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Ten million labels, one formula.


Over the weekend a friend needed advice on a business he was starting. After 30 seconds of hearing about this business I knew it was going to fail. The product of this business is fruit juice sent via mail. The drinks are pretty good, but him and his partners are already wrapped up in being rockstars, pseudo-philanthropists and billionaires. They haven't sold a single unit, have no office or workspace, and yet they're valuing their "company" at $3 million and trying to take on venture capitalist investors.  I think they have been watching too many Shark Tank reruns. 

But that wasn't what bothered me, what bothered me was an "endorsement" they were putting on their site. The endorsement was from a woman with a lengthy resume in the medical field, decorated with various important sounding titles, including the claim that she is a doctor. She paints herself as a busy, accomplished professional in the medical field including teaching at a local medical school in addition to her normal doctoral duties. 

With all of the above, which should be a full time job, she somehow found extra time to open a "holistic" health company selling natural remedies. And now she is working with a non-existent business endorsing juice as being a cure for cancer. 

I told my friend he needs to stay away from this woman, at the cost of losing his business before it even begun. And when he asked why, I said to never trust a doctor with a side business.

 

"Doctor" Miss Information has a remedy for you...

Welcome to Private Label Skin Care

It got me thinking about the skin care "brands" seen in doctors offices or advertised on instagram. From celebrity plastic surgeons to dermatologists, they all have their own skin care side business. And if you have ever known a doctor who is halfway decent at their job, the one thing all decent doctors have in common is that they are always busy with their work. Just like how if you have ever known someone who owns a business, they too are always busy. This is one reason why it takes me 3 days to respond to a text. 

So if both doctors and business owners never have a moment of extra time in their day, how can a doctor run a skin care company?

Well there are two ways. The first is if the doctor isn't good at their job. The woman mentioned above is a bad doctor because she thinks juice can cure cancer. And bad doctors need a side business to make ends meet and have enough time to start one.

And the second is private label skin care.

The private label industry spans from food, to cleaning solution, to skin care. Anything can be private-labeled. What private label companies do is create a generic product and sell that product to other companies who then put their label on it.  For example, if you go to Whole Foods and see Whole Foods labeled frozen carrots, that is private label. Whole foods does not own their own carrot fields or hire farm workers. They pay a major food processing company like Bird's Eye for the right to put the Whole Food's label on their carrots. And chances are there are 20 other grocery store chains who have their company's label on that same bag of carrots.

Generic/private label carrots

 

And the same is true for skin care. 

Whenever you see a celebrity, a doctor, blogger, influencer or anyone else with a skin care brand, 99% of the time it is private label. Regardless of the price or the claims, it is all the same formula. That means the $200 dermatologist-branded serum is the same serum that is being sold by thousands of other companies online or in doctor's offices. The influencer who just started her own brand really just picked out a bottle, put her label on it, and paid a private label company to fill it with their generic skin care. 

And this is especially true for celebrity brands. 

 

When all you need to start a skin care brand is your own logo

Big marketing, small sales

A good friend of mine is the president of a major personal care manufacturing facility here in California. About two years ago we were talking about a major celebrity's beauty brand. This celebrity is extremely famous and her beauty brand was claimed to be worth a billion. I said there is no way this company is worth a billion, at the most they are doing $10 million in sales a year and worth $100 million at most. The rest is just inflated marketing, unverified claims and accomplished PR. My friend didn't believe me and I said "just wait" the truth always comes out about this kind of thing. I remember Enron. 

A few months later my friend had some news for me, this same celebrity just hired her company to manufacture the new skin care products that her beauty brand was launching. My friend was excited about this deal because she assumed that since this company was supposedly worth $1,000,000,000 this would mean that the beauty brand would be outputting millions of units. She assumed that the Beauty Brand would have their own formula to make products unique to their brand. And that the manufacturing company would make a good profit from manufacturing thousands to millions of units of skin care products. 

Well, none of that happened. What did happen was the celebrity's brand representatives went to my friends company, said to just put the beauty brand's label on their generic/private label skin care products (in her words "whatever you have"). And they ordered a very low quantity, and re-ordered only twice in one year. 

So even with the top beauty brands owned by celebrities, they are generic, private label, off the shelf products. If you ever bought generic skin care from the drugstore, from Amazon, or from a discount big box retailer it is the same skin care as from this celebrity's beauty brand. The only difference is a label, a box and a marketing campaign.

And I believe people caught on to the low quality of this skin care brand's products quickly because despite this celebrity's tremendous fame, the sales are dismal.

News also emerged, in a buried report, that the celebrity in question lied about how much revenue her brand made and grossly inflated the value of her company. 

Beware the skin care industrial complex 

The problem with private label skin care is twofold: first the quality is bad. When you receive generic skin care it is mass produced with low quality, skin-damaging synthetic ingredients, fragrance, essential oils, alcohol and harsh preservatives. 

There is no biological research behind private label skin care because no research is necessary. It just needs to smell good, feel good, look good and be able to sit on a shelf for 2 years in a warehouse. Private label is meant for mass consumption at a low manufacturing and maintenance cost. It is the fast food of skin care.

And the second is that someone can take a generic cream or serum, put their label on it, make any claim they want, and sell it to you for a premium. When a celebrity, doctor, or influencer purchases a private label serum for $0.50 a unit, they can put their fancy label on it, claim that it took a lab years to research the formula, that it removes wrinkles and prevents aging and charge you $20-2,000 for it. 

With OUMERE, it took me 10 years of biological education, research and experience to be able to begin formulating. And an additional 2+ years per product to create the formulas in addition to hundreds of reformulations and tests. This was a 100 hour week endeavor for years. With private label, it is just a matter of coming up with a nice logo, picking out a product from a catalogue, and buying ads to sell it.  

So why does private label sell despite the low quality generic formulation? Because influence sells. Marketing sells. celebrity sells. The private label industry depends on it.