentially a larger sales revenue. As a wholesaler you get access to a wide range of outlets and products which may allow you to reach a bigger customer base and provide the potential to expand into global markets, than if you were a retailer. Having access to a wider audience gives you the opportunity to grow your business quickly, whilst also creating good relationships with retailers who want to stock your product. Establishing a good relationship with your retailer is of paramount importance to the success of your business. If you create a positive relationship with your retailer then they are more likely to stay loyal to you and your business, resulting in a more consistent stream of income.

What to Consider Before Starting a Wholesale Beauty Business

Before diving into starting a wholesale business, there are a few things to consider to ensure it is successful.

Have You Developed a Business Plan?

Firstly, the most important thing to do before starting a wholesale beauty business is to devise a business plan and have a clear idea in mind of how you want your business to progress. Your business plan should set out your strategy over the next couple of years, including clear objectives and how you will achieve them.  Whilst devising a plan is great for setting out concrete ideas for how you want your business to grow, it is also essential if you need to secure capital to start your company as you will need to present an in depth plan to either your investors or your bank.

The main things to address in your business plan include:

  • A company profile – explain the history of your business. If you are a start up, then provide information on your industry experience and what progress you have made to starting your business.
  • Market analysis – describe the market and trends, the nature of your customers and finally highlight any industry trends.
  • Goals for the business and methods on how to achieve these
  • Financial projections – if possible, provide historical figures and information. If you are starting a brand new business, then provide a financial forecast for the next three to five years, including information on sales, profit and cash flow budgets.

A business plan is a good way to help you focus and develop your ideas, providing you with a benchmark for how your business should be performing and giving potential investors a clear outlook on your intentions.

How Will You Source Products?

Before starting your wholesale business, you need to know where you will source your products from. Do your research to find a supplier that stocks the beauty products you want to sell.

UMMA is a straightforward option for Korean beauty wholesalers. Finding the right supplier that stocks the right products can be a long and demanding process that involves lots of research into what are the most popular brands and products. You then have to contact each brand to source the right quality and price, before keeping tabs on the delivery schedule. However, UMMA makes the whole process stress free with a seamless shopping experience by selecting authentic products from popular brands, so that you don’t have the hassle of searching for hours on end. With UMMA, starting a beauty supply business is made simple thanks to the easy to use e-commerce platform. The hardest part is deciding which best-selling, top quality Korean beauty products to choose from!

Where Will You Store Them?

Finding the right storage space for your beauty stock is essential when running a wholesale business. For smaller businesses, you may have enough room in your house to store all of your products, however, alternatively you could hire a storage unit if you’re tight on space at home. Finding the right space is dependent on how many products you distribute and how much space that demands. Just ensure that you have storage space organised prior to your delivery from the supplier to avoid any last minute stresses.

Who Will You be Selling to?

The next thing to consider when starting a beauty supply business is who your audience is. Establish who you will be selling to as a wholesaler, for example, will you sell to beauty stores, other wholesale businesses or both? Defining your audience at the outset will help you to develop your business strategy and meet the needs of your customers.

Once you have established your customer base, you will be able to find your niche in the beauty wholesale industry.

How Will You Deliver Your Goods?

The final step is to decide and organise how your business will deliver products to your customers. For smaller wholesale businesses, shipping services such as FedEx are a great option.

Another option that is growing in popularity is dropshipping. With dropshipping the retailer does not stock the products, instead the retailer partners with a wholesaler who is holding the stock. The retailer then transfers customer orders and delivery details to the manufacturer who then ships directly to the customer. Dropshipping is becoming more popular because it minimises risk and cost, plus it is more convenient for the retailers and so strengthens the relationship between wholesalers and retailers.

How you deliver your products depends largely on the size of your business and what works best for you, so take into account which process will be most efficient and profitable for you.

White cosmetic tubes on pink background with copy space. Skin care, body treatment, beauty concept. Square crop.

How to Set Up Your Own Wholesale Beauty Business

Once you have created your business plan and done your research for how you want to run your wholesale company, there are some practical things you must consider to get your business up and running.

1: Register Your Business and Get a Wholesale License

If you want to sell beauty products wholesale, then first you must register your business to get a sales tax license, before getting a wholesale license.

In some countries wholesale licenses are a legal requirement and, even in locations where they’re not compulsory, wholesale licenses allow businesses to trade at competitive prices and benefit from certain tax exemptions, such as import or export tax. What’s more, having proper licensing in place helps businesses appear more credible to potential customers.

2: Set Your Price and MOQ

When starting your wholesale beauty business it is important that you establish your prices and your minimum order quantity. Before setting your prices, it is necessary to do your research to see how your competitors price their products so that you do not overprice or underprice your products. You should aim to sell your product for 2.5 times what it cost you to buy it, but you can find your perfect price point by comparing production costs against your required profit.

The main purpose of setting a wholesale MOQ is to increase your revenue quickly by encouraging your customers to order your products in bulk. With a MOQ in place, you can focus your efforts on more profitable customers who value your products and so are more likely to buy in bulk.

To calculate your MOQ, you should take the following into account:

  • Raw material costs
  • Average order size vs desired quantity – this step is for established businesses as opposed to start ups
  • Average profit per item
  • Plan for your worst case scenario

Establishing a MOQ will help you keep on track of your business and goals, whilst also remaining profitable.

3: Market Your Wholesale Beauty Business

To secure clients, it is important to market your wholesale beauty business in different ways and across a number of different channels. Social media is a great platform to market your cosmetics business, so take advantage of these sites to promote your products. It is also a great way to connect with potential customers so make sure your content is interesting and interactive, for example, with your presence on Instagram you could share beauty tips using your products with links back to your website. 

It is also important to market your products in more traditional ways too. For example, you could advertise your business in newspapers, magazines or by distributing posters locally. The way you market your products depends largely on your customer base and the best way to raise awareness for your business.

4: Create an Inventory and Keep Your Stock Organised

From the get go, you need to set up an inventory that is then routinely updated in line with the turnaround of your stock. Keeping an inventory of your stock is essential for running your business efficiently. It is a huge company asset that helps a company plan for the future, stay within budget and remain profitable. Regardless of the size of your business, keeping an inventory will help you keep track of how well your company is performing but will also save you any stress and headaches by consistently keeping your stock organised. An inventory can help you see trends over time and so you can predict more accurately when certain products may run out.

To run a successful and efficient wholesale beauty business, creating and routinely updating an inventory is essential to ensure that your company remains profitable.

5: Know Everything There is to Know About Your Industry Niche

Keeping up to date with trends and developments in the beauty industry is just as important for wholesalers as it is for retailers.  Knowing the ins and outs of your beauty niche, like K-Beauty for example, will set you apart from your competitors and give you an in depth knowledge about the best products available for your customers. With UMMA,  members get exclusive industry insights into the latest K-Beauty trends, making it simple for wholesalers to keep track of the most popular products on the market. Set yourself apart from your competition and become an expert in your field by regularly expanding your knowledge of the industry.

Starting a wholesale business can be a profitable opportunity, provided you approach it correctly. Devise a business plan, establish strong relationships with your retailers and become an expert in your niche market to make a success of your wholesale beauty business.