A Study of Porters 5 Forces of the Eva Cosmetics Concept

Porter 5 Forces draft

My Secret taps into the benefits of the large-scale mainstream cosmetic industry as well as the niche market of travel consumer goods. We conducted a Porter’s Five Forces analysis of the competitiveness and potential benefits of operating in this niche.

Threat of New Entrants/ Potential Competitors: Moderate

Eve has effectively introduced high barriers of entry to disincentive new entrants to compete directly. This has been achieved through the creation of exclusive contractual right to repackage and distribute cosmetic products with leading brands as well as establishing unique product patents. New entrants would not be able to acquire similar contractual agreements, as we hold the exclusive rights. It is therefore unlikely that other firms will gain a chance to obtain the necessary resources and finances compete in the market. Eve also holds the patent over the product’s revolutionary modular packaging design, which is crucial in the effective packaging distribution of the product.

As a sole distributer for companies contractually bound, we are the only company legally permitted to supply our partner’s products in travel sizes or as a multi-branded travel package, thus providing us with a cost advantage. However, we must remain aware of competitors seeking to make deals to offer substitute or similar products as well as the threat of illegal multi-brand packaging performed by smaller online retailers. It should be noted that the brand itself might produce single product  (low priced) travel packages as a promotion, in order lower price to attract new customers.

Threat of Substitute Products: Moderate

Although consumers are able to purchase cosmetics from a number of distribution channels, we are the only company that offers consumers the chance to personalise a travel-sized package to suit their individual requirements. Switching costs are high: Without our product consumers would have to pack their full makeup cases (bulky for travelling) and design their own palette. If consumers choose to purchase products in larger sizes, they may be able to benefit from cheaper prices per Oz but at an increased total cost.

There is currently no direct competitor to our travel-sized products, however a growing travel retail sector plus the success of cosmetics brands in-airport sales, such as L’Oreal’s Sixth Continent and Estée Lauder’s travel retail segment could pave the way for increased competition in the future.

The Bargaining Power of Buyers: Weak

As we currently offer a unique service, there are no direct alternatives for travellers seeking to gain a pre-packaged, personalised travel set. Further to this, it is currently difficult for consumers to construct their own sets, as due to our contractual agreements with partners, travel-sized samples are not available elsewhere on the market. This reduces our seller control as it limits consumer’s ability to negotiate on price. Furthermore, our closest competitors Joliebox, acquired in 2012 by Birchbox, only offer not personalised products to customers who pay a subscription fee. As a result the bargaining power of buyers is low.