Cosmetics are a highly sought-after product on which you can build a profitable online business. However, for this, you need to organize everything correctly, since it is necessary to go a long way from the idea to the desired output. First of all, you need to choose the right strategy and plan each step.

Decide on your niche

It is best to start an online cosmetics store selling a narrow but popular group of products, rather than all at once. This approach avoids direct competition with large online stores, since in this case it is possible to create a website and marketing strategy customized for a narrow target audience, which is cheaper and gives a high conversion.

You need to search for a niche among product groups that are gaining popularity and have a large audience reach. It's relatively easy to do this, the main thing is not to believe ads and articles like "Top 10 Trends in 2020", as they are often wrong (or are native ads).

For example, according to such articles, eco-and natural cosmetics are now gaining popularity. However, if we look at what people are looking for on the Internet using Google Trends, we see a different picture.

In fact, this niche has sunk in 10 years. The reason is simple: first, customers ask, "Give us something without sulfates and parabens." And the next time they say: "My hair isn’t combed well enough from this eco-brand, give me L’Oreal. At least it works as it should". In addition, natural cosmetics is long and difficult: "first you rub tar and coconut oil into your head, and then you rinse it 5 times and comb it for half an hour. Whereas with the usual shampoo: I washed my hair, dried it with a hairdryer, it seems to be good, so I ran to work".

Sustainability is appreciated in words, but in practice - simplicity.

Another example - in the last few years, the skin intellectual movement seems to be gaining popularity. These are consumers who understand the composition of cosmetics and approach the ingredients from a scientific point of view, that is, adherents of evidence-based cosmetics. In reality, this is a dying trend.

The point is that skin intellectuals, eco-cosmetics, natural cosmetics, and much more (for example, V-beauty products) are marketing, behind which are certain brands that promote their products with the help of such "trends".

When looking for a profitable niche, you should rely only on analytical tools: statistics on search queries and sales.

Choose a store business model

The next step in opening an online cosmetics store is choosing a business model. Most Popular:

Dropshipping. A type of mediation in which the buyer first places an order in an online store, then the seller purchases the product from the supplier or manufacturer and sends it to the end customer. In this scheme, the store does not need a warehouse and complex logistics. Profit is formed due to the margin between the prices of buying goods from the supplier and selling to the client.

Business model benefits:

• such an online store is easy to launch;
• it’s enough a small budget to start;
• minimum transaction costs.

Manufacturer. It is cheaper and easier to create your own website than opening a physical point of sale or looking for retailers to sell. Selling through marketplaces is also less profitable, since they need to give 10-30% of the profit.

Business model benefits:

• you determine the value of the goods at your own discretion;
• you control all processes - from production to delivery;
• difficult, expensive and risky, but you can build your own franchise.

Intermediary. You buy an item, store it in a warehouse, and sell it through your web store. It is more complicated and more expensive than dropshipping, but you can control the quality of the goods, their compliance and the delivery process.

Business model benefits:

• more complicated and more expensive than dropshipping, but this way you can significantly reduce the risks associated with the delay of goods at customs, breakdown of a bulk carrier, etc.;
• you can establish closer communication with customers.

White label. Products are manufactured by one company without labeling or branding, and then sold under the brand name of another company, which simply puts their labels on it. Most often, they sell perfumes, shampoos, gels and other liquids that can be easily packaged in their own branded containers.

Business model benefits:

• you can create your own unique brand without engaging in production;
• you can set your own margin, even 1000% (this is not uncommon).

Select products to sell and suppliers

Product search. Once you have chosen your niche and business model, you can start looking for specific product names for your online store and the vendors that sell them. You can find them in several ways.

For example, if you are targeting the United States of America, then Amazon Best Sellers listing is handy. There you can find products that have received recognition from buyers in your niche.

Also in this listing you can see customer reviews of specific products, their estimated selling price and a detailed description that should be transferred to your website. There are similar listings on eBay and AliExpress.

When choosing product names, use these criteria:

• Avoid branded categories. If you choose products that are associated with specific brands, like a smartphone in the United States is associated with an Apple iPhone, then your online store will be more difficult to promote, since key search queries in this niche have long been occupied either by the brands themselves or by large marketplaces.
• Look for brands whose manufacturers have a neutral or positive reputation among both buyers and their employees.
• Look for items with selling prices ranging from $ 50 to $ 100. This price bracket has the highest demand and trade margins.

Supplier search. The easiest option is AliExpress or Alibaba. Both sites have a lot of suppliers and a well-established delivery system. The main difference between the two is that Alibaba has a minimum order quantity (MOQ), while AliExpress does not.

If you don't want to work with foreign suppliers, you can use local supplier listing aggregator sites. For example, in the United States, suppliers of cosmetics can be found at SaleHoo. On the same site, there is a marketing research laboratory where you can compare different products and evaluate them based on sales trends and the competitive index (how many other online stores sell the same product).

There are a few tips to keep in mind when looking for a supplier:

• Select vendors that have been independently verified. For example, Alibaba does this for everyone who subscribes to the Gold Supplier. These providers have a corresponding icon on the website.
• Start by making a few small orders from different suppliers. Evaluate their communication, speed of delivery and quality of goods and only after that move on to closer cooperation.
• Avoid suppliers with excessive or strange fees.

Create your website for selling cosmetics

WordPress. You can create an online store website in literally an hour without spending a dollar if you use WordPress themes. These are white label solutions without being tied to cloud SaaS services and anything else besides the CMS itself. Such solutions do not have the ability to change the design, add new features or do serious customization of the online store, so all sites based on WordPress themes are very monotonous.

Aside from being monotonous, WordPress sites also have security and reliability issues. In addition, various plugins are needed for them to work properly, which usually are sold for $ 20-100 in the form of a one-time payment or monthly subscription.

Development from scratch. Complex, expensive and time consuming option. They choose it if they want to create a unique online store, radically change the design or add new functions. Almost all large marketplaces are built from scratch, usually with the help of outsourced technical partners. How to find and choose such a partner is described in the article: «How to Choose Development Company»

Here is the estimated cost of developing a website for an online cosmetics store, broken down by features and hourly rates of $ 50 and $ 100:

SaaS-solutions. Cloud platforms to which you can connect and immediately get an almost ready-to-launch online store. You just need to customize it a little (choose a theme, color scheme, payment services, functions) and add product cards. You are only responsible for marketing and sales, everything else is on the SaaS provider. The cost of such a service is from 50 to 5000 dollars / month depending on the service, subscription and store income (some charge a commission on each transaction).

Here is a comparison of the most popular e-commerce platforms to launch an online cosmetics store by Ecommerceceo.com:

Promote your online store

For an online store to be profitable, you need to educate Internet users about its existence and why it is worth using it, and not the sites of competitors. Do it with such tools:

• Online listings - free. Inclusion of a company in Google My Business, Yelp, Facebook, Pinterest, Instagram business listings.
• Search Engine Optimization (SEO) — $600-5000 per month. Analysis of search queries for the SEO core, text and content optimization, link building, etc. - all this increases the importance of the online store in the search results of Google and other search engines.
• Social Media Marketing (SMM) — $500-5000 per month. Creation of posts on social networks (texts, photos, videos, gifs, stories), targeting the target audience, launching marketing campaigns, communicating with customers, etc.
• Content Marketing - $500-5000 per month. Development of a content plan, creation of relevant content, its distribution and promotion, as well as the creation of a link mass.
• E-mail newsletter — $0-1000 per month. Developing strategy and design for multiple email templates, content creation and testing, and fees for using special services like HubSpot or Pardot.

Register a business

Any serious commercial activity requires registration with government agencies and obtaining the appropriate licenses and permits. Consider this procedure using the example of Delaware (USA):

1. Consultation with a lawyer. This is important as each state has its own local laws, rules, licenses, regulations and other nuances to consider when starting an online store. It's even better if you hire a lawyer to do everything for you.
2. Choice of registered agent. You can fulfill this role yourself by providing your home address, or you can assign it to a separate resident who is authorized to provide this service. Here is a list registered agents in Delaware .
3. Registration of the company name. You can check the availability of the name at the United States Patent and Trademark Office, book at Division of Corporations, register at Delaware Courts.
4. Submitting an application for starting a business. Can be done online or sent by regular mail. Website and registration form vary by business and state (online forms for Delaware).
5. Conclusion of an operating agreement. It is important if the store has several co-owners. This document will outline their rights and responsibilities.
6. Registration with the Internal Revenue Service (IRS). You need to get FEIN (aka EIN). Can be done on the IRS website.
7. Opening a bank account. Allows you to accept bank card payments from your customers. Can be done at any major US bank.
8. Publication of news about the opening in a local newspaper. In some states, this is a prerequisite for completing business registration.
9. Obtaining the necessary licenses and permits. Usually this is a merchant's license and some other documents. The list depends on the state and type of activity.

How to Start an Online Beauty Supply Store? key takeaways:

#1. Decide on your niche
#2. Choose a store business model
#3. Select products to sell and suppliers
#4. Create your website for selling cosmetics
#5. Promote your online store
#6. Register a business