How to Start an Online Fragrance Business
The fragrance industry is a thriving market that offers endless possibilities for entrepreneurs. If you already have a passion for the perfume industry and the drive to start your own business, all that’s left is to learn how to start an online fragrance business.
The rise of e-commerce means that starting a successful perfume business online has become more accessible than ever. This gives enthusiasts a great opportunity to launch their own perfume brand and compete with even the biggest players in the perfume business.
1. Write a Business Plan
A detailed perfume business plan is the foundation upon which you will build a successful enterprise. Research from Harvard Business Review suggests that entrepreneurs who commit their plans to paper are 16% more likely to create viable businesses than those without a plan. Writing a plan gives you a clear roadmap for progress, establishes goals, and anticipates problems before they occur.
Writing a business plan also gives you time and space to establish your vision and lay out a strategy for reaching your goals. Your plan will describe your niche and target audience, your financial goals, and your strategy for establishing and marketing your products.
Position Yourself Strategically as a Small Business
Dipping your feet into the perfume industry is thrilling. However, the prospect of competing with perfume giants may seem daunting at the outset. It’s easy to feel like a drop in the ocean as a small business. However, studies suggest that being a small business can be a strength if you know how to put the data you collected from your market research to good use.
A 2022 study observed that SMEs are able to adapt faster to market demand (page 12 of the PDF). This is because they’re more in tune with changes in their target market’s disposable income and can adjust their prices accordingly. Small businesses are also better equipped to change the product type or improve its quality in response to customer feedback.
This study underlines two important lessons for small perfume businesses as they create their business plans:
- You must always be aware of what your customers want and need and be open to taking on feedback to improve and adapt.
- Small businesses needn’t be intimidated by the scale of the perfume market, as being a small business can be a strength if you know how to use your small size to your advantage.
Define Your Target Audience
The business owner’s vision doesn’t always align with the reality of the perfume market or consumer demand. That’s why it’s essential to conduct market research before jumping in head first.
Make sure you have a clear understanding of who your audience is and what sells; will you focus exclusively on perfumes for women, or are you open to joining the cologne business for men? Will your brand focus on high-end fragrances or offer options at more accessible price points?
Keep in mind that selling perfume online is vastly different from selling it in a high-street store. Ask yourself who buys perfume online, what motivates them, and how you can attract their attention. You will also need to adapt your marketing strategy when selling perfume online rather than in-store, for example by focusing on the effective use of adjectives and visuals rather than fragrance sampling.
It’s important to direct resources and finances to this part of your business journey. Jumping to conclusions about your target audience can prove costly in the long run. Take time to ensure you have a product that sells before investing in its development and the online tools you will need to launch your brand.
2. Define Your Niche
Choose a niche that fulfils a need in the market or provides something you think is missing. Your niche could be a specific product like beard oil or a scented bath product. Alternatively, your niche could focus on a specific age range such as babies or children (using mild, non-toxic scents) or a particular scent profile.
Your niche should be defined by the research you did while writing your business plan. Consider the price point you’ll pitch your products at, the type of product you want to develop, and whether it’s an everyday or luxury fragrance.
Possible approaches to finding a niche could be:
1. Focusing on a Particular Demographic
Imagine you want to develop perfumes for women. There are many sub-niches within this category that you could develop as you scale your business. For example, you could focus on luxury products, cruelty-free products, or natural perfumes made using essential oils. Remember that your marketing strategy will be more effective if your product line and messaging are highly focused.
2. Focusing on a Price Point
Another approach could be to sell a range of products but limit them to a certain budget. We often consider fragrances as luxury products, but there’s a huge market for perfumes at lower price points. In fact, 65% of fragrance sales in Europe are considered non-luxury.
Choosing your niche must take into account a range of factors that will depend on your location, budget, interest, and expertise. Your choice of niche must respond to market demands in order to be successful.
For example, the fragrance market in France is dominated by luxury brands with a focus on traditional aromas and high-quality ingredients—despite the fact that there is a large demand for non-luxury fragrances across Europe in general. This underlines the importance of understanding your target audience and what’s likely to do well where you are.
3. Manufacture Your Products and Packaging
Whether you develop your fragrances at home or outsource production to a manufacturer, your fragrances must comply with European cosmetics regulations. Remember that you’re producing a product that your customers will use on their skin. Make sure you follow all of the regulations surrounding safe manufacturing processes, labelling, and allergens.
Your fragrance bottles must also align with the image you want your brand to have. Everything from the material you use to the originality of the design should reflect what you want potential customers to understand about your fragrance. Think of your bottle as the door to the perfume itself and remember that online shoppers choose with their eyes, not their noses. Ensure your bottle and any other packaging is memorable and visually stunning.
4. Select the Right Marketplaces
New and small businesses often rely on marketplaces as well as their own e-commerce websites to sell their products. Look for marketplaces that will boost your brand’s visibility and reach without eating too much into your bottom line. Consider the following when comparing marketplaces:
- Target market: Find out where your target market shops and position yourself there.
- Fees and charges: Selling on online marketplaces doesn’t come for free. Research all of the costs involved and how much each marketplace will impact your profitability.
- Brand visibility and reach: Marketplaces are only useful if customers see your products. Choose the options that will ensure the greatest possible visibility.
5. Build Your E-Commerce Store
Entrepreneurs have access to a wealth of tools to help them set up an online perfume store. If you already sell fragrances in person, building an e-commerce store is an essential step towards digitising your business.
The first decision when setting up your e-commerce store will be whether to get a web developer or use a web builder platform to set up your online store. Most small businesses will find that a web builder like Shopify or WordPress is enough for their needs.
What to Include in Your E-Commerce Store
Your e-commerce store must offer resources to help your customers understand your products and how to choose one that matches their preferences, because—unlike in high street shops—they can’t sample your products before purchasing them. Some must-have features in your e-commerce store include:
- Interactive tools: Interactive features personalise the user experience via a series of questions about the kind of fragrance product the customer is looking for. This will help them find fragrances that match their personal preferences quickly.
- Classy product showcasing: Customers who purchase perfumes online rely on visual stimuli and product descriptions to distinguish one product from another. Your product descriptions must be flawless and include detailed descriptions of the scent notes and ingredients as well as which occasion or customer it could be suitable for.
- Storytelling and brand heritage: Weave your brand story throughout your website. Highlight the craftsmanship behind your products and create a narrative that captivates your customers’ imaginations. This could include behind-the-scenes videos on the inspiration behind your brand, the ingredients that go into your products, and the thinking behind your bottle design.
6. Set Up Payment Processing
Payment processing is vital for small online businesses to accept national and international payments. European businesses with the ambition to sell their goods across the continent or further afield will benefit from working with a payment processing provider that accepts more than 100 different currencies, facilitates secure transfers, and accepts a host of payment methods.
Set up your merchant services account with an integrated global payment gateway to accept customer payments quickly and easily. Partnering with a provider like Unicorn Group will also allow you to benefit from:
- A reduction in failed payments
- A mobile dashboard to manage transactions on the go
- Fraud and chargeback protection
Having a system that stores customer data is also useful for planning marketing campaigns and monitoring customer satisfaction.
7. Market Your Brand
Online advertising will likely represent the most integral part of your marketing strategy. Digital marketing must be focused on making your products visible, getting customers interested in your brand, and ultimately driving sales. Your digital marketing strategy should include:
- Social media marketing: Both paid ads and your own content on social media can be highly effective in reaching new customers. Consider your target audience and meet them on the platform where they spend the most time. Working with influencers can also be effective and is one of the top beauty e-commerce tips.
- Marketplace-specific advertising: Marketplaces offer different ways to showcase your products, such as sponsored listings and e-mail marketing. Consider the options that best fit your marketing budget.
8. Refocus Your Goals for Long-Term Success
Many brands will find breaking into a competitive industry like perfumes to be the biggest challenge on their business journey. However, the hard work doesn’t stop when you reach your initial goals.
Refocus your goals regularly to ensure your longevity. This may involve scaling your operations, releasing a new perfume line, diversifying your product range, or trying out new advertising methods to reach more customers.
When rethinking your strategy going forward, remember the loyal customers who got you this far. Nurture these relationships as you refocus your sales strategy:
- Monitor: Keep an eye on the key performance indicators that show you’re staying on track.
- Evolve: Stay ahead of the curve by anticipating new trends and using customer feedback to improve your products.
- Invent: Be brave enough to try out new strategies or product lines to keep your brand fresh and relevant.
Establish Yourself as a Player in the Perfume Industry
Starting an online perfume business can be a rewarding venture for those with a passion for scents and entrepreneurship. Carefully consider your target market, develop a unique brand identity, and leverage digital marketing strategies to establish a successful online fragrance business.
Remember to stay updated on industry trends, prioritise customer satisfaction, and continuously differentiate your brand in the competitive fragrance market. These elements plus an insatiable drive for growth and improvement will set your business up for success.
