The short answer: differentiation disappears when entry barriers are nearly zero and the entire industry uses the same set of visual signals. The solution does not lie in product formulas but in layers of meaning and distinctive assets that cannot be replicated overnight.
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When outsourcing becomes the default
Vietnam's cosmetics sector imports more than USD 1.3 billion in raw materials and finished products each year, up about 17% on the previous year (2023 customs data, cited in a Euromonitor market report). More important: the same contract manufacturer (OEM, meaning production to another party's order) can supply identical base formulas to dozens of different brands. The filtering film, the concentration of actives, the feel on the skin and even the scent can all be the same, straight from one factory catalogue (a sample product list). The buyer only needs to pick a bottle, stick on a label and run ads.
What is the result? A customer walks into a store or opens an e-commerce page. They see fifty serum bottles with minimal designs, in white or cream, with thin fonts. And the same three phrases: "brightening", "moisturising", "anti-ageing". No one is wrong. Everything looks the same. And when everything looks the same, the buyer's brain defaults to choosing by price or by whichever ad appeared most recently.
The mechanism of the similarity trap
This is no one's fault. It is a natural result of a market with low barriers to entry and high short-term sales pressure. When each newcomer observes the best-selling products to emulate, visual and linguistic signals converge on a common point. Researcher Byron Sharp calls this category convention pressure, which pulls all brands into the same identity space because no one dares to be different first.
This trap has two self-reinforcing feedback loops. The first loop: new brands lack the budget to build long-term identities, so they choose safe designs that look like their successful competitors. The second loop: as competition intensifies, they lower prices to attract orders. These two loops combine to create a crowded domestic cosmetics industry with increasingly thin profit margins, relying entirely on advertising costs to generate sales.
A brand is the perception in the hearts of customers about your product, service, or organization. It is not what you say about it, but what they say to each other.
Marty Neumeier, The Brand Gap
Why “natural” and “clean” are no longer enough
In the past, positioning around "natural ingredients" or "clean beauty" (pure beauty, free of harmful substances) created real differentiation. Today, that phrase appears on almost every bottle. Customers, especially in the educated segment, have learned to read INCI ingredient lists (the international nomenclature for cosmetic ingredients) and compare them side by side. Free lookup tools let anyone confirm that two bottles contain the same actives at the same concentration. At that point, the advantage of "good ingredients" becomes table stakes, not a point of difference.
The counterfeit cosmetics case in Bắc Giang, with more than 100,000 orders uncovered (authorities' report, 2024), shows another dimension of the crisis. When brand identity is weak, fakes can survive for a long time undetected, because customers lack a sound basis to tell real from fake.
The escape route: identity assets that cannot be replicated
Cocoon is the Vietnamese example most worth studying in this context. The brand does not simply say "Vietnamese ingredients" as a generic slogan. It ties each product to a specific place and a specific journey: Bến Tre coconut oil, Đắk Lắk macadamia nut butter, Đắk Lắk coffee. This origin story creates a verbal asset that no contract manufacturer can sell on to another brand, because it requires real relationships with suppliers, field imagery and a transparent supply chain commitment.
Researcher Jenni Romaniuk measures the strength of distinctive brand assets along two dimensions: fame and uniqueness. A white bottle with a thin font scores low on fame and close to zero on uniqueness, because it shares that signal with dozens of competitors. By contrast, an origin story with its own name, its own colours and a consistent visual character becomes more valuable on both dimensions over time.
Three brand intervention points that truly create a gap
Based on the above logic, there are three intervention points that cosmetics brands can start with, in order from foundational to surface:
- An origin story that cannot be outsourced: ingredient sources with a name, a place and people, for example Huế tràm oil picked in March. This information creates a real barrier to copying, because it requires real relationships.
- Reputable third-party certifications: Leaping Bunny, PETA Vegan, Ecocert, or independent testing publicly disclosed. Customers do not trust what brands say about themselves, but they trust third-party organizations that confirm it.
- An ownable visual asset: not the generic words "minimal" or "premium", because the whole industry is using those two adjectives. It has to be something specific, repeated and belonging only to this brand: a particular colour, a particular illustration, a particular way of arranging things. Researcher Romaniuk calls these distinctive assets. The more they are used, the more valuable they become, thanks to consistent repetition over time.
What many brands overlook: packaging is the salesperson
According to a survey by Ipsos of American consumers, 72% say packaging influences their purchasing decisions. In an e-commerce environment, the product bottle must convince viewers through a smartphone screen, often at thumbnail size. Packaging designed for physical shelves often fails on screens, and vice versa.
The issue is not simply whether it looks good or bad. The issue is whether the packaging conveys the right signal in the first 50 milliseconds. That is the window in which a visual impression forms, according to research by Lindgaard and colleagues in Behaviour and Information Technology in 2006. A bottle that looks identical to the ten beside it does not earn those 50 milliseconds, because the buyer's brain does not stop to process it.
This is why brand design in the cosmetics industry is not an aesthetic problem. It is an economic one: customer acquisition cost (CAC) soars when no one remembers who you are. Profit margins shrink when price is the only competitive tool left.
References
McKinsey, The Business Value of Design, 2018. Kantar BrandZ, Most Meaningful Brands, around 2020. Byron Sharp, How Brands Grow, Oxford University Press, 2010. Marty Neumeier, The Brand Gap, New Riders, 2003. Jenni Romaniuk, Building Distinctive Brand Assets, Oxford University Press, 2018. Ipsos, Packaging and Purchase Decisions, survey of American consumers. Nielsen, Innovation Report, CPG data (consumer packaged goods). McKinsey, The State of Fashion: Beauty, 2024.