Whether you are adding private label products to your business or starting a business that will be built entirely on private labels, understanding the strategy behind a successful private label product business is crucial. Let’s take a look at the world of private labels, and how to leverage this entrepreneurial best kept secret.
What is a private label product?
A private label product is simply a product carrying a retail company’s brand name but is manufactured by a third-party. Everything about the product – from the concept, what materials or ingredients are used, design, to packaging – is specified by the retailer company who, then, pays a private label product manufacturer to produce and deliver the product to the store.
Compared to reselling other brands or white label goods (other brands that a company rebrands as its own), creating a private label brand gives a company a greater profit margin as it can better manage the upfront costs of manufacturing and shipping, have better quality control, and charge more for the product.
How to private label a product
Private labeling a product, just like any other business endeavor, comes with its own risks and benefits. But if you do it right from the very beginning, then it can be a highly profitable investment.
Here are the basics of how to private label a product.
Research is key.
If you have not identified your niche market yet, the first thing you need to do is figure out what niche you’re comfortable working in, at the very least, or that you’re already an expert in, at the very most. This way, you’ll be more effective in conceptualizing and marketing your private label product.
When identifying a niche market and coming up with a good product idea, you should also take into consideration the demand for a product. There are two ways by which you can go about this.
You can go online and find products that a lot of people love, and you can follow suit and take advantage of the high demand. Or you can find products that have a lot of negative reviews, and you can find a way to improve on it to satisfy customers’ needs and fill a whole in the market.
Take the time to properly conceptualize.
Come up with a few product ideas and do further research on each one. How easy or hard is it to manufacture? How much will it cost? Will it be difficult to ship to you and to your customers? What do you need to know about storing the product in bulk? What is lacking in the same product offered by other brands? Can you improve on it?
Keep your product as uncomplicated as possible, especially if you’re new to the industry. You should also have an idea of the upfront manufacturing costs and marketing costs so you can prepare a budget plan.
Find a private label manufacturer.
Consider your chosen private label manufacturer as more like a business partner than just a provider. Your initial investment in private labeling is going to be significant, so you should make sure that your manufacturer is reliable and trustworthy.
Finding the right one, or even more than one manufacturer, can be a time-consuming task if you don’t know where to look. One of the best places to start is Alibaba; you can find manufacturer info for every Alibaba seller. In addition to finding out the quality of the products that a company manufactures, you also need to know about MOQ, production capacity, shipping costs (to you or an online platform, such as Amazon or Shopify, or directly to your customers), and shipping time.
Start building your brand.
Build a brand that people will not only be interested in, but will want to buy and even “promote.” Take advantage of as many platforms as possible to advertise and sell your brand and private label product, and to reach and engage with your target market.
Is private label profitable?
If you play your cards right, investing in a private label product can be highly profitable. Choose a product that has a big enough market and, at the same time, is simple to develop and manufacture in bulk. Minimize any possible product issues that could cost you more than what’s within your budget to correct. Needless to say, you should stick to your allotted budget as much as possible, but you should also make allowances for additional expenses.
As mentioned above, use any and all available avenues to market your private label product. Even if you have your own ecommerce website, you should consider selling on platforms like Shopify and Amazon. Of course, you should also make your brand’s presence known on social media platforms.
Always keep yourself updated on market trends, especially within your niche market. You should always be in tune with customers’ needs and how your competitors are doing so you’ll always know if your product needs improvement to stay relevant, competitive, and profitable. Through regular industry research, you may also be able to address a new need/demand by looking at what answers or solutions people are looking for online.
Private label brand examples
Tesco Everyday Value is a product line that includes common grocery items – mostly pre-packaged foods.
Walmart’s Great Value line includes sliced bread, frozen vegetables, frozen dinners, canned foods, light bulbs, trash bags, buttermilk biscuits, cinnamon rolls, pies, and many other traditional grocery store products.
Ikea is known the world over for their ready-to-assemble furniture, kitchen appliances and home accessories.
H&M (Hennes & Mauritz AB) is a multinational clothing-retail company known for its fast-fashion clothing for men, women, teenagers and children.
22 best private label products to sell in 2020
Here’s a list of the best private label products to sell, whether on Amazon or other ecommerce platforms, to give you an idea on where you can start your research.
Reusables will continue to be the trend, now that disposables are increasingly growing out of favor. So the demand for water bottles has been steadily increasing as more and more people are becoming more environment-friendly.
With consumers wanting to be more eco-conscious and contribute to reducing plastic pollution, the demand for reusable bags (or eco-bags) have also grown. You can go with both practical and fashionable concepts, of different sizes, to target a wider market.
Essential oils are typically used as basic ingredients for other products, but can also be used as they are. This means that essential oils can be marketed in a variety of ways, and you can target either high-end or low-end customers.
You have a lot of sub-niches to choose from if you decide to private label bags. The most popular ones are bags for women, the outdoors, sports, laptops, and kids. It’s best to start with a single target market, and then expand your product line once you have built your private label brand.
As a basic necessity, this niche is wide-ranging and, therefore, also has an expansive market. Again, start small and expand your line and target market gradually. The great thing about choosing apparel as a private label product is that it’s relatively easy to find a reliable manufacturer.
With mobile phones veritably becoming an indispensable technology and, perhaps, even a basic necessity for many, the market for phone accessories is also a veritable gold mine. Don’t limit yourself to phone cases; you can also private label chargers, USB ports, protective covers, and chains, among many others. At the same time, because they are “accessories,” you will have to be more creative with your packaging and marketing to convince customers that they need to buy your product.
There is always room in the beauty industry for new products and labels, so you won’t find it difficult to find a manufacturer to work with. Just remember that cosmetics are under stricter health and safety regulations, so do adequate research and choose your ingredients carefully. Organic and all-natural cosmetics are a big trend, but you still have to make sure that all ingredients are safe to use on skin. You will also have to label your product carefully, especially with all the relevant precautions. You will have to get a model to represent your brand, so this will be an added expense.
You can start an eyewear private label line that includes both eyeglasses and sunglasses. The most common complaint about eyewear is that the frames break easily, so this is an aspect that you can improve on to be competitive and quickly build your brand. Of course, a fashionable design is always a big selling factor, as well.
DIY home decor videos may get up to hundreds of thousands of views but most consumers would still rather buy these items online. This is an even bigger niche than clothing, as there are countless items you can sell. You have the choice to either compete in a high-demand market with common home decor ideas or offer a novelty selection.
Go for both function and style! The target market for these backpacks are the trendy and practical travelers. The backpacks are ergonomically designed with multiple compartments and made using sturdy materials.
As with cosmetics, make sure you only use ingredients that are non-allergenic and non-toxic. You can go with popular scents, but make each scent name and your brand name unique enough to stand out among the competition. And you’ll have to think outside the box for your product’s packaging and your marketing approach.
Wooden toys are making a comeback, with the increased awareness on the immeasurable harm of plastics to the environment, especially marine life. Stick to toy designs that are big to avoid the potential dangers of children swallowing small objects, and also simple, to appeal to the basic motor and cognitive benefits of play. You can copy popular toy designs for the purpose of the latter.
Eco-Friendly Bath Products
Organic soaps, shampoo and conditioner bars, all-natural face masks, and bamboo toothbrushes – these products are becoming more and more popular. Aside from using safe ingredients, you will also have to use eco-friendly labelling and packaging. Additionally, you’ll need to inform your customers about shelf-life and proper storage as products with natural ingredients and no artificial preserving agents typically degrade differently from similar commercially-produced products.
These are travel-size bags that include travel-size hygiene essentials, such as toothbrush, toothpaste, soap, shampoo, razor, deodorant, comb, nail clippers, and wipes. You can customize the items by adding one or two novelty stuff to make your product more unique.
Think about those “revolutionary” kitchen products that are being sold on the TV shopping network. You have hundreds of product options to choose from. Selling kitchenware, however, usually requires a bigger capital. Your marketing strategy will play a big role in building your brand. Of course, make sure you’re selling good-quality items.
This is another fast-growing private label category online. You can buy ready-made versions from manufacturers and simply stamp your brand on it, or you can design your own game. Think, Cards Against Humanity and other similar adult card games.
The technology is simple enough and easy to manufacture. Start with basic GPS tracking tech which consumers can attach on personal items, such as their phone, keys, or even their pet.
Unique home lighting ideas are among the most popular DIY home improvement projects. You can private label neon LED room decorations, fairy lights, Chinese lanterns, star projectors, or come up with your own LED lighting concept.
The search volume for “yoga” on Amazon is extremely high, and you can take advantage of the increased popularity of this fitness trend by private labeling yoga mats, yoga blocks, yoga balls, yoga pants, yoga straps, etc.
Personal grooming products for men have become more mainstream, and shaving equipment – such as shaving creams, soaps, and brushes – is a profitable private label product. Finding a good manufacturer for shaving products is also surprisingly not that hard.
These are small and simple equipment fit for a home gym. These can include dumbbells, kettlebells, resistance bands, ab-rollers, and exercise balls.
This is another huge niche with countless product options. These include accessories and safety gears for all types of sports and outdoor activities.