Retail companies are seeking new ways for entering in the market, and selling their products for brand loyalty.
However, with the increase in the manufacturing costs, many retailers are now opting for private label product marketing.
This guide will provide an in depth insight on the private label market, and will cover several important aspects that will help you guide your way into the market yourself.
You might have come across the term private label once in your life and wondered what does it mean? For starters, a private label is a product that is manufactured by a third party but sold under a retailer’s name.
Its example can be taking the product from someone else while putting it in the market under your name. However, the retailers that use the private label are the ones that decide the specifications of the product.
What goes into the product? How does the label look like? What is the cost of production and delivery? All such features are decided by the retailer that will sell the product. For instance, Target allows other companies to sell their products under their name.
Often hair saloons launch their products in the market comprising of shampoos, conditioners, and other beauty products. Restaurants launch their dishes and deals using delivery services.
The use of private labeling helps brands to get products produced by someone else. This helps them to reduce their manufacturing costs, which in return reduces the production costs for the customers
Private label companies sell different products that they get directly from manufacturers. The manufacturers are directed regarding the aforementioned product qualities, and the price is decided too. Since the overall price is reduced, retailers sell the products at lower costs to the consumers.
These are the products that are produced by one company and sold under the name of another. Manufacturing companies have to abide by the instructions that are provided by the selling company.
Private label brands act as a platform for manufacturers to produce and sell their products. They negotiate in terms of production, delivery, and sales price. Once the negotiation is done, the manufacturers produce the products accordingly.
White label products are those that are manufactured by any third party, similar to private label products. However, in white labeling, the retailers that sell the products take the entire credit to themselves.
It means that the production company will not be getting any credit or their name displayed in front of the consumers. On the other hand, private label products get a chance to display the name of the production company.
On the other hand, while needing wholesale products, you contact the manufacturing company as a brand owner. You can ask for the products that the company is producing, and get them in bulk as required. Later, these products can be sold as needed.
In white labeling, you don’t get a heavy customization facility just as it is available in private labeling. Moreover, in the private label business, products cover several consumer products, whereas white labeled products comprise of software or perishable goods.
The goods in the white label are much more complex, and cannot be taken in bulk. For wholesale, there aren’t enough customization options but bulk capacity can be taken.
Although it may seem that using the production of someone else may be illegal but it’s not. As highlighted earlier, retail brands act as a platform for manufacturers to sell their products in the market.
Most of the manufacturers have their own major selling companies but they still sell a small portion to private label companies. This is done to create a market promotion for their products. Private label companies have a great repute in the market. Venturing with them allows manufacturers to further improve their brand awareness amongst the customers.
Moreover, the private label companies decided on the rates before getting the products from the manufacturers. The rates are based on the requirements and standard compliances that manufacturers have to abide by.
If the manufacturing companies fail to provide the quality that is requested, the retailers cancel the partnership. Afterward, the manufacturers can no longer sell their products under the private label with the said retailer.
Private labeling isn’t expensive. The manufacturing companies and retailers decide on the rates. If the rates are favorable, they go on agreeing, and venture in a private label contract.
Since the products are coming straight from the production house, the retailers can sell them at a lower price easily. Why? Because of the costs of marketing, production, etc. have already been covered before the agreement.
Here are some of the perks of private labeling:
Since there is no need for brand names on a private labeled product, the additional cost of the vendors is minimized. In addition, the customers only have to pay for the product cost. The vendors can themselves pay for the promotional costs additionally.
Since private label allows you to get customized products easily, you can organize your suppliers to get you a distinctive product. This will minimize product comparison in the market as your product will be unique.
Your competitors can also contact your supplier to produce the goods that you’re using. This will create substitutes in the market, increasing competition for your brand.
Even though someone else is producing your goods, you still get a chance to get them customized your way. This allows you to create a new brand for yourself. Products will be customized and labeled as per your requirement.
Moreover, these will also be sold using your marketing campaigns, which will enable your brand’s promotion amongst the consumers. Private labeling allows significant brand establishment due to its extensive customization options.
You are more likely to earn more money from private labels. The cost though is to get the marketing done right. Private labels allow more profit margins as your production costs will be cut short.
Apart from the marketing costs, the costs decided for manufacturers, and incentives, you’ll be able to earn more because of paying less. In addition, your products will be available at low rates, which will attract more customers as compared to other brands with high costs.
Once the products pass the standards of the customers, you can easily expect a rise in sales. The reason? Product price and quality. Customers will be getting premium made products at low costs easily.
This will move them from traditional costly products made by your competitors and will lead them to your brand. Brand promotion and loyalty are the utmost necessary for any business, and that is what private labels benefit the most.
Apart from the pros of private labeling, here are some of the potential drawbacks:
A customization is a great option that comes with private label products. However, not having the idea of what the customers want, and customizing the products will lead you to have dead inventory.
Since the customers won’t like or buy your products, your inventory will not go out. Moreover, private label goods can’t be returned. To deal with the situation, you will need to reduce the costs, cutting out your profit margins.
Manufacturers need a minimum order quantity or MOQ before they start selling products to different buyers. This is a bulk quantity, and buyers need to put a lot of effort into choosing the right product to order.
That is why before getting a private labeled product, retailers have to go through extensive product planning so that it can be successful. In addition, the better the product is designed, the lower are the chances that it will end up in dead inventory.
Consumer behavior is perhaps the most important element for any business. It is therefore important for private labeling too. Many customers think of private labeled products as inferior since they are sold at low rates in comparison with their substitutes.
That is why private labeled products need to be produced in a way that correlates with the requirements of the customers. This will allow them to get awareness that the product offers premium quality at low rates.
Here are some of the private label product niches that can be sold easily, and are currently trending in the market too:
With modernization, customers are extensively looking for new products and brands to discover. That is why private label apparel is a great market, can easily be looked into. The perks? Your average production cost can get you more than 100 items from different fashion and clothing brands.
Here are what various manufacturers that are standing by to private label products:
The skincare industry was estimated to be $180 billion by 2020, and it’s growing every day now. However, with every passing year, people are getting more concerned regarding what they use for their bodies, and what they put in.
This gives an edge to private label product idea sellers on customizing their products as per customer’s requirement. Using vegan, organic, skin friendly, etc. products will give an edge in the market.
Here are some of the trending private label cosmetics:
Another trending private label market that is worth exploring is the food industry. Just like cosmetics, people are extensively cautious about the food that they are eating. Especially the ones that buy food and nutrition products online.
You can easily opt for the various product range, including vegan, gluten-free, organic, non-GMO, etc. In addition, you can choose to provide edibles with custom flavoring options too. Some of the products that are easy to sell as private label goods include:
Another huge market that is worth exploring for private label selling is the hair care industry. Falling under the niche of beauty care, the domain comprises of similar traits and requires to get products that meet customer demands.
Everyone has different hair and would be looking to get products that will match their hair needs. You can use this information to get your products manufactured that meet several demands in the customer segment.
Some of the ideal product lines to start in include:
Who doesn’t like to get buffed and healthy? People are growing more cautious about their health, and are buying products that give personalized results. That is why the private label supplement market is a great place to start with.
One of the examples of such a market is Dr. Axe that is progressing competently in the domain. Apart from that, here are some of the product ranges that you can begin with:
The element here to consider is that each of the niche aforementioned requires extensive marketing. You need to illustrate how your product is different from the rest of the consumers. Marketing platforms such as Facebook, ads, PPC, etc. are a great way to promote as well as gain revenue.
Moreover, these platforms also allow you to communicate with your desired customer segment. You can simply ask what the customers need with a campaign of customizing the product range. In addition, you can ask to “create a product” from your customers. It will give a significant idea of what the customers need and expect from your brand.
If you can enter the focused product domain, and generate sales enough to meet your breakeven point, you’ll have a great opportunity to reach out to the customers again.
Here are the ways that you can use to start your own private label business:
For starters, you’ll need to research the niche that you want to dive in. This is necessary since you don’t want to select a niche you aren’t familiar with. Even if you do, you should invest in knowing the niche since the competitors in the domain are already progressing competently. It means you’ll have to come up with something extraordinary to seize the market.
Choose the products that you think you can sell, and that will attract the customers. Even if you choose out of the trend products, you need to innovate them in a way that they attract the customers. If you’re going with the traditional ones, make sure to introduce superlative ideas for innovation in them.
Researching your competitors is viable since you want to know what businesses are already working in the domain. Once you find potential ones, take a look at what they are offering, and how they are working. This will help in finalizing your strategy for promotional campaigns and overall management.
Before you dive into the business, assess whether you have enough capital to pay the manufacturing costs or not? If not, assess whether you have enough resources that will help pay off the debts.
When you’re sure about your capital and the product you want to invest in, you can go look for a reliable manufacturer. Finding a reliable manufacturer is important since it’ll guarantee you a quality product at the best rates, and low time.
Next up is to create your brand elements. What element do you want to provide to your customers? Six of the most important brand elements include memorability, meaningfulness, likeability, transferability, adaptability, and protect-ability. Assess what elements would go best with your selected niche and product.
It’s time to order your first batch. FYI, it’s not going to be perfect, and you’ll find different elements that you would want to change. That is why batch assessment is also a key part of the process.
Assessing the batch will allow you to see how well the manufacturer has adopted your requirements. It will also allow you to see how your customized design looks in real-time. Consider all these factors, and use them for further improvement in the next batch.
There are two ways to sell your product. You can either sell it on your e-commerce website or you can go sell on Amazon. Using your site will give you an effective brand image. Using Amazon will allow you to attract customers from Amazon, and will reduce the cost for the website development and its SEO.
Promotion is the key here. While you’re cutting your manufacturing costs, you need to put your focus on engaging clients. Using digital media is the best way to engage customers in today’s world. Social media marketing, digital marketing, email marketing, etc. are some of the ways you can start with.
Get reviews. Communicating with your clients will help get reviews regarding the product quality. It will provide metrics that you can use to improve the next batch of your product.
Here are some of the factors that you should pay keen attention while establishing your private label business:
The prime factor is product research. This is important since you don’t want to invest in a product that isn’t popular amongst the customers.
In addition, your product should meet the requirements and expectations of the customers as well. Because if it doesn’t, it will end up in dead inventory, and then you’ll have to sell it at lower costs, cutting your profits
Make sure to hire reliable manufacturers since they will be the ones that will manufacture your product. You’ll need to build a relationship of trust so that your manufacturers fell confident working for you.
In addition, the product requirements should be clarified and inspected before and during the production so that any changes can be made on time. The costs should be decided with mutual agreement, and all compliances must be regulated properly.
For FBA private label products of Fulfillment by Amazon, you need to guarantee that your shipping costs are included or dealt with before the production begins. As manufacturers require minimum order quantity, ensure that you have enough resources to deal with MOQ, and it’s delivery date.
If you want to find a reliable private label manufacturer, then you need to make sure to assess every parameter for assessment. You can be hit with several issues such as quality control, capacity decision, etc. However, all these have to be assessed in order to make the process efficient.
To find a reliable label manufacturer, you can invest in:
The first thing you need to decide is the market that you’ll be selling your products into. One of the best places to start is Amazon since it’s already a well-established e-commerce platform. On the other hand, you can opt to create your e-commerce website that will feature your products.
The reason is due to the aggressive competition that has increased on Amazon. Having your e-commerce website will allow you to feature your products without having to hassle with any competitor.
The cost of private labels is low as compared with traditional selling methods. Since you’re buying directly from the manufacturers. It can cost a few hundred based on the product that you’re investing in.
Here are the top 5 private label brands that were able to seize the market with their superb product customization and marketing campaigns.
One of the many examples of how any brand used low costs and product customization to reach their customers. Universal Thread invested heavily in Denim. However, this year they dived into women’s lifestyle Denim, which paid off quite well.
In addition, their “grounded” in Denim business offers shoes, tops, dresses, and other accessories starting from as low as $5. Moreover, the company also introduced a size range of 00-26W. The price range is also lower than the rest of its assortments by 10%, which makes it customer friendly.
Inspiration comes from anything. However, you’ll need to make an effort for it just as Opalhouse did. The team went to Paris, Lisbon, and Mallorca to get inspiration for their “eclectic” home décor line.
Apart from their home décor line, the brand provides an extensive range of 1300 products starting from $30. Moreover, they’ve entered a venture with Target as well. The venture aims to allow customers to get Pinterest worthy home décor designs at reasonable rates.
One of the subsidiaries of Target, Heyday is the very first consumer electronics private label brand that was debuted in summer 2018. It comprised of numerous accessories, including speakers, headphones, phone cases, chargers, etc. all priced $20-$60.
The intriguing element is that Target made a move into Amazon’s domain of consumer goods. It organized their niche according to Gen Z’s requirement and merged fashion with functionality alongside affordability.
Another attempt made by Target for reaching Gen Z consumers was to launch women’s apparel brand Wild Fable. From the price range starting from $40 and customized size of 0 to 26W, Target was able to engage their targeted segment easily.
Moreover, it used digital marketing extensively, making it easier for consumers to book their products online. Since Gen Z was their prime target, the brand’s use of digital media led to significant progress, promotion, and success.
Made by the “Cheap Chic” apparel line, Target’s next private label line was Prologue. The product line featured what they call as “sophisticated, understated” line of women’s apparel. It included blouses, skirts, dresses, trousers, etc.
The clothing size varied, starting from 0-16 and 0-22W for online. The price was kept $12.99 to $49.99. The element of interest is the use of extensive digital marketing, low pricing, and premium quality products.
Moreover, Target is also investing to attract brands such as Lord & Taylor, etc. to boost their sales. It will allow the brand to make a competitive stance against retailing giants such as Walmart and Amazon.
Here are the best 10 trending private label products so far in 2020 that you can invest in:
Due to the extensive demand for environmentally friendly products, water bottle companies like Hyrdoflask and Swell are making millions.
Contribution to social responsibility or reducing waste, providing elegant and convenient water bottles, and making them budget-friendly. The market is estimated at over $10 billion by 2025.
The cosmetics industry is booming. With around 200 different types of oils consumed yearly in the US, the market is expected to grow by 9% every year until 2024.
It offers a superb opportunity for private label manufacturers that want to introduce their products in the market.
Estimate to grow by 9% per year from now on, party games are one of the many private label products to sell on Amazon.
These offer brand equity and are a favorable choice to make if you plan on entering the private labeling industry.
The phone accessories industry is estimated to reach over $100 billion by 2022. We come across numerous phone gadgets every day. It shows a high-profit market that one can seize with an innovative idea.
Growing with a rate of 12.9% form 2017, the tracking device market is one of the many niches that you would want to be a private label supplier.
The increase in the use of GPS systems is the reason for the market’s growth. You can also opt for phone tracking devices to start.
Attracting consumers to a noble cause, reusable bags are an effective niche to start with your private labeling quest. You can easily use green innovation to your marketing advantage.
The increased health awareness regarding smoking caused an overall decline in smoking.
However, the e-cigarettes market, which is blooming by 22.36%, is expected to grow at a value of $50 billion by 2050.
A perfect niche to tap into the Gen Z market.
Houseplants have always been one of the customer-friendly products. This is why investing in terrariums will be a good option for private labeling companies.
Since 37% of millennials grow indoor plants, you can expect to have a great turnover for your investment.
Who doesn’t love outdoors?
And what more one can get when they’re getting stylish and smart backpacks at low rates?
Yes, the smart backpack market is also one of the competitive options for investing as a private labeler.
As promising as it is, you can expect to have more than 4% growth every year.
The increased demand for LED lights is a good option to invest in as a private labeler. You can also invest in ventures with other companies to improve your brand awareness and then create your brand.
LeelineSourcing is a great place to start with when you’re diving in a private label business.
The platform provides effective insights on niche selection, product designing, competitor analysis, manufacture sourcing, and other important elements of your private label business.
Using this guide and aforementioned methods, you can easily invest in the private label business.
However, one should consider researching the domain himself extensively, and should gather intel on how existing private label companies are already functioning.
Before we get to know what the Amazon FBA private label is, let’s have a look at what a private label is.
So, essentially, when a product which is manufactured by a third party is sold under a particular brand name, that product is called a private label product. When you are the brand owner, you get to decide all the specific aspects of the product like-
– what your product looks like
– how your product is packaged
– how it is made
– what the label looks
– any other features that you want to add to make the product unique.
The Fulfilment by Amazon or FBA private limited is a service provided by Amazon, which was started in 2012, which helps facilitate the storage and distribution aspect of businesses, big or small.
If you use FBA, you will be allowed space in Amazon’s warehouses to store your products. Not just that, Amazon will pack your products and even deliver the products to your customers, as and when ordered.
On top of that, FBA will also handle returns and provide customer care for your products. (Related Article: How to Labeling your amazon products with fba fnsku or upc stickers)
The Amazon FBA private label solves a series of problems that businesses of all sizes face. It takes an immense amount of time and effort to receive orders, finding storage space in a warehouse, pack products and to ship the products to the customers.
This hinders with a company’s plans of expanding their business and establishing their brand. Amazon FBA takes care of all these tasks by using their warehouses, which are spread across the globe. All you need to do is ship your products to one of Amazon’s FBA warehouses and that’s it.
Amazon will then proceed to store, ship and even package all the orders that you receive from customers, regardless of the fact which channels the orders are from, Amazon or not.
Handling customers can also be extremely hectic, the Amazon FBA private label solves this by taking care of the returns and by providing customer service for all your products.
To get started with the Amazon FBA private label, you first need to provide your details to Amazon through the ‘Contact Us’ link provided on their website.
Once you have done this, Amazon will get back to you, once they review your information, and provide you with information on the next steps and how to proceed.
If you get accepted into their program, you will be required to register one of their FBA centers as an additional place of where you do business, with the main tax authorities.
Now that you have been accepted into the program and you have completed all the formalities, you will be required to work on how to get started with your business through FBA.
There are 4 easy and simple steps to get started with your own Amazon FBA label business. These are-
Making a profitable product can be a really difficult task, especially because of the over saturation of the market. Every other person has a product to sell. How can one differentiate?
You can do so by finding a niche which is profitable, i.e. which has a lot of demand in the market but not a lot of supply. A niche can be described as a highly specialized area in the market.
For example, an organic shampoo. A normal shampoo is mass-produced and is already being bought in extremely large quantities. It is considered by a lot of people as a basic necessity and so the market is huge. But something like organic shampoo has a much smaller market.
The companies that are manufacturing them as not doing so in great volumes and the group of people who are buying them is also smaller. Since organic shampoos are a niche, it is easier to compete in the market instead of taking on mainstream giants like ‘Head & Shoulders’.
So, the first step that you need to do is to find a niche product which has a lot more demand than supply.
You need to make your product different from the other products on the market. For this, you need to make your product more valuable. There are several ways in which you can do so.
Add more features to it, that no one else has or maybe even create a completely new product which solves the same problem but in an efficient and innovative way.
You can also add value to your Amazon FBA private label product by putting a message behind the product which will motivate potential buyers to buy your product instead on anything else.
3. Find private label manufacturers
You need to be extremely careful when you’re deciding on a private label manufacturer. Because your manufacturer will be the one responsible for the production of your product.
So, you will need to keep the following things in mind. First of all, your manufacturer should have the goods required to make your product.
They should have the low factory direct prices while still providing high-quality product manufacturing. Make sure the manufacturer you hire is well known in the industry.
Lastly, the delivery schedule should be reliable and no defects or damages should be present in the products.
Your business needs marketing material to inform potential customers about your product, to attract more people and convert them into customers.
Marketing materials are a great way to make a good first impression, but only if it is presented efficiently and effectively. You should take some time to create the marketing material that will suit your brand the best.
It is a great investment to make because your marketing material will determine the image of your company. You should create a message, set objectives and pick the right layout.
Marketing material will help you boost your company’s popularity, so do it carefully.
If you have any more questions about Amazon FBA Private Label Business, please do get in touch so we can assist you in getting the right information.
Leeline sourcing company is involved in different sourcing business that will help your company’s grow, and make your international business better.
No matter how big or small your orders are, we will help you source quality and affordable products, and we will ship them directly to you.
• Product Sourcing: With over 10 years experience in this field, our team will keep your mind at peace, and you will be sure that the products are supplied through a responsible supply chain.
• Amazon FBA sourcing service: We offer you Amazon seller services, from product procurement, to brand labeling, quality inspection, packaging services, product photographing and also shipping of products to FBA warehouses. Just tell us what you need, and we will help ship your products to your warehouse at lightning speed.
• Business and sourcing ideas: If you walk into our office, we will share business and sourcing ideas with you, even if you are importing yourself, our ideas will help you avoid mistakes that will be costly to your business. Our advice will surely help your business turn out better.
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