What Are Private Label Brands?
Private labels are slowly taking over the online business world, as many retailers see the potential and profitable pricing that leads to higher profit margins thanks to low production costs. While this may sound inviting, you may wonder what a private label brand actually is and how they work.
Here is the private label definition; a company or retailer that enlists the help of a private label manufacturer to produce their product idea. This can also be referred to as contract manufacturing and sees a third party platform produce private label products. An important note is that while the retailer does not directly make the product, they will have all creative control of the product line and their branding.
To expand on the interesting world of private labeling, we will take you through the positives of becoming a private label and how you can start your own private label brand if that is your goal.
Positives of selling private label products
Of course, there are many avenues you can go down when starting your own business that sells products. But, when focussing specifically on private label products, there are many benefits from choosing this way of selling your product line.
- Enjoy complete creative control of all branding assets and ingredient lists, ensuring that your private label products are 100% aligned with your goals and own brand.
- Create high-quality products at a low price. Many contract manufacturers have highly knowledgeable employees and next-level tools at hand to create incredible formulas, which you will be able to sell for a mid-range price after purchasing from the manufacturer at a reduced production rate.
- Start up your business more efficiently and quicker, without waiting for outside parties to call the shots, giving a quicker relay time to sell private label products and generate a profit.
- Reduce your overhead costs, as you won't need to employ as many workers as private label manufacturers will handle all of the production sides of your company.
How to become a private label
While selling private label products is a quicker process than going through more traditional routes, there are still steps that you will need to take when deciding that you would like to sell your private label goods. Below, we will give you a brief rundown of the process you will need to go through;
Conduct industry research
It is fundamental that you gain an understanding of the industry you would like your private label line to occupy. Looking into other brands online and store brands' best-selling products and generic products that consistently do well will help you out massively when making private label decisions, such as which product you would like to create and how to brand your business.
Understand your target market
This aspect comes hand in hand with your industry research, but paying close attention to your target audience is equally important. Look at consumer trends, branded products that are popular amongst your demographic and how most retailers create successful marketing campaigns to cater to this customer.
Select a private label manufacturer
Sourcing a private label manufacturing company that is reliable and provides you with the ingredients you need for your own products is essential and can often take time to find the contractor that is right for you.
Once you have selected a manufacturer, you can work on your own range and create a private label product that appeals to your customer while hitting the criteria you have put in place.
Set up your private label business to sell online
Private labels succeed best when sold online through a well-marketed platform such as Amazon. If using an ecommerce company such as Amazon, make sure you select the private label categories you want your products to be a part of to ensure that consumers interested in this specific industry can locate your private labeling products without stress.
The difference between a private label product and branded products
Now that we have taken you through how you can set up your company to sell private label products, you may wonder why this is a better route than creating branded products and hiring employees to help you with this.
The answer is simple; private label products are a more cost-effective way to get your business up and running, and you can still use your brand name on your branded goods. So, you won't need to worry about big popular brand products blowing you out of the water, as consumers won't be able to tell that you are a private label from looking at your private label offerings.
If you are looking into starting a new business and setting up a product line, starting out as a private label is incredibly beneficial and comes with many benefits. Private labelling will allow you to have sufficient creative control over your private label product, creating a brand that is true to you and one that customers will love.
Frequently Asked Questions
What are some examples of private label brands?
Many product lines found in supermarket chains such as Walmart and Costco can be referred to as a private label product. However, many of our favourite big brand names are also white labels, such as IKEA, that create their furniture through a manufacturer but sell online under their own brand name.
Why do companies want private brands?
Running a private label is desirable to many brands as this will give them creative control over which products are being produced and the image synonymous with them. As well as creative benefits, private label products often come with lower production costs.
What is considered a private label brand?
A private label brand is defined by a retailer using a contract manufacturer to create a product line but selling the product under their own name with their own branding. Private label brands are rising in popularity due to their convenience.