How to Start a Cosmetic Business in India - Step-by-Step Process

With a market of over USD 7 billion, the Indian cosmetic industry has grown tremendously, unleashing opportunities for aspiring entrepreneurs to dream of creating ventures like Sugar Cosmetics or Mamaearth.

Let’s uncover a roadmap to transform your idea into a successful cosmetic business in India.

Why should you Start a Cosmetic Business?

The market for beauty and cosmetic items is ever-growing with the evolving preferences of consumers. The cosmetic business is expected to grow to USD 18.4 billion by 2032. Cosmetic shopping has specifically inclined to buy high-quality, innovative products for skincare and haircare, creating a niche-based demand for beauty cosmetic items.

Before we learn more about how to start a cosmetic business, one must know why you should start a cosmetic business. Let’s break it down:

Scope for growth and profit:

With the increase in income of the middle class, there is a surge in the buying power for cosmetic items. This presents the scope of profit for smart brands that are offering high-quality niche-based products with a suitable price range to ensure significant returns.

Diverse market:

India has a diverse market for cosmetic items as people have different skin tones and distinct hair types. This is an opportunity to have a specific target audience and present innovative cosmetic products to resolve the skin or hair problems faced by the specific audience. The diversification could also be along the lines of creating natural or organic cosmetic items or skin-specific or hair-specific products.

eCommerce expansion:

With the boom in eCommerce shopping after the COVID-19 pandemic and the rise in several eCommerce platforms, consumers leverage the added advantage of ease of accessibility and convenience. Furthermore, selling through online platforms eliminates the need to have a store and the expenses of maintaining it.

Low investment:

A strong cosmetic business plan can be curated with minimal investment and a leaner approach. So, aspiring entrepreneurs need not invest in extensive inventory or other resources for the large-scale manufacturing processes in the beginning.

Steps to Start Cosmetics Business

The cosmetic business can be a profitable venture with the right business plan and process. Let’s explore 7 steps as a guideline to starting a cosmetic business.

Step 1: Market research and defining target audience

The fundamental step to start a cosmetic business relies on market research for the different cosmetic items in the market, the strategy and innovative products presented by the competitors, and the evolving consumer preferences. Some of the common research activities include reviewing social media trends, creating online surveys, and compiling online reviews for cosmetic items and beauty products.

The market research will build a strong foundation to determine a specific niche to introduce innovative products and define a target audience. This will generate clarity on the type of products that can be launched initially and align with the needs of the consumers.

Step 2: Business Registration and Application for Licenses

The next step to start a cosmetic business involves registration of the company. This varies according to the nature of your entrepreneurial journey. For solopreneurs, the business registration could be of 2 types:

• One person company
• Sole proprietorship

On the other hand, for partners, the business registration could be of the following types:

• Private Limited Company
• Partnership firm
• Limited liability partnership

After initiating the business registration process, the next step would be applying for operational licenses such as:

• GST Registration
• Shops and Establishment Act
• Trademark (for preserving brand identity)

Step 3: Finalize the supplier

A strong cosmetic business plan needs to have a well-connected network of suppliers that can help procure products aligning with customers at a reasonable margin. One can also set up a plant when the products are tested. When selecting a supplier, confirm the production and delivery timelines along with the credibility of the supplier.

Here are 3 ways to search for suppliers for the cosmetic business:

• Wholesalers: Search for local wholesalers collaborating with the competitors and connect with them for further research on different brands.
• Online Directories: There are several platforms maintaining lists of potential suppliers that can support the cosmetic business requirements. These websites feature different types of products and services and provide the contact details of the required professionals. Some of the common examples of online directories include Justdial, TradeIndia, Alibaba, and BizTradeIndia.
• Social media platforms: Social media platforms such as LinkedIn, Instagram, Twitter, and Facebook are great tools to connect with different brands and their suppliers.

Step 4: Determine the business structure and create a cosmetic business plan

When starting a cosmetic business, creating a strong cosmetic business plan can act as a roadmap to experiment with different strategies and make the venture successful.

Here are a few factors that help you with the business plan:

• Clarity on goals: Define the business goals and targets with a clear vision of how the company would like, the objective of the business and keep it at the core while forming new targets and analyzing the specific areas that need more focus while managing the operations.
• Timeline: Plan out the implementation of the goals back tracking it with a timeline to accomplish them.
• Action plan: Maintain clarity on the specific steps to be taken when starting the cosmetic business and have a fixed agenda for specific dates on the execution and completion of work.
• Risk assessment: Analyzing the risks is an important part of making a cosmetic business plan considering the different factors that can break or make the business. This includes considering the financial and operational difficulties and having a plan to resolve them on occurrence.

Step 5: Test the product

When the cosmetic item to be launched is ready, the next step is to record the utility experience of the people with a trial. Ask for honest opinions after sharing the product with friends, family, colleagues, and even volunteers. The feedback and insights are valuable to innovate the product further and analyze the efficacy of its utility.

Step 6: Devise a selling strategy

When setting up a cosmetic shop business plan, some of the key elements are considering the location, the nature of the products, and the defined target audience. For example, for a product with a defined target audience as teenagers, the location of the store should be easily accessible to them. Further, the store should have sufficient stock of an array of products that are high in demand.

The display of products is another crucial factor, where the products should be in colorful packaging, vibrant displays, and stacked on shelves easily accessible by the customers.

Step 7: Review growth

With cut-throat competition in the market of beauty cosmetic items, it is crucial to review the growth strategy recurrently. It is important to have clarity on what cosmetic items are generating revenue and which products are not preferred by consumers.

Alongside this, review the current progress of the cosmetic business with respect to which domain needs more pick-up from innovation, sales, and marketing to ensure strategic growth.

Tips for Growing Your Cosmetic Business

Alongside, the roadmap on how to start a cosmetic business, here are some additional tips to grow the cosmetic business at a faster pace:

Leverage social media platforms for brand visibility

With social media platforms such as Instagram and Facebook, showcase products, share tutorials and directly engage with consumers. With relevant content and consistency, there can be a significant improvement in brand visibility, leading to growth in sales of presented products.

Expand the distribution network

Focus on both offline and online sales for your cosmetic business, as well as plan out how to expand from regional and local levels to national and global networks.

Work on customer retention

As cosmetic items are a part of regular utility, one of the pivotal strategies should be customer retention. Curate loyalty programs and frequently communicate with existing customers about new products, new offers, etc.

Take customer feedback seriously

When customers mention their reviews on the problems faced with the utility of the cosmetic items, any side effects, or any suggestions on what can make the product better, it can shape product innovation and help in further growth of the cosmetic business.

Get insurance for the company

Alongside a concrete cosmetic business plan, one of the most crucial steps while running a cosmetic business is purchasing business insurance to ensure business continuity and operational resilience.

There are different insurance policies meeting the specific risks in the beauty and cosmetic market. There can be several claims arising due to allergic reactions to the cosmetic items, or any third-party bodily injury or property damage which might require paying from the pocket.

Business insurance can safeguard from any such losses and help with the legal costs involved in the claims. Get personalized insurance for your cosmetic business with Covrzy today!

Conclusion

The cosmetic business is rapidly growing in India and has a tremendous scope in 2025. This presents the opportunity to start with a cosmetic shop business plan and work on increasing the visibility of cosmetic items through offline as well as online channels. The key to presenting a beauty cosmetic item in the market is picking up a niche and defining the target audience aligning with the product demands. Furthermore, consumer feedback plays a pivotal role in shaping innovation in this market segment.