10th June 2022
MADARA Cosmetics AS
Print-on-Demand Project With 15 years of experience in contract manufacturing, MADARA has expanded its manufacturing service by creating a print-on-demand (POD) start-up – Selfnamed. We consider Selfnamed as a synergy project for the contract manufacturing segment which potentially may significantly increase output volumes and margins. A valuable feature is that products are retaining the COSMOS natural and/or organic certification that is compatible with EU and US standards. The self-service experience via the Selfnamed platform includes a design studio with drag-and-drop features that allows placing the user’s brand elements into label and box layouts. Market research shows that there is no other POD manufacturer offering certified natural and organic cosmetics, however, Selfnamed has cooperation with an integrated platform “Sell” that does not own printing equipment but lists Selfnamed or Cosmetics Nord SIA products in their product assortment. Currently, the “Sell” platform complements what Selfnamed is missing, that is, the possibility of integration with an e-commerce store and drop-shipping. Also, the possibility to manufacture white-labelled cosmetics, on a contract basis, for other POD manufacturers is an option, but currently developing Selfnamed is a priority. The potential client segment is very wide. Custom labelling can be of interest for brand owners like hotels creating personalised hand soaps or body/hair wash or retail chains creating personalised hand care products. Considering that there is no minimum order size, such a service is available for clients that want to make a customised gift or have a custom product labelling for events. Also, influencers and content creators are seeking ways how to monetise their brand, such a platform is an easy way to personalise products. According to the management, the Selfnamed platform is targeting low-medium size orders; however, for high quantity orders, MADARA uses outsourced labelling service as it is done for contract manufacturing partners currently. The product assortment and features, like 3D product visualisation or platforms integration with Amazon, Shopify etc., at Selfnamed currently is limited or not available, but according to the management, it will be extended over time if the desired demand will approve. While the platform lacks vital features for clients who want to commercialise their brand, the Selfnamed platform is deemed to be more appealing for individual orders. However, as mentioned, the cooperation with Sell partly solves the problem. As more companies and society, in general, are looking for ways to make themselves more sustainable, MADARA products and packaging are suitable for such purposes. From a closer inspection of the Selfnamed product offer, products are very similar to MOSSA brand products considering the International Nomenclature of Cosmetic Ingredients (‘INCI’). However, the proportions of ingredients which are not displayed are likely different making Selfnamed products somewhat distinctive from MOSSA. The principles of production, inventory planning and risk management must also be taken into account here. It is more efficient to buy 1,000 kg of one basic raw material and use it for several brands than to buy 2 different basic raw materials just to make INCI different. In terms of both price and risk, there is no need to throw out the raw material if the product X that uses the base raw material for some reason does not sell. We consider Selfnamed products manufactured by Cosmetics Nord SIA quite distinguished from the “MADARA” brand in terms of formula complexity and target customer. However, the Selfnamed products in price and supposedly quality overlaps with “MOSSA” and eventually targets same customers. This could potentially result in somewhat self-competition decreasing “MOSSA” sales. While Selfnamed will have a high gross margin, the positive effect potentially
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could occur only in high volumes. Importantly, our estimates do not include the potential contribution of Selfnamed in terms of revenues or profits. Currently, we are reviewing the Selfnamed itself, the industry it is operating in, and its overall market potential.
POD Sector Overview Print-on-demand (POD) and personalisation are two of the hottest trends happening right now in the printing business. But even though they’re having a moment, they’re not entirely new to the scene; it’s just that, currently, available technology lets entrepreneurs do some pretty amazing stuff with them. By the 1980s, printers started to become available to the public, and print on demand took off. It started out with paper and then evolved into being able to print on fabric too – what is called direct-to-garment (DTG) printing. The first real DTG printer was called ‘Revolution’, and it became available in the 90s. However, modern POD manufacturing as we know it today has risen in the last decade. Print on demand means that your piece of clothing (or whatever else you’re printing on) doesn’t actually get printed until a client places an order, allowing prints of single or small quantities. Furthermore, designing has been largely simplified and does not require extensive knowledge. For a business owner, it means you don’t print unless you’ve really sold something. This is a fairly new way of going about printing. Traditionally, they would create inventory by printing a certain number of products. Then, they would work with this inventory to sell their creations. Especially beneficial for individuals who almost in any scenario do not prefer to order bulk personalised t-shirts or other merchandise, can now access single quantity order for reasonable price. There are a few reasons why traditional printing can be inconvenient. One, it’s riskier. Business owners need to make their best guess at what people will want to buy unless they’ve got extrasensory perception. Then, businesses can easily end up with a big stack of products that for whatever reason just aren’t selling, as they typically have to order in bulk. For building up inventory, capital is needed that sometimes isn’t there or people aren’t willing to risk with. Printon-demand changes this approach. For example, content creators, influencers, or any kind of brand holder can design a product on the POD platform and list it on their e-commerce platform which is connected with the POD manufacturer. A popular approach for today’s merchants is using Shopify which enables them to create a website in minutes with all the necessary integrated features like payment gateways, performance tracking, and easy integration with many POD manufacturers. When you receive an order for your custom product, it goes to the POD manufacturer which fulfils the order and ships it to the customer. Doesn´t seem much effort compared to the traditional business approach, right? That is the reason why so many are using POD as it is a low-risk business model and creators can concentrate mostly on creating their public figures and visualisations for products. However, there are some limitations and not so appealing aspects. Naturally, your costs per item will be higher than if you buy in bulk. Also, these integrated platforms do cost a commission and there are many intermediaries, thus margins are usually very thin. Choices are limited, meaning that the ability to customise products depends on the vendor and the product. You’ll have to weigh base costs, customisation options, and available sizes when deciding which products to customise. Also, shipping costs can get complicated, as it might vary for different POD products. Options are also limited if you want to create a standout unboxing experience. But POD is not only for content creators or influencers to sell their brand. Companies can use it to print work uniforms or custom accessories with the company’s logo on them for their own use or gift them to clients. Also, individuals, which is actually the largest customer base for POD manufacturer businesses, can create personalised apparel or other accessories for their own use or design them, especially for
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