By
Sarah Harris
“Private label” is the term that helps us understand the relationship between brands that sell the products that companies actually manufacture.
Most brands that use the private label method work with a manufacturer. This manufacturer typically specializes in their type of product in order to ensure premium quality for their customers; as well as professionalism within the supply chain.
What is Private Label?
Private label products are made by a third-party or contracted manufacturer. These items are made with the intention of being sold by a specific retailer under their label. Within this type of manufacturer-buyer relationship, the buyer has complete control of all of the manufacturing methods.
Moreover, companies that buy private label products are buying them with the intention to sell them as their own brand. This means that the buyer designs the label provides directions to how products must be made. Next, the product is shipped to the brand’s storage facilities. They can do this so that they can ship them out to their customers. They can also opt for putting these products on the shelves in their brand store.
Private label products typically are sold n the retail stores of the brand. For example, there are certain clothing, food, and home goods brands that you’ll only see within Target, Costco, or Walmart. Similarly, the grocery store Trader Joe’s stocks its shelves with roughly 85% private label ingredients that you won’t be able to find in any other store.
Private Label Categories
Private label goods are common in nearly every category of consumer product. Some of these include:
- Dressings and condiments
- Cleaning products
- Person hygiene
- Cosmetics and hair care
- Drinks
- Frozen food items
- Paper goods
These products still make up a significant percentage of offerings available in stores; though private label products are in the minority when compared to nationally sold materials with branding.
Advantages of Private Labeling
Though private labeling is relatively rare, there are a few distinct reasons why companies will opt for this method of manufacturing and sales. Retailers that use private labeling enjoy complete control over product materials, quality, pricing, and branding.
Additionally, private labeling allows companies to be more adaptive to the market. The private labeling process is faster than large brand manufacturing, which allows buyers to take advantage of market trends quickly before those trends change.
This level of adaptability can often improve brand loyalty as customers grow to expect quick responses to new demands.
Disadvantages of Private Labeling
Unfortunately, the private labeling process can also have some disadvantages. In a private labeling relationship, a company relies solely on one manufacturer. This can become problematic if the manufacturer faces any issues internally.
In addition, private label companies can also face difficulty when building brand loyalty and customer value. This is because widely produced brands may have more name recognition.
Developing consumer awareness of your brand can be difficult when the scope of product availability is relatively limited, as it is with private labeling.
What is White Labeling?
White labeling and private labeling are similar concepts that share many factors in common. Like private label products, white-label products are produced by a third-party manufacturing company. Ultimately, this allows brands to buy and resell products under the brand name.
However, with white label products, the buyer will have less say in the manufacturing process as the products typically go through mass-production by the manufacturer. The main contribution that the buyer makes during the product manufacturing process is the supplication of the printing of the brand name on the label.
Differences between Private Label and White Label Products
White label products are less customizable than private label products since the buyer only chooses the brand name on the label and not the ingredients or materials used to create the product. Therefore, white label products are not unique, while private label products are completely unique to their specific buyer, even if the manufacturing company also produces a similar product for a different brand.
Private label manufacturing tends to be more expensive for buyers due to the high level of customization and specification. However, this also means that private labeling typically comes along with a higher return on investment (ROI), due to the high level of brand loyalty and customer value that these unique products can inspire.
Tips for Starting a Private Label Business
Since private label businesses are working with a third-party manufacturer, they don’t have to go through the same lengthy product development stage that large brands do. However, there are a few simple steps that businesses can take in order to set themselves up for success with private labeling.
1. Find a Niche Market in Which to Sell Products
Niche markets work well for private label product marketing because they provide the unique opportunity to use extremely targeted strategies for marketing. This could mean targeting a specific age group, location, occupation, or another demographic grouping.
For example, niche marketing could include markets like hair care, body care, and hygiene, baby and pet goods, and specific health and wellness products.
2. Contact the Manufacturer
Make sure that your potential manufacturer has experience with the type of product that you’re trying to create. Most third-party manufacturing companies offer a wide variety of product options, which provides even more freedom to build your product to your exact specifications.
Many manufacturers also have minimum order requirements, which may determine which company you decide to work with, depending on your level of output.
3. Order Samples
Make sure to test out your product with a sample before making it available to purchase in-store or online. Errors can happen in the supply chain process, especially early on in your company’s relationship with your contracted manufacturer. It’s important to be certain that the quality of your product is up to the standards of your brand before it hits the shelves.
Unique Products to Reflect Unique Brands
Though private label and white label products can seem complex there are many specific advantages to them; especially for new companies looking to find their niche. Ultimately, partnering with a 3PL, a third-party logistics company, can help you accomplish private labeling, as well as faster shipping times and warehousing!
Want to learn more about what private labeling could do for your business? With Print Bind Ship, you will have the ability to branding products, packages, and more! Sign up for a free consultation with one of the experts at Print Bind Ship today.