If you are wondering how to start a diaper business, it could be either because you are raising a child or have raised one before. As it is something that you have to have a never ending supply, it is very common for a parent to think about having a diaper business of their own.
Of-course not every parent has an entrepreneurial itch and thus the thought never sees the daylight. But as you are interested in learning more about starting your own diaper company, you do have an entrepreneurial spirit.
According to the statistics, the diaper market is worth more than 75 billion US dollars. Additionally, the diaper industry being part of the baby product segment, is a recession proof industry. No matter how the economy or other industries are performing, no parent can’t cut down on the need for a diaper.
It is a must have for anyone raising a child and a diaper business owner can expect a steady source of income all year round.
But how will you be able to get your diaper business idea off the ground?
This is where this step-by-step guide will help you out. We have outlined the steps that will help you formally set up your diaper business.
Read on to learn everything you need to know.
The very first decision you’ll need to make in order to learn how to start your own diaper business is figuring out your business’s niche. If you have already decided and are aware of all product and service opportunities, you can skip this step.
Diaper business types
The diaper business in general can be divided into two types:
- Diaper (as a product) : In this category you will be selling diapers either in retail or wholesale. The customers will be able to buy diapers from your store ( physical or online ) and you may offer a doorstep delivery. You can have the diapers along with other baby products and toys. Thus you may add diapers to the existing product range.
- Diaper delivery / subscription service: In this category, you will sell and deliver diapers as per a set delivery schedule. The difference between this category and a regular store is that you can have work towards a dedicated diaper business. The customers need not visit your store again and again, and the subscriptions will be recurring orders.
Next, you need to consider the diaper category you want to target. This step is extremely important as it will impact your marketing and financial decisions. You can choose from the below categories:
- Baby diapers: You have an option to target the new born baby and toddler market segment. In this category, the customer will be the parents and you will need to market to them accordingly.
- Adult diapers: If you want to target the adult market segment, the marketing and targeting will be completely different. These are mostly self purchases and new age digital marketing may not workout.
Diaper business model
Once you have identified the diaper category and the business type, you need to blend them together in a business model. Here are a few options for you to consider:
- Diaper wholesale: In this business model, you do not need to target the end consumer directly. You can build partnerships with big diaper brands such as Pampers, Huggies, Mama Bear and stock diapers in bulk. You can then sell those to the retailers and other distributors for a decent profit. As the purchases in this business model will be recurring, you wont need to spend a lot on marketing efforts. A simple warehouse and negotiation skills is all you would need.
- Diaper retail: This business model will mostly be an addon to an existing business. The reason is that you cannot envision a diaper only physical store to exist with a good unit economics that makes any sense.
No customer will walk into a diaper only store and come again and again for repeat purchases. However if you have an existing baby product store and a retail store where you can expect a parent to shop for other things, you can surely add diapers to the product mix for additional revenues.
At the end of this step, you should have a fair idea of what you want to sell, how you want to sell and who you want to sell to. The next step is to create a plan to bring your diaper business idea to life.
By writing a diaper business plan you will be able to provide a roadmap to other stakeholders and investors. You can start small, have a draft business plan with basic outlines and then make changes as you scale your business.
This document will be a living document that you will be able to update as you scale. Thus you need not wait for the perfect moment to begin such an important step.
Important things to consider in your business plan include:
The executive summary in your diaper business plan will clearly define the purpose of your business. It will also outline your vision and where you see the business in the next 3- 5 years. You will also need to add the steps that you will take to achieve your growth goals.
You will need money to make money. If you have an initial investment secured already, you can surely launch your business. Unless you have infinite money to fund your business, you will pretty soon feel the need for investment.
As a part of budgeting exercise, you will aim to create a financial plan for your business. This will help you answer questions such as how you plan to make money? What costs can you foresee? How long do you think it will take for the current funds to get over? Can your business fund itself? How long will it take for your diaper business to break even?
A few examples of the costs that you will incur and consider while starting a diaper business include:
- Staff salaries
Market analysis is an essential part of launching your diaper business. It is a reality check of your business idea and also an important tool to understand your business’s growth potential.
For example, let's think of a scenario where you found that the diaper business potential in your target market is about 10 million dollars. Also that there are about 50 suppliers targeting your market ( and will be your competitors).
Let's assume that the market is evenly distributed and each of the competitors is averaging about 200000 dollar in sales. Unless you have a brilliant sales pitch and a truly unique diaper business idea that you think can beat the competition, you will potentially get roughly the same revenues as them.
Now is it something you will be happy with? Would that kind of revenue be worthwhile?
With this kind of analysis, you will be able to tweak your target market scope and demographics to increase the revenue opportunity. That said, market analysis will help you in many ways. Some of the questions that it will help you answer:
- Who else do your customers buy from?
- Which brands sell the most?
- What is it that you need to do to attract customers your way?
- What is their pricing strategy?
- Is there a market opportunity to sell your diapers online?
- How do the competition acquire customers?
- How do they talk to customers on social media?
- Do they use local partnerships such as hospitals and daycare?
Once you have given a thought to the above questions, you will be able to do a quick projection of what your business growth will look like.
At this stage, with a business plan and product idea in hand, you can move on to the next step, to get your diaper business formally registered and making it official.
Here are a few things you need to take care of:
Determine your legal entity structure
In order to formally register your business, you will need to decide on an entity structure. This is a legally defined structure that will affect tax, registration, level of legal protection, licensing and funding. As you can’t register your business without this decision, it is an extremely important step to complete.
The entity structure for your diaper company will depend on the business model you choose and the growth you can foresee. For example, a single person can start an online diaper business from home and won't need as much formal documentation as a wholesaler with dozens of staff.
You need to plan ahead and choose from the following options:
- A sole proprietorship: This type of business has one owner or is owned jointly by a couple. The taxes are reported on a personal income tax returns and overall the structure is very simple to begin, but difficult to scale and partner with big brands.
- Limited liability company (LLC): LLC gives all of its stakeholders a limited liability and personal protection in an unfortunate situation of a lawsuit of legal trouble. For taxation, there are multiple options to choose from.
- General partnership: It is sort of a sole proprietorship in terms of registration and taxes but has multiple owners ( partners).
- Corporation: Another type of incorporated business with options such as C-corp or S-corp.
Generally, in the beginning a sole proprietorship is an obvious choice and a popular legal entity structure. It is the simplest and easiest way to get started. You can transition to another entity structure as your business grows.
Tip: Consider consulting an attorney or a qualified professional for this step, as their experience will be extremely valuable. They will be able to help you with everything that you need to have to be compliant with everything.
Registering a business name
If you haven’t already, you’ll need to decide on a name for your diaper business. It will be extremely helpful to choose a name that reflects your business purpose and transform into a strong brand identity.
Unfortunately, you can’t just choose any name you like. You will need to make sure that the name is available for use and isn’t something claimed already by another business. You can perform check its availability in three steps:
- Performing a google search with that name. If you do not see a result with an exact match, you can move to the next point.
- Check for trademark filings in U.S. Patent and Trademark Office website. If you do not see any matches, you are good to go to point 3.
- Check the local secretary of state website and see if there is any business with that name. If you do not find anyone, you are good to go, else you will have to go back to step 1 with a different name.
Tip: Once you get a name that is yours to use, as a next step go ahead and buy a domain and register accounts on social media with a consistent social media handle.
Depending on the business model that you have chosen, you may need to get additional permits and licenses to be compliant with the state laws. Some states require just one license to operate whereas some require industry level licenses.
Mostly you should be able to find the information on the county or city clerk’s website. The official SBA website is an excellent resource to know more about the requirements on national and local level.
Additionally, you should not ignore buying business insurance. As you will be storing inventory and hiring employees, you will need to have insurance such as general liability insurance, business owner policy. Also, by law, with any business with employees, you will need to get staff related insurance such as workers’ compensation insurance as well.
As a retailer, One of the most crucial aspects of your business will be building relationships with suppliers and wholesalers. If you plan to be a diaper wholesaler, then you will need to get your supplies sorted out directly with the diaper companies or associated national distribution centers.
The relationships that you will build be the cornerstone of your business. They will become your most valued partners who can provide you all of the inventory you will need at the price that you can make the most profits from.
You should look at the following aspects before finalizing your vendor partners:
- Trust: You should be able to trust your suppliers for timely deliveries. You do not want to be in a position of losing a sale because of logistical issues in their supply chain.
- Price: If you can’t make a profit selling your diapers, then it won't be any business at all. Given that the selling price will be sort of extremely competitive, getting the best price from your suppliers will directly increase your profits.
- Stability: You will ideally like to partner with a long term relationship in mind. Both the wholesaler and you will mutually benefit from higher diaper volumes over a period of time. Thus look for a partnership which can last a long period of time and stay away from one off deals.
- Reputation: You can check the vendor's reputation in the market. Are they known for selling products with issues in terms of quality and delivery timing?
Tip: We recommend that you choose multiple partners for your business for obvious reasons.
Depending on your business’s operational model, you will need to find a space that you can run your business from. When finalizing the space for your diaper business, don't just go with a gut feeling.
Have a proper plan by doing research into the area. Here are a few things to consider:
- Retail store model: If you are planning to open a physical store selling diapers along with other baby products, find out how many other stores exist around the location you have shortlisted. As these are your direct competitors, you should aim for minimum competition.
Also check the demography of the location to forecast the sales. For example, if the area has more of a senior citizen population then you are more likely to sell adult diapers, whereas if it is an area with more of a student population, you may not choose to open in that area.
- Wholesale model: If you are planning to sell diapers to other businesses, you just need a warehouse to keep your diaper supplies. In this model, the only criterion you should consider is the proximity to logistic hubs.
Alternatively, if you are looking to sell diapers online, you will need to invest in an ecommerce website. Luckily, it is easy to create an ecommerce site using one of the top website builder platforms. Here are a few you can consider:
Being a seller on ecommerce marketplaces such as Amazon and eBay won't be a good idea for your diaper business.
It will be nearly impossible to scale your business without money. Thus it is extremely important to organize your finances and have a proper financial plan in place. As there is a limit to which you can extend your own savings, this is a time where you will need to look for external funding.
Worry not, this is the case with every other entrepreneur out there and your diaper business is no exception. Luckily there are a ton of options available for you to secure external funds.
We have listed a few options to consider:
- Friends and family
- Angel investor
- Venture capital
- Short term business loan
- Small business loan
- Business credit cards
At this step, you have covered everything that is needed and you should be ready to open the doors and get the customers to come in asap. But how would they know that you are ready?
You now need to have a plan to spread the word that your amazing diaper business is ready to serve their diaper needs. As a part of your diaper business marketing plan, you can consider the following marketing strategies:
- Email marketing
- PPC marketing such as Google Ads, Facebook Ads
- Instagram marketing
- Tiktok marketing
- Traditional marketing
- Local guides
- Online review platforms
Along with the business operations, marketing should be the biggest part of your daily to-do list. After all, the success of your business will entirely depend on how well you can market your diaper business.
As you will be in retail, try looking at traditional marketing such as flyers and partnership with daycare centers, schools etc to build awareness of your business.
Tip: Establishing your online presence and nurturing your customer base is one of the most important steps in growing your business.
As you navigate the steps above, do not lose sight of why you are opening your own diaper business in the first place.
At any stage if you feel overwhelmed, try remembering and reigniting the passion that inspired you to launch your business. With a bit of patience and hardwork, the process will get easier and you may actually start enjoying the entrepreneurship journey.
If you want to learn how to start a diaper business and grow it into a full time income, now is a perfect time to learn from the above steps and get started.
We wish you the best of luck and can’t wait to hear the stories of what you’ll build.