Haircare Products Case Study

industry:

HAIRCARE PRODUCTS

target market:

UNITED STATES

revenue:

8-FIGURE USD

key metrics:

ANNUAL SAVINGS

Through product cost reductions of over 33%

$440 K

CUSTOMER COMPLAINT REDUCTION

Due to a payment terms ratio improvement.

75%

LEAD TIME REDUCTION

For their core product

33%

The Challenge:

The client operates in the haircare industry, aiming to develop their own custom hair growth formula and expand into custom hair growth shampoos and conditioners. They’ve never operated in this industry before and didn’t have any experience working with formula manufacturers in China.

Developing a custom hair growth formula: The client is an advanced e-commerce seller who wanted to create their own custom hair growth formula, but needed guidance on finding a quality manufacturer that can help with developing their own proprietary hair growth formula. They also needed assistance with finding a bottle manufacturer that can make a specific bottle they wanted to use for their packaging.
Better pricing: (product cost, quantity discount). When the client launched their brand in the US market, initially pricing wasn’t optimal. They needed help with reducing cost so that they can be more profitable and scale faster.
Better payment terms to free up cash flow. The client was doing 50/50 payment terms (50% down, 50% upon completion). This tied up a significant amount of capital for weeks on end. The client wanted better payment terms to free up cash flow for marketing and other priorities.
Improve formula: After the product launch, the client noticed that a number of customers complained about the oiliness of the product. They needed help making the formula less oily.
Develop New Products: The client was interested in developing a number of related products for building brand awareness and upsell.

Each of these problems required extensive collaboration with the manufacturer’s R&D department and sales team. Overcoming these challenges was crucial for the client to scale faster and more profitably.

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our solutions:

The key in helping this client achieve their goals is to find a high-quality factory that has the R&D capabilities to help them make their custom formulas.

Conducted thorough due diligence to identify quality haircare factory and bottle factory. Through extensive research and communicating with over 15 formula manufacturers, we were able to identify a high quality haircare factory that specializes in manufacturing custom haircare formulas. For haircare (and body care in general), the bottle is as much part of the experience as the formula; as such, our team also performed due diligence to find a suitable bottle factory that has extensive experience making bottles for haircare. Our team met in person with both the haircare factory and the bottle factory to build working relationships with both and to fully examine the factories in person.
Renegotiated pricing and payment terms after product launch: As the client began scaling their business, we focused on strengthening our relationship with the haircare manufacturer in order to obtain more favorable pricing. We lowered the price (>30%) and improved payment terms (reduced deposit amount).
Worked directly with R&D team. After hearing customer complaints about the texture of the formula, we worked directly with the factory’s R&D team to make the product less oily, while still maintaining the effectiveness of the formula for hair growth.
Worked with new factories to develop new products. Our haircare supplier specializes in hair growth products; our client wanted to expand into other beauty and skincare products. Through extensive research and communicating with over 30 formula manufacturers, we were able to identify a high-quality skincare factory to work with, along with a haircare ancillary products factory to work with as well.

The Outcome:

By launching several new products, building stronger vendor relationships, and implementing rigorous R&D improvements, we were able to:

Successfully developed and launched hair growth product. Developed a winning formula and found the exact bottle needed based on the client’s specificity. The client was able to achieve 10X growth within the first four months and we were able to streamline production so that there was no stock out. Through monitoring their production bottlenecks, we achieved speeding up the client’s production lead time by 33%, allowing the client to free up their cashflow and avoid stockout.
33.23% savings on product cost over time: From the frequent meetings and relationship building, we were able to successfully reduce our clients cost per unit by a third, leading to over 400K in savings annually.
Improved payment terms from 50/50 (deposit/completion) to 30/70. By building a relationship with the manufacturers directly, we were able to secure better payment terms, which freed up the client’s cash flow.
Reduced customer complaints by 70% by improving product formula. By working with the factory’s R&D team directly, we were able to make the formula less oily while maintaining the effectiveness of the formula.
Launched 4 new products for upsells. We worked with two other factories (skincare and ancillary hair product factories) to introduce 4 new products. These product launches lead to additional revenue of 50%.

Overall, we were able to help this client successfully launch their first ever customized hair-growth product, helped them reduce cost, helped reduce customer complaints, and helped launch ancillary products that generated significant additional revenue.

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