If you’re looking to start your e-commerce journey, perhaps you’ve heard of private labeling. When you sell private label products, you obtain them from a third-party manufacturer and sell them under your own brand name. It’s a convenient and effective way to build your brand without the hassle of creating a product from scratch. Compared to dropshipping, private labeling allows you to stand out from the competition and differentiate your products from the rest.
Private labeling works because it helps you establish a loyal customer base. When you amass an avid fanbase of customers, you open up better sales opportunities for your business. In this article, we’ll discuss what private labeling is, the advantage of selling private label products, and a couple of tips to get you started with this business model today.
What is private labeling?
When we talk about private labeling, we’re referring to the products created by a supplier or manufacturer that a retailer or company then brands to sell under their name. Here, you contact the manufacturer to produce a product that meets your specific requirements (packaging, design, materials, quantity, etc.). Basically, you outsource the product sourcing to a company to create a unique item for you to sell.
From a consumer’s point of view, the private label products appear as your brand, which is great if you’re looking to establish your presence online. You’ll find private label products in plenty of retail stores. One example is Costco’s Kirkland brand, a private label brand that sells furniture, food, gifts, and more. Amazon also has private label brands like Amazon Basics and Nature’s Wonder. According to Storebrands.com, private brands grew by 13% in 2020, outgaining national brands that sit at 12%.
You gain access to the entire supply chain with private labeling since the manufacturer controls the sourcing, manufacturing, importing, and shipping. Thanks to its consistency and affordability, it’s no surprise that many retailers adopt this business model to enter the e-commerce space.
What are the advantages of private labeling?
Whether you’re a small retailer looking to sell products online or a big company that wants to add products to its portfolio, private labeling offers plenty of advantages. The four most notable benefits of private labeling are:
One of the main benefits of private labeling is the flexibility of the products. We all know how important it is to adapt to consumer trends and behavior, and private labeling allows you to change your products quickly. Being able to cater to your customer’s demands is a huge benefit of selling private label goods. Contact your manufacturer to tweak the product, and you’re all set.
2. Product customization
To truly cater to your target audience, you must provide what they want/need. With private labeling, you can customize your products according to the exact specifications. You can define the materials, the color, and the shape of the products, which helps differentiate them from competing goods. This added control over production makes private labeling even more appealing to retailers.
3. Cost management
Another advantage of private labeling is managing the production costs to ensure maximum profitability. You gain more control over the product’s pricing since you’re in charge of the whole supply chain. By conducting market analysis, you can determine the product cost and find a suitable manufacturer to work with.
4. Diverse product offerings
Often small retailers don’t have the budget to develop their product range. But thanks to private labeling, you can diversify your products to meet the different needs of your consumers. When you work with a manufacturer that can expand your existing products, you can attract a new set of customers to your brand.
5. Establish a unique brand
The e-commerce world is highly competitive, and if you want to succeed in this space, you need to give customers a reason to choose you. When you go private label, you have the opportunity to establish a unique brand and help you stand out from the crowd.
Getting started with private labeling
Selling private label products isn’t as difficult as you might think. Take the time to learn the basics, and you’ll be up and running in no time.
1. Figure out which products to sell
When it comes to private labeling, you can pretty much source any product you want. There is no shortage of options available, from office supplies and home improvement tools to fitness equipment and computer accessories. Figure out which products you want to sell and validate that with thorough market research.
To check if there’s enough interest in the products, you can use Google Trends and Ubersuggest. These tools give in-depth information about the search terms people type on the internet. You want your products to be in-line with the current trends to be profitable, so make sure to do your research first.
2. Look for a reputable manufacturer
The manufacturer you choose will have a direct impact on your brand’s image, so it’s worth choosing one that’s reputable to avoid issues early on. The best place to find a manufacturer is through Alibaba, where you can see company certifications and third-party verifications of their products.
When searching for the right manufacturer, look for customer reviews. How does the general public receive them? Are customers satisfied with their products? And do they handle negative feedback well? A reputable manufacturer will go above and beyond to ensure their clients are delighted with their product offerings.
You want to build a list of manufacturers and contact each for negotiations. Ask as many questions as possible, and be sure to clarify things like the price, contract, turnaround times, etc. If a manufacturer takes too long to respond, look elsewhere, as this can make it difficult to negotiate with them.
3. Design your brand
Here’s the fun part of private labeling; designing your brand! The good news is that you don’t have to be a graphic designer to create your own brand. There are plenty of tools available to help you create beautiful brand art like Canva, Gimp, and Procreate. Experiment with the thousands of templates available to find the perfect design theme for your brand.
Remember, your brand image is what will stick with your core audience, so give it plenty of thought and let your creative juices flow! Those who aren’t as inclined can hire a professional graphic designer from freelance marketplaces like Fiverr and 99designs. With a graphic designer, you can rest assured that your brand art looks professional and well-suited to resonate with your target audience.
4. Open your e-commerce store
Now that we’re through the design stage, the next logical step is opening your retail store. When selling private label products, you have two platforms to choose from; Amazon and Shopify. Both platforms offer e-commerce sellers the necessary tools to start private labeling. With Amazon, you get access to the platform’s established consumer base, while Shopify provides flexibility and customization options.
Either way, both platforms are excellent for selling private-label goods. Once your e-commerce store is ready to go, you’ll need to create a listing for your products. Add high-quality photos of your products and write detailed, engaging copy in the product description. You want to focus on the quality of your product listings as these will influence their buying decision.
5. Develop a sound marketing strategy
Here’s the challenging part of selling private label products; marketing them. Developing a sound marketing strategy is crucial to the success of your brand, as you’ll need to reach the right people to buy your products. The three most important marketing methods you should implement are:
- Search engine optimization (SEO) – Search engine optimization refers to optimizing your product listings to ensure they appear on top of the search results. SEO drives organic traffic to your store and is a time-and-tested way to boost your visibility online.
- Social media marketing (SMM) – Almost everyone is on social media these days. Customers look for products on platforms like Facebook, Twitter, and Instagram, so it makes sense to market your products to where the people are. Create a page for your brand and post regular content while engaging with your target audience.
- Content marketing – This marketing method involves writing blog posts and posting informational content relative to your brand. When you produce high-quality content, you provide value to your customers. It’s an effective way to build your brand image as people associate good content with professionalism and reliability.
You can also run ads to obtain paid traffic to your product listings. Before running paid ads, we recommend doing keyword research to ensure your ads are well-optimized.
It’s no surprise why private labeling continues to grow. As we approach 2022, private brands are becoming more profitable than national brands, thanks to quality and affordability. If you’re an aspiring e-commerce seller and want to give private label products a try, make sure to do your research first. That way, you can determine whether or not this business model is suitable for you.
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