Private label products are manufactured by one company and often sold by a third party under a different brand name. Here are a few myths about private label products that we want to debunk.
- Switching to private labeling will benefit every kind of business. This is not true. One of the examples is hand tools and screws. People wouldn’t really care if the screws they’re using are of a fancy brand or not.
- You need to give orders in large quantities to a private label manufacturer. A change in the customer’s behavior led to manufacturers reducing their minimum order quantity. Some don’t even have a minimum order quantity requirement.
- All private label products are of bad quality. This solely depends upon the manufacturer.
What is a private label?
What is a private label? A private label is also known as its brand in the market, referring to the products manufactured by different companies and sold by others. For example, company A manufactures clothes. And company B retails clothes. So, company B gives orders to company A for producing clothes according to their wants.
In this case, company A is a private label manufacturer. And company B is a private label brand.
Pros or Cons of Private Labeling
Private labeling is gaining massive success in the market and is benefiting both traditional businesses and e-commerce It also has some of disadvantages and advantages:
Pros of Private Label Products:
Retailers are more than happy to sell products under their brand name and the main purposes are:
1. Profit margin is high in private label products because the cost is 40% to 50% lower than branded products. The business owner also can control the pricing.
2. You can have proper control over the production as manufacturers follow your guideline. You can easily install all the features in the product consumers are searching for.
3. You can also have control over the packaging and marketing. You can gain a maximum audience and make your product more valuable just by doing the proper packaging or marketing.
Cons of Private Labeling
Just like everything private labeling, too, has cons along with pros. And the only reason we’re telling about them is that you think about it and come up with a solution if possible.
1. It is usually hard to win consumer loyalty and preference compared to other popular brands, even with the best-selling private label products. Consumers often think that private label products, whether trending or not, are cheap, have low standards, and compromise quality.
2. You can barely control the quality of production because manufacturing is out of your control. You should be well aware when starting a private label brand about the manufacturer and always choose a well-trusted manufacturer.
3. Selling private label products is very time-consuming, especially if you are new to this business. You don't have consumer trust, and building trust among consumers is very hard.
4. Another disadvantage is profit maximization because your standard products will only get you a good profit.
How to Sell Private Label Products
To sell private label products is easy as compared to branded products. In this category you don't have to invest so much in inventory or think about manufacturing. But that is not enough. There are some issues you have to solve before selling private label products such as online store.
Image taken from Strikingly
Find the Best Market that Suits You
What you need to do is to find the industry you want to work in. Private label products cover all the categories of consumers' needs starting from makeup to fast food. But you have to choose the niche wisely. Picking a niche according to your expertise is crucial.
Look for a Reliable Manufacturer
A non-reliable manufacturer can cost your business considerable loss. Drop shippers are a good example when considering private-label product manufacturers. Further, also ask them if they can hold the stock you want to order. When all is set with the manufacturer, order a sample to check out the quality standard.
Start an Online Business
When you are done with everything listed above, start with your online store. You don’t need to worry about hiring a developer because this is where Strikingly comes in. It is the best website builder for creating any online store within 15 minutes. Strikingly gives access to thousands of different templates and it is the most reliable online site builder.
Image is taken from Strikingly
Strikingly offers budget-friendly monthly and yearly pricing plans for your website which includes many features.
Image taken from Strikingly
Attach High-quality Pictures
When you are done uploading all the private label products to sell on your online store, make sure to upload all the best-selling private label products with high-quality images. It is a great idea to attract consumers to your private label products.
Insert Pricing and Description
Again, you have to be careful when choosing the pricing strategy for your private-label product. With the pricing also, don't forget to write the best description for the product.
Market your Store
Now it's high time to market your private label brand, and you need different platforms such as social media. Marketing your product is essential because it is important to build trust as you start your business from scratch or even if you have a good name in the private label market.
Image taken from Strikingly
Now, you are all set to sell your private label products.
Categories of Private Label Products
Private labels usually work with almost every category of products. Here is the list of the bestselling private label products.
It is the most common search for private label products and it even comes in the top. It includes all cosmetic products such as face cleansers, eye creams, lipsticks, acrylic nails, and much more. The best manufacturer in this category is ThomasNet which consists of over 500,000 suppliers and six million products. It is located in North America.
Clothing is another best-selling private label product that can help to maximize your profit. Manufacturers in this category also don't expect orders of bulk quantity, so you can even order within your limits. When gaining profits you can increase the amount of your order. Further, you can start with one product in clothing, such as yoga pants. After some time, you can increase your product to shirts, jeans, etc.
Hair Care Products
Hair care products include shampoos, conditioners, hair masks, and much more. Some private label manufacturers for this category even create paraben and alcohol-free products.
Food is another best example of private label products. Private-label manufacturers also offer vegan-friendly private-label food items, which can also help you attract vegetarian customers. Again the best example is Thomsnet. Before starting to sell this private label product, first, do the search of what is in the market or googled mainly by the customers. For this category, you also need a good and reliable brand name.
What to Do When Finding Private Label Manufacturers
Finding a reliable manufacturer for your products requires time, a lot of research, and correct information regarding manufacturers. However, you don't have to worry as I have mentioned all the guidelines below for finding the most suitable manufacturer for your business.
- Stop searching on dropship directories or tools like Aliexpress, etc. Instead, search on sites like Thomasnet, Alibaba, and Google.
- Search for the product like private label shoes. When going through the results, dig carefully and do a trial before ordering.
- Digging means seeing the reviews or specialization of the manufacturer's products, comparing their prices with the sellers, looking out whether they ship to your country or not, and how much they sell.
- After digging there is less chance of scams or traps.
- Get a business name and bank account. A proper bank account will create trust and more reliability among you and sellers and hence attract them.
- After all the information gathering, reach out to the manufacturer and ask them about samples. Once you’re satisfied, sign a contract with them. Signing a contract is very important.
- Even if the manufacturer is reliable, signing a contract will create good trust between you both.
And yes, last but not least, while selling private label products, you must hire a private label lawyer and educate yourself because of the risk, rules, and regulations of private labeling.
Best Private Label Brands
The best private label brands include Walmart's great value brand, Target's mainstay brand, and Costco's Kirkland signature brand. Nike is also a private label brand that orders bulk from other manufacturers, makes some changes in the product, and then sells it. Some others are Ikea, universal thread, original use, etc.
Amazon also deals with over 100 private-label brands that work with different markets or niches, including food, snack, and clothing. Amazon's private labeling started from the in-house brand name AmazonBasics which sells everyday household items in 2009. By 2017 it was working with over 30 private label brands, and now the number crosses 100 private label brands making dozens of best-selling private label products. Amazon brands, such as Echo and Kindle are mostly known as private label brands. Others can be recognized by their description because the Amazon brand is written in their description. Amazon's private label brands make up to 1% of its sales, which are rapidly growing nowadays.
To sell private label products can be time-consuming, but it is a great source of good profits. Anyone starting their own e-commerce business should look into this category for maximizing their investments and generating a good source of income. Do not forget what is important though: study every rule and basics of private labeling.