Why Is It So Hard to Start a Fragrance Business in Australia?

Saturation, high raw material costs and competing in a market where you're up against billion-dollar companies and people who want to eat you.

Who I Am And How INOX Parfum Started

My name is Lak, and I've started a fragrance business called INOX Parfum that has been quite successful so far. Within just 3 months of opening, we have sold out 70% of the entire range, and we are on track to expand and hire our first few employees.

Despite the good news, it hasn't always been a smooth road.

Leaving Corporate and Taking the Risk

I took the leap of faith, quitting my 6-figure job in operations and logistics (after seeing my colleagues around me absolutely miserable), which also added increased pressure from family members.

Additionally, within the fragrance industry, it's almost as bad as the clothing market, with pure market saturation, especially in Australia. Competing against small, medium and large businesses and everything else in between, there's not a lot of wiggle room in the fragrance business, or any business for that matter. So it was indeed a risk I took, and it was just the tip of the iceberg.

The Reality of Costs and Sourcing Ingredients

Furthermore, increasing equipment and ingredient sourcing costs are challenges anyone starting a fragrance business will face. In terms of fragrance, Australia has some of the best sandalwood. Still, in my experience many other raw materials are better sourced overseas (and cheaper).

Just know that if you are starting a business, whatever your budget is, be prepared to spend 3x that amount, even if you think you have everything perfectly planned out.

Automation, AI and Market Saturation

Sure, automation is at its peak right now, and everyone uses ChatGPT to propel their business, generate code, and automate repetitive tasks, which, in turn, is adding to market saturation.

However, hard work, determination, grit, and a willingness to tackle an actual problem are what we see as the key to our success so far.

Success at Queen Victoria Market (QVM)

Within the 2 months of operating, we were fortunate to secure a position at QVM, which, if you don't know, is THE MARKET in Melbourne and, according to Google, attracts approximately 10 million visitors annually.

Within the 3 months, we achieved a conversion rate of around 40% (for reference, the average business conversion rate is 2–3%). We did this simply by offering f****** amazing scents and the best customer service, making customers feel as though they don't need to think about buying, and, obviously, by having a really good lineup of fragrances.

Building a Brand Through Quality and Word of Mouth

However, despite these challenges, we have focused on delivering high-quality ingredients with Australian craftsmanship that leave customers coming back for more.

I had one customer go out of their way to visit us at QVM because a mate of theirs told them how good it was (this is the power of word of mouth).

Feel free to check us out at www.inoxparfum.com and smell the greatness for yourself. We have more stock coming soon, and an update to the packaging is underway.

The Unexpected Challenge of E-Commerce

However, even though we have been smashing market sales, our online conversions are shocking (around 0.5%).

When we started, we didn't realise how hard it would be to break into e-commerce, which has honestly been the most surprising thing. Still, in hindsight, it makes sense because no sh*t you can't smell a fragrance online, so there's more risk to the customer.

Also, even though the earnings potential in e-commerce is infinitely higher than in markets (where you aren't confined to a physical location), the saturation and competition is even worse. Not to mention, fragrances are classified as dangerous goods, so right now we can't take our product overseas unless we have a business account with a 3PL that has a permit to send dangerous goods by air or sea (which can cost thousands).

Advice for Anyone Starting a Fragrance Business

But we are doing everything we can to expand and grow, and there is so much to look forward to.

I suggest that if you are looking to start a fragrance business, make sure you have the capital and are prepared for the challenges ahead, working a 9-5 isn't easy, but neither is starting a business.

 

Lakdinu

INOX Parfum