Is Private Labeling Legal? EXPLORE Higher Profit Margins

Is private labeling LEGAL? That is a QUESTION; you’ll find an ACCURATE answer anywhere. Many sites are nothing but waste. To handle THIS SITUATION, our LAW experts have written this article. 

Private LABEL has a Big market SHARE. It shares up to 50% of the MARKET in the European market. In the US, it has 17.3% of the total SALES. (Statista)

Our Leeline Sourcing experts sort out the BEST private label suppliers. And help get HIGH-QUALITY private-label goods. You GET higher profit margins by BUYING at WHOLESALE PRICES. 

Want to know the PRIVATE LABELING process? 

Read this guide. We will EXPLORE the private labeling process in-depth. 

Let’s learn! 

What Is Private Labeling?

Private LABELING is a PRACTICE used by famous brands. In this process, the manufacturer sells its PRODUCTS to the brand. And the brand sells them under its LABEL. The selling rights are OFTEN exclusive to the RETAILERS. And give retailers HIGH control over private-label products. 

Confusing? 

Let me explain it with an EXAMPLE. 

Kirkland Signature sells the products MANUFACTURED by Huggies. And other manufacturers. It labels them under its brand name. And sells it to the buyers. 

How does private labeling work?

The working MECHANISM of the private labeling is VERY SMOOTH. It involves two parties. 

• Private label manufacturers. The MANUFACTURERS produce private-label products. And deliver them to the retailers. 
• Private Label Brands or Retailers. These RETAILERS sell under their own brand name. 

For instance, Apple has its FACTORY in China. In comparison, the central location is in California. Manufacturing and assembly occur in CHINA instead of the US. 

So, China Factory is the PRIVATE label manufacturer. And apple is the PRIVATE label brand selling products. 

That is how PRIVATE LABELING WORKS. 

Is Private Labeling Legal for Businesses?

Yes. Private labels are 100% LEGAL. It is like OUTSOURCING the products to the FACTORY. In the LAW, there are no restrictions on outsourcing. So, technically, it is LEGAL. 

Many popular COMPANIES like ZARA or Apple find FACTORIES. Get their inventory manufactured. And sell them under their BUSINESS label. 

It is LEGAL until you: 

• Have registration from the Government. 
• Pay Taxes
• Show the manufacturing location or Factory. 
• Produce only LEGAL products. 

Until then, you hold INTELLECTUAL property rights to the products. And sell them under your business label. 

What Are The Benefits of Private Labels?

Are you starting a PRIVATE label business? Wait a minute. I have something to SHOW you. Read it! 

• Better Control over the products

Have some SPECIFIC IDEAS in mind? Private label manufacturers got you! 

You are the SOLE OWNER of the private labeled products. With private label agreements, you can CONTACT your manufacturers. Propose your DESIGNS. And get the desired specifications! 

Impressive, right? 

Moreover,  I compel my SUPPLIERS about the STRICT quality criteria. It avoids the RISKS of falling prey to SCAMMERS. And damage the BRAND image with low-quality products. 

• Unique Brand identification

After close work with SUPPLIERS, my brand can say: 

Hey, I am UNIQUE. I have those products that others don’t have. 

Since I have CONTROL over the products, I order UNUSUAL designs. A new design SHAKES the market with more sales. And defeats all my competitors. 

Isn’t it GOOD to have SET AN INSTANCE of uniqueness? 

• Complete Marketing control

Marketing is SOMETHING, I would say: 

“An integral part of the BUSINESS. “

Better MARKETING guarantees better prominence of the brand. And before I launch the PRODUCT, I say: 

The private label helps CUSTOMIZE the packaging. Add BRANDING to promote the products. And get more RECOGNITION with an effective MARKETING strategy. 

• Faster Products Changes

What if you get a BAD review due to some LACKING features? 

It is a BIG PROBLEM. Start thinking MORE. 

What is the IDEA getting the same elements? Believe me; it is a LENGTHY process. But not in the PRIVATE LABEL. Manufacturers are ready to IMPLEMENT the changes before you sell the NEXT BATCH of products.

It reduces CUSTOMER disputes. And increase their SATISFACTION. 

• Consumers Loyalty

I have won my consumers’ loyalty with QUALITY. When you design UNIQUE and ATTRACTIVE packaging. Add your business logo. And SEND products to your consumers. 

I am sure 9 out of 10 CONSUMERS are going to love. Next time, they will purchase your BRAND LABEL. 

You BUILD LOYALTY faster. And enjoy HIGHER SALES. 

• Higher margins

Do you want to get MORE PROFITS? I have a SECRET STRATEGY. Increase the price. In private label BUSINESS, I have complete control of the PRODUCT LINES. 

I raise the products prices when the DEMAND of that particular item increases. And it directly smakes 20-30% more profits. It gives me a BETTER chance to invest in marketing campaigns. 

Legal Requirements for Private Labeling

Private LABELED products are LEGAL to sell. But you need to follow the PROPER RULES for selling. 

Here are some rules. 

Quality Product List

QPL differentiates products from OEMs. A PRIVATE LABEL manufacturer needs to follow applicable regulations. And provide QUALITY inventory. 

Premium Certification

Premium certifications give MORE trust in the quality checks. For instance,  DLC approval gives a UNIQUE brand identity to products. 

Mandatory Third-party Certification

There are some MANDATORY certifications. These are CE, FCC, and many more based on the SELLING market. 

Ensure you get it from CERTIFIED third-party manufacturers or inspection services

When Should You Choose Private Labeling?

Don’t step into the PRIVATE label business. I said, “NO.”

So, when to start? 

Here are some POSITIVE indications! 

• You have ENOUGH RESEARCH on company concept and success. 

Launching a COMPANY does not make you ELON MUSK. It is the IDEA. It is the research. And most importantly, it is the CONCEPT. 

If you launch a PRIVATE label brand, tell me: 

“How will you compete with other store brands?”

They will EAT YOU UP in fierce competition. And you’ll see nothing but the DARKNESS. 

How to cope with this situation, then? 

I researched before STARTING A STORE BRAND. I aimed to KNOW the notions of national brands. Understand their STRAFETY. And move step by step. 

Do you know what HAPPENED? 

SUCCESS! 

• You get the PROFITABLE products. 

As per MY KNOWLEDGE, the secret lies in the research. When I started the Amazon FBA brand, other store brands were BIG HURDLES. I could not make the SALES. 

Not even a SINGLE sale in the first week! Can you imagine such a bad performance? 

But the experience made me LEARN the importance of research. I found the top 10 selling products. I explored the PROFITS per generic product. And now I own a SIX-FIGURE private labeling brand. 

• When you have ENOUGH budget to run the startup. 

The red light in the BUSINESS is the budget. 

No money. No business. Insufficient money? Probable business COLLAPSE. 100% FAILURE. 

I speculate the MONEY. For instance, I have a BUDGET of 100 USD. I won’t JUMP into the selling of smartphones. Instead, I find LOWER PRICED yet profitable products. Don’t jump on the FINAL LADDER. Start from the FIRST one. 

It is better to estimate the BUDGET. Find the relevant products. And start selling to MAKE SOME Money. 

• When you have a PROPER supply chain mechanism

The supply chain is not ALL ABOUT selling the products. It involves: 

• Selling. 
• Packaging. 
• Shipping. 

Do you have ALL the features in one PLACE? In addition, I provide FIRST CLASS customer service as well. It wins more customers. 

You should contact the LOGISTICS companies. Let them know the ORDER FULFILLMENT processes. And finalize a LOWER PRICE to get higher profits. 

That is all! 

One more thing.

You should ensure the SHIPPING is fast and reliable. Otherwise, you might lose the customer base. 

Tips for Starting a Private Label Business

I have listed some tips to START a private label business. 

Get the TARGET customers on TOP

Do you have any IDEA where you will sell the products? 

I often DO RESEARCH. Test the market behavior for a SPECIFIC product. Only if I am sure of SUCCESS, I launch the products. Otherwise, there is CLEAR NO! 

It helps me AVOID the waste of bucks. And make more sales in the RIGHT market. 

Negotiate the private-label agreement

I negotiate before I START working with a supplier. Do you know why? 

• I know how the Manufacturer will approach the PRODUCTS. 
• What facilities do I have? 
• How fast does the SUPPLIER act when I need product modification? 
• What is the LOWEST cost I can grab? 

With these, I obtain 100% QUALITATIVE inventory. And make HIGHER PROFITS.

Sort out the TOP manufacturers

Finding a GOOD manufacturer is a GOOD DEAL. You get a seamless experience. And safe trading. 

What I do is list the TOP 10 MANUFACTURERS. Talk to everyone separately. Get the PRICING and samples. And finally, settle the deal with the BEST one. 

It GIVES more business marketing by SAVING money. And BRANDING packaging effectively. 

Get product samples

Are you afraid of scams? Don’t worry. I know it is a BIG HEADACHE. But also, there is a SOLUTION. 

I contacted my suppliers to get me FREE SAMPLES in the first place. Rarely have I paid for the samples. After lab testing, I get more confident about QUALITY. And my decision about the supplier. 

That is how you avoid QUALITY scams in the e-commerce industry. 

Promote your BRAND and sell products

Have you launched the BRAND? It is time to have MORE CUSTOMERS. And I speed up this process with ADVERTISING. PPC advertising is MY PERSONAL RECOMMENDATION. It is cost-saving. 

Use social media or Google advertising. It will Increase your BUSINESS REACH. And get you more customers. 

People Also Ask about Is Private Labeling Legal

What’s Next

Starting a PRIVATE label business is VERY effective. You become part of six or SEVEN figures sellers. And get DIRECT ENTRY into the HEARTS of the customers. 

But for that, manufacturers are the KEY. Are you tired of scams regarding QUALITY? 

No problem. Contact Leeline Sourcing. Our Sourcing experts PROCURE A DECADE of experience. We will find the BEST manufacturers. Provide GUARANTEED quality. You get an ESTABLISHED brand image. And your BUSINESS will boom with a PROFITABLE inventory. 

Call us to get the FREE QUOTE!