The Pros & Cons Of Working With A Cosmetic Factory Near Me
Searching for a new cosmetic factory for your beauty business?
Struggling to weigh up the pros and cons of sourcing nearby versus abroad?
This guide is for you!
We outline the biggest benefits and drawbacks of working with a cosmetic factory in your country. We discuss the impact of manufacturing location on costs, lead times, and consumer perception.
Plus, we reveal how your niche could impact your ideal manufacturing location.
The Biggest Benefits Of Working With A Local Cosmetic Factory
1. Reduces Financial And Consumer Safety Risks
Sourcing from abroad can increase the chance of quality issues and this presents real risks to your business - both financially and in terms of a damaged reputation/lower consumer trust.
Research has shown that the risk of product recall is higher if you choose to offshore your manufacturing process.
Corsi and colleagues’ 2014 paper notes that globalization has somewhat increased inconsistencies in quality control - resulting in more quality failures and consumer safety risks.
The same study found that offshored outsourcing has the greatest impact on recall rates, while domestic outsourcing has the least impact on recall rates.
Reduce the risk of costly and reputation-damaging quality failures by sourcing your cosmetics closer to home.
2. Quicker Delivery Times
A nearby manufacturer is a huge plus if you plan to pick up your finished cosmetics in person or deliver them to your exact location.
Typically, brand owners will deliver all of their stock to a warehouse. Be mindful about the supplier’s location and take note of potential warehousing options close by.
Before you decide on the ideal manufacturing location, you need to calculate the total estimated cost of production. It should include the delivery costs for your cosmetics - not just the costs of producing the goods.
Delivery costs can make a huge dent in your profit margins without contributing to the quality of your product, and working with labs closer to home naturally cuts down on these costs.
A closer supplier network can also allow for a more seamless ‘Just In Time’ (JIT) manufacturing process later down the line.
This enables your small beauty business to respond quickly to consumer demand by ordering more cosmetic products during busy periods and holding off on ordering more stock during dry spells.
Learn more about the estimated timelines and costs associated with manufacturing cosmetics here.
3. Less Susceptible To Unstable Economic, Political, and Climate Factors Abroad
Unforeseen circumstances that disrupt the supply chain are an unavoidable part of any business, but sourcing farther afield presents additional risks that could be avoided by manufacturing closer to home.
Unstable economic, political, and climate factors in other countries could result in significant production or delivery delays for your business.
What if these delays coincide with a booming domestic economy? What if they happen during your highest-ever period of consumer demand? Think of the missed profit potential in these scenarios.
Of course, instability at home can also be an issue. However, as we saw with the recent pandemic, unforeseen factors that impact domestic production can be even more devastating on a global scale.
According to research by The BCI, 66.2% of business continuity managers considered switching to more local suppliers in 2020, while 43.0% were hoping to reduce their reliance on the Far East.
War and political instability are difficult to predict, and any unexpected new conflict could damage trade links. You must factor in these potential risks before you commit to a cosmetic factory abroad.
Disruptions to trade abroad can result in significant delays or increased transport costs that completely negate the benefits of offshoring.
4. Fosters A Closer Working Relationship With Your Supplier
Working with a cosmetic factory in the same time zone is a good first step to improving communication with your supplier. But if you truly want to collaborate closely and build a long-term relationship with your manufacturer, go one step further and source from the same country.
Choosing a lab in the same country opens up the possibility to meet face-to-face to discuss your manufacturing goals for the future in detail and clarify any misunderstandings.
As a business owner, it's difficult to let go of control and place your trust in another business’ hands.
Sourcing close by can reduce some of this anxiety. In some cases, it’s possible to tour a local supplier’s manufacturing facilities.
Another underrated benefit of working with a cosmetic factory near you is their deeper understanding of the domestic market.
Close suppliers have better knowledge of local beauty trends and domestic consumer sentiment and can sympathize with the struggles of US-based small beauty businesses like yours. It’s easier to create cosmetics that the modern US market truly wants.
As an entirely US-based manufacturer, at Genie Supply, we understand the domestic cosmetics market. We also pride ourselves on the personalized attention that we provide to each and every one of our clients.
5. Sourcing Locally Is A Selling Point For US Customers
Working with a nearby cosmetic factory is also a strong selling point for potential customers.
It’s important to think beyond just the costs and instead focus on value for money. Makeup and skincare consumers don’t buy solely on price. Quality products are key to gaining a loyal fan base.
If locally sourced cosmetics are superior in quality, even if they cost more to produce, they could earn your business more money in the long run.
Despite increasing globalization over the past 70 years, Americans still see the value in shopping locally.
Retail Brew, in collaboration with The Harris Poll, found that 72% of Americans very often or somewhat often purposefully seek out products made in the USA. Additionally, 65% of respondents claimed they are willing to spend between 10 - 30% more for goods made in the USA.
Collaborating with nearby suppliers is particularly important at the beginning stages of your business. Manufacturing your cosmetics locally is a major selling point at local markets and trade fairs. Success at these events helps to spread the word about your new business.
Sourcing locally can also help signal your brand’s commitment to sustainability. Brand new research from 2023 highlights the benefits of backshoring and nearshoring when it comes to the environment. The research paper notes that local manufacturing can help achieve the UN’s Sustainable Development Goals (SDGs).
Genie Supply’s team is diverse and women-led. We conduct all of our manufacturing and R&D right here in the USA.
The Biggest Drawbacks Of Working With A Local Cosmetic Factory
1. Sourcing Locally Limits Your Options For Specialization
A significant drawback of sourcing locally is that it limits your manufacturing options. Depending on your business goals, finding a cosmetics lab that meets your brand’s vision in your country could be difficult.
Is your business focused on one narrow cosmetic niche? If you specialize in lip gloss, it could be a struggle to find local labs that offer the same range of lip gloss formulas and packaging options as specialist labs abroad.
If you have a highly specialized range in mind, narrow down a list of specialist manufacturers first, and then consider your options based on location.
Ethical considerations could also factor into your decision. Are you hoping to create a 100% clean and vegan cosmetics range? You need to vet all of the cosmetic manufacturers in your area and ensure they match your brand’s ethical standards.
At Genie Supply, we’re experts at formulating vegan, clean, and high-quality cosmetics with a commitment to flexible, scalable, and adaptable manufacturing strategies.
If you specialize in just one particular cosmetic niche, we may have the facilities to formulate your products completely from scratch. Learn more about our custom formulating capabilities here.
2. Choosing A Local Cosmetic Factory Is Typically More Expensive
Cost of production is usually the factor that discourages business owners from working with local suppliers.
Sourcing in the US is typically associated with higher costs - but the reality of the cost differentials is not as dramatic as you may think.
As noted in a 2019 study, the latest evidence suggests that businesses’ expectations around offshoring are overly optimistic. Most only consider the benefits of outsourcing without fully accounting for all of the costs.
As explained in the study, this is especially the case with recent increases in labor costs per unit in developing countries, which is reducing wage differentials between production in the US and abroad.
Never make any assumptions without crunching the numbers first. Take time to work out all of the additional costs associated with local production compared to offshored manufacturing. Only then can you decide if the benefits of offshoring outweigh the costs for your business.
At Genie Supply, we’re committed to providing value for money across our budget-friendly and luxury pre-formulated cosmetic ranges. We also offer several customized manufacturing services to suit a variety of budgets, including a budget-friendly custom product creation service.
In sum, the pros of working with a cosmetic factory near you include:
Reduced financial and consumer safety risks
Quicker delivery
Fewer risks from global instability
Local collaboration can impress US-based customers
Better working relationship with your supplier
The downsides of choosing a domestic supplier include:
Limited options for specialization
Sourcing locally is typically more expensive
Ready to work with a US-based cosmetic factory dedicated to high-quality clean skincare and color cosmetics? At Genie Supply, we would love to work with your small business! Email us: customerservice@geniesupply.com or call: (812) 329-1105 to learn more.
