This article is based on insights gained from the distributor search process conducted in the United States for PlastiNV, a packaging manufacturer for the cosmetics sector, during the summer of 2019.
PlastiNV is a company based in Colombia that produces high-quality and precise injection-molded plastics for cosmetics and fragrances. For PlastiNV, potential distributors were identified in the United States who have a sales network in the cosmetics sector and the potential to sell high-quality plastic components.
U.S. cosmetics and packaging market conditions
Following recent years of rapid growth, it has been observed that the growth rate has slowed in some sectors in the U.S. The U.S.-China trade war appears to have contributed to this slowdown, affecting certain sectors, including packaging. However, the 25% import tariff on some products still presents opportunities for new suppliers.
The continued entry of new and small brands into the cosmetics sector creates more opportunities for companies that can produce in small quantities and specialize in packaging.
Impact of E-commerce on the market
The increase in purchases from e-commerce platforms provides opportunities for small and medium-sized enterprises. The proliferation of e-platforms facilitates access to more options and helps niche and new products become quickly known. The cosmetics sector, in particular, has benefited greatly from digital platforms, with companies adjusting their positions and restructuring themselves according to e-commerce trends.
The presence of new and small firms alongside established major cosmetics brands on the same platforms under similar conditions is a great example of the contemporary competitive environment. In recent years, it has been observed that large, established cosmetics companies are acquiring new, small niche brands to enhance their competitiveness and protect their market share. Another trend is that brands are keeping their marketing and finance departments in-house while outsourcing production and logistics services.
A new brand can gain significant advantages by differentiating itself with its product and story. The right packaging choice offers a substantial visual advantage in conveying this story.
Importance of sourcing from nearby countries
Sourcing packaging materials from countries closer to the U.S. rather than from China provides significant logistical and other advantages, including:
- Sourcing from nearby countries ensures faster and more reliable delivery, preventing production delays.
- Transportation from distant locations typically involves high shipping costs. Sourcing from nearby countries reduces shipping expenses and lowers overall product costs.
- Shorter delivery times allow for lower inventory levels, simplifying stock management and reducing storage costs.
- The ability to quickly respond to material needs minimizes production disruptions and improves customer service.
- Sourcing from closer countries can reduce carbon emissions due to shorter transportation distances. It also helps companies comply more easily with environmental and social responsibility standards.
- Working with nearby suppliers enhances supply chain flexibility and strengthens supplier relationships, enabling faster and more effective resolution of supply chain issues.
- Collaborating with suppliers in nearby countries facilitates regular inspections and more effective quality control processes.
- Trade with nearby countries can reduce bureaucratic hurdles in customs and import processes, ensuring smoother and quicker transactions.
These advantages help businesses enhance operational efficiency, reduce costs, and maintain competitiveness in the market.
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