Head to any major retailer, both online or offline, then you will likely notice that they have their own brand products. These are affordable products that you can only purchase from that retailer. Have you ever wanted to do the same? Let us introduce you to the idea of private label products.
On this page, we are going to talk to you a little bit about what are private label products. We also want to walk you through some of the advantages and disadvantages of going down this route. Hopefully, you will leave this page knowing whether a private label is a route to go down for your business.
What Is A Private Label Brand?
It is very, very rare that a company will produce their own ‘own brand’ products. It would simply be far too expensive for them to have all of the manufacturing facilities set up, and that is before you factor in all the additional costs for the design of the product. This is where private label products come into play.
Private label products are products produced by a third-party manufacturing company. The retailer, essentially, approaches a third-party manufacturing facility, gives them the details of the products that they want, and the manufacturer will produce the product to this specification. At the end of the process, the retailer’s brand will be added to the product packaging.
When a company buys in products that carry the brand name of another business, this is not a ‘private label’ product. Examples of private label brands include AmazonBasics and Sam’s Choice (Walmart). Non-private label brands would include things like Apple, Kellogs, and Heinz.
So, in summary, what is a label? According to SageMailer, it is when a company has its own branded products produced by a third-party company. You will know if a product is a ‘private label product’ because the brand will only be sold by one retailer. You won’t be able to find it in stores anywhere else.
How Do Private Label Manufacturers Work?
It depends on the manufacturer of the private label products. Many of the private label brands are products that have already been designed by the manufacturer. When a retailer makes a purchase, the retailer will be doing nothing more than changing up the product packaging to the retailer’s specifications. In fact, in some cases, the product packaging won’t even be changed by the private label manufacturers. It will fall upon the retailer to make their own branding.
In some cases, particularly if the retailer has a bit more cash to spend, the manufacturer will design a product based upon the specifications of the retailer. This means that the retailer will have full control over the look and feel of their product. Basically, the product is going to be specific to their company.
Many of the private label products sold on Amazon will fall into the former category. This means that people are buying products ready-made products directly from a third-party manufacturer and branding them themselves.
Is Private Label Right For Your Business Model?
One of the major advantages of using private label manufacturers is that you do not have to worry too much about the design or manufacturing of the product. You just place your order, and the private label manufacturer will ship the products out to you. This helps to keep costs nice and low. It also means that private label is an affordable way for a new business to start selling products under their own brand name.
With the right manufacturer, the retailer will also have a huge amount of control over the product that is delivered. This will allow a retailer to develop brands that differentiate themselves from other products on the market.
The retailer may also be able to develop a product to meet a certain price point i.e. if a retailer wants to pay just $10 for a product, then they can work with a private label manufacturer to change up the design of the product to try and get as close to this price point as possible. You don’t get this sort of adaptability with products purchased from other brands.
Of course, the major downside to private label is that you are putting a lot of the success of your business in the hands of a third-party company. If the manufacturer goes out of business, or they change up their manufacturing processes, then you could lose your business overnight. So, if you do go down the private label route, you will probably need to avoid putting all of your eggs in one basket. Nobody should ever be building a business on the backs of somebody else.
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