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.
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.
Here are the basics of how to private label a 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.
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.
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.
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.
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.
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.