Being a beauty editor I am surrounded by a lot of brands and formulas so know when brands are selling the same products but at different prices. It's called private labeling and I briefly mentioned it in my last post where I used small boutique cosmetics brand ELES Minerals Makeup as an example of when private labeling can go extremely wrong when it is exploited by poor business sense and ethics.
This blog is all about the reasons why companies use private labeling. Private label companies are manufacturers who provide retailers with ready made formulas and packaging. So your favourite Australian perfume or makeup isn't made in your favourite brand's factory somewhere out in the desert in Australia.
Surprised? ... don't be. The rise of private labeling in Australia is not a new phenomenon.
While the rise of private labels is a topical subject around the world, and currently hotly debated in the cosmetic industry in Australia, the notion of private labels is not new. In Europe and America, private labels have been around since the 19th century. In the UK, St Michael has been the Marks & Spencer retail chain’s own brand for more than a century. Kumar and Steenkamp (2007) consider that the impetus for the recent surge in private labels began in earnest in the 1970s when retailers started to significantly consolidate and to develop national chains. Up until this point, manufacturers had firmly held the balance of bargaining and negotiating power in the market between retailers and manufacturers.
Since the 1970s, the balance of power has most certainly swung in favour of more commonly known brands such as MAC, Smashbox & Napoleon (who boldly claims that his formulas were conceived by him!) to name the obvious. These companies all have a significant part of their business concentrated in private labels because it's the cheapest and fastest way to get product out to a demanding market and for markets like Australia kept in the dark on a well known and standard industry practice... they become targets for the not so ethical companies wanting to get rich more quickly than they deserve.
Private labels are growing strongly around the globe and are expected to continue to do so. The range of cosmetic products covered does not seem to be limited, enveloping all kinds of formulas, latest shade trends, stylish packaging. And more brands are openly basing their business model around sourcing their products from private labeling companies - meaning that all those expensive brands charging higher than the international RRP will either have to lower their prices to stay in the market or fall by the wayside.
So it's good news for customers.... unfortunately bad news for bigger brands who have been happily riding the gravy train on private labeling for decades.
Makeup Prices in Australia
Recently I came across a product review where customers were outraged with the price differences on brands selling same products to multiple countries. So I thought to write my first blog around this widely disputed topic.
Yes - it is fact that say buying MAC in US is cheaper than MAC in Australia and you want to know why? This brand isn't the only one that has different prices for different regions. Big iconic brands have been doing this for years so let me open your eyes into the cosmetic world.
The majority of brands use private label companies so it doesn't matter where you live, you're most likely getting the same product and formulas. Pricing all comes down to how competitive the industry is in each market. For example, MAC's prices change because there is more competition in US than Australia and sadly most Australians are so used to paying whatever prices brands set and usually these are the highest they think you will pay!
Why? Because they are not aware of the fact that competing smaller brands with better prices are using the same private label companies but they haven't been as lucky to get the same brand recognition.
It is starting to change in Australia as more brands start popping up and being honest about using private label companies. We are seeing small ripples of incidents where boutique brands, claiming to be exclusive so that they can charge higher than the RRP are caught by customers recognising that the same products can be bought cheaper from another brand.
A good example of this, in May 2009 and June 2012 it was controversial that creator Liane Scior of ELES Cosmetics and sole retailer of Pevonia Botanica within Australia was questioned on her business ethics. When customers found other Australian brands selling same packaging and formulas at lower prices, news travelled fast. It was a difficult bullet to dodge back in 2009 when ELES was questioned on charging four times the international RRP, a bullet they barely missed by suggesting it was reasonable due to the US economy being so strong. See an excerpt from Beauty Heaven discussion July 2012...
". Some facts come straight from a discussion taken from this exact site back in 2009 where you BB and Eles were part of. In case you don’t remember it let me refresh you
Beauty Heaven, May 2009 Eles was question by seemingly disappointed posters who question Eles on her misleading customers into thinking her products were “exclusive”, made in Australia but the same as Napoleon and other international brands.
Eles was also questioned on her pricing on which she answered with “the products are more expensive in Australia because the American dollar is stronger. Companies have to consider this as well as shipping, staff costs, marketing etc when determining pricing. Every brand that you find in the US that is made there will always be cheaper.” Let’s just follow up on this statement because it was around May 2009 that online sales increased in America from Australia customers. Some of these customers told us in 2009 how they were paying twice the amount at Eles. Today we are getting new Australian customers saying they are paying 4 times the amount at Eles when US dollar is almost on par. Over the years international companies have been keeping Eles in their sights because of their ethics bringing shame to industry and have noticed a steady increase in their pricing and never a decrease. Eles products and shades have never changed- discontinued shades and products are still being sold on their site – but their pricing changes dramatically. "
However, later in June 2012 they were questioned again when the Australian dollar was stronger, a question ELES was unable to answer. ELES was also put under scrutiny when they described their formulas as being "exclusive" in media and social forums.
Unfortunately, ELES publicly announced on Beauty Heaven forum that they were the "first" to introduce the product range/formulas to Australia. This backfired when it was revealed that brands like Issada, MAC, Napoleon, Lancome, Ebony & Ivory a few smaller unknown brands had been selling the same formulas for many years prior to ELES starting up business. It didn't help when news also surfaced that ELES was selling discontinued products at full rate causing skin reactions and stockists to lose clients. See evidence from a forum discussion in 2012 on Beauty Heaven that was removed based on the site's opinion that the thread contained what they considered "unverified" proof... according to whom? ELES perhaps who is a main contributor on their site?
Fortunately, my research on ELES had led me to this thread and I had subscribed to this lengthy discussion at the time so have the entire discussion on record:
ELES has also been accused of copyright infringement, fraud, plagiarism and cyber bullying, online defamation and harassment towards its competitors via threat emails and having ELES staff masquerading as customers to extract information from their competitors. While they argue there is no substantial proof many have provided evidence on ELES not only recycling other brands and unaffiliated makeup artists model portfolio photos but also ELES making claims that these models wore ELES makeup when in fact they did not. See example of where they claimed to have completed makeup on model in their 2012 'Metallic Temptress' look when the model appears back in 2007 for client Cinderella Boutique . ELES also have the same model appearing on their About Us page. This is a regular pattern for the brand as numerous stock photos off sites like Shutterstock have been used to promote their makeup.
More recent evidence revealed them stealing online content from other brands social media sites where blogs, posts and even signature makeup looks were copied verbatim. Further proof of ELES using stock photos to falsely advertise their "makeup looks" was revealed when a researcher found the same stock images from another brand appearing on ELES landing page (where ELES was also advertising discontinued product on their website). See below where the same image appears in Nude by Nature's makeover ...
When caught red handed by disappointed customers, one of which is a colleague of mine in the beauty industry on Facebook, ELES frantically removed all related posts and received the following posts:
I am not just singling out ELES...another Queensland company, Issada Cosmetics also makes the same false claim of exclusivity to charge higher prices. Both of these companies' ethics have revealed what has been happening in our industry for decades.... buyers are just getting smarter now and doing their research.
Don't get me wrong, not all brands are like ELES . There are honest brands out there but to protect yourself make sure you do your research on a brand before buying from them.
*All information that I've provided is based on research backed by proof.
Yes - it is fact that say buying MAC in US is cheaper than MAC in Australia and you want to know why? This brand isn't the only one that has different prices for different regions. Big iconic brands have been doing this for years so let me open your eyes into the cosmetic world.
The majority of brands use private label companies so it doesn't matter where you live, you're most likely getting the same product and formulas. Pricing all comes down to how competitive the industry is in each market. For example, MAC's prices change because there is more competition in US than Australia and sadly most Australians are so used to paying whatever prices brands set and usually these are the highest they think you will pay!
Why? Because they are not aware of the fact that competing smaller brands with better prices are using the same private label companies but they haven't been as lucky to get the same brand recognition.
It is starting to change in Australia as more brands start popping up and being honest about using private label companies. We are seeing small ripples of incidents where boutique brands, claiming to be exclusive so that they can charge higher than the RRP are caught by customers recognising that the same products can be bought cheaper from another brand.
A good example of this, in May 2009 and June 2012 it was controversial that creator Liane Scior of ELES Cosmetics and sole retailer of Pevonia Botanica within Australia was questioned on her business ethics. When customers found other Australian brands selling same packaging and formulas at lower prices, news travelled fast. It was a difficult bullet to dodge back in 2009 when ELES was questioned on charging four times the international RRP, a bullet they barely missed by suggesting it was reasonable due to the US economy being so strong. See an excerpt from Beauty Heaven discussion July 2012...
". Some facts come straight from a discussion taken from this exact site back in 2009 where you BB and Eles were part of. In case you don’t remember it let me refresh you
Beauty Heaven, May 2009 Eles was question by seemingly disappointed posters who question Eles on her misleading customers into thinking her products were “exclusive”, made in Australia but the same as Napoleon and other international brands.
Eles was also questioned on her pricing on which she answered with “the products are more expensive in Australia because the American dollar is stronger. Companies have to consider this as well as shipping, staff costs, marketing etc when determining pricing. Every brand that you find in the US that is made there will always be cheaper.” Let’s just follow up on this statement because it was around May 2009 that online sales increased in America from Australia customers. Some of these customers told us in 2009 how they were paying twice the amount at Eles. Today we are getting new Australian customers saying they are paying 4 times the amount at Eles when US dollar is almost on par. Over the years international companies have been keeping Eles in their sights because of their ethics bringing shame to industry and have noticed a steady increase in their pricing and never a decrease. Eles products and shades have never changed- discontinued shades and products are still being sold on their site – but their pricing changes dramatically. "
However, later in June 2012 they were questioned again when the Australian dollar was stronger, a question ELES was unable to answer. ELES was also put under scrutiny when they described their formulas as being "exclusive" in media and social forums.
Unfortunately, ELES publicly announced on Beauty Heaven forum that they were the "first" to introduce the product range/formulas to Australia. This backfired when it was revealed that brands like Issada, MAC, Napoleon, Lancome, Ebony & Ivory a few smaller unknown brands had been selling the same formulas for many years prior to ELES starting up business. It didn't help when news also surfaced that ELES was selling discontinued products at full rate causing skin reactions and stockists to lose clients. See evidence from a forum discussion in 2012 on Beauty Heaven that was removed based on the site's opinion that the thread contained what they considered "unverified" proof... according to whom? ELES perhaps who is a main contributor on their site?
days ago
John510
4 posts
|
A customer who moved to Australia
contacted me about ELES products to get a price check and I was
happy to help but when they asked about these two products Concealer / Hydra
Bright Line Diffuser & Mineral Sheer Veil it raised issues because these
phased out of the North American market 4 seasons ago and there’s serious
health risks selling old stock to customers. I’m not Australian but as a
retailer of the same mineral products think it’s my duty to notify all
Australian customers that Eles is selling several seasons old stock and at 4
to even 5 times the RRP. I know this because my company with many
international retailers use the same private label company
and FDA regulations prohibit cosmetic brands to sell stock beyond
expiry date.
|
ELES has also been accused of copyright infringement, fraud, plagiarism and cyber bullying, online defamation and harassment towards its competitors via threat emails and having ELES staff masquerading as customers to extract information from their competitors. While they argue there is no substantial proof many have provided evidence on ELES not only recycling other brands and unaffiliated makeup artists model portfolio photos but also ELES making claims that these models wore ELES makeup when in fact they did not. See example of where they claimed to have completed makeup on model in their 2012 'Metallic Temptress' look when the model appears back in 2007 for client Cinderella Boutique . ELES also have the same model appearing on their About Us page. This is a regular pattern for the brand as numerous stock photos off sites like Shutterstock have been used to promote their makeup.
More recent evidence revealed them stealing online content from other brands social media sites where blogs, posts and even signature makeup looks were copied verbatim. Further proof of ELES using stock photos to falsely advertise their "makeup looks" was revealed when a researcher found the same stock images from another brand appearing on ELES landing page (where ELES was also advertising discontinued product on their website). See below where the same image appears in Nude by Nature's makeover ...
Removing all the other posts including mine in response to
your review links is not professional.
The conduct is becoming a regular pattern of yours when someone asks
reasonable questions about your brand and products. I find it very disconcerting when a company
removes posts instead of answering them.
I came on here scouting for a company to write a full spread article on
and I have been met with offhandedness behaviour and arrogance. I will not be recommending your brand and
will pass off your existing media coverage as either merely sheer luck at
deceiving customers & stockists or mailing out plenty of free product to
motivate positive action. I will be
speaking to my colleagues in the industry to notify them of your disagreeable
conduct on Facebook.
I am not just singling out ELES...another Queensland company, Issada Cosmetics also makes the same false claim of exclusivity to charge higher prices. Both of these companies' ethics have revealed what has been happening in our industry for decades.... buyers are just getting smarter now and doing their research.
Don't get me wrong, not all brands are like ELES . There are honest brands out there but to protect yourself make sure you do your research on a brand before buying from them.
*All information that I've provided is based on research backed by proof.
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