Understanding the Advantages of Private Labeling

If you’re in the retail business and you’re looking for a quick way to get some quality products and let your brand get known throughout your customer base, then private labeling is something you might want to look into. Whether you want to sell car detailing products, perfumes, t-shirts, or even USB flash drives, you can look for a company that can shoulder the responsibility of manufacturing the products while you focus on marketing and selling them. This is the beauty of private labeling. Read on to learn more about this business transaction and how you can benefit from it.

What is Private Labeling?

A private label product is manufactured by a contract or third-party manufacturer and sold under a retailer’s brand name. As a retailer, you can have your products manufactured the way you want them to be, then you can market them under your own brand. It’s a great way for businesses to get their products into people’s hands and without you worrying about building your own manufacturing facility.

Some of the biggest brands in the retail industry work with private label companies too. Brands like Costco partner with Kirkland Signature, which is a known private-label brand. While Kirkland sells products under their own name, they also manufacture a lot of products for Costco under their brand name.

What are the Advantages of Private Labeling?

Private labeling isn’t that much known to many people, but it’s actually quite common in today’s shopping environment. It’s basically outsourcing the manufacturing process to other more capable companies. If you’re planning on partnering with a private label company, here are some benefits you can expect from it.

1. Loyalty

The key to long-term business success is building a loyal customer base. You need to have enough products to do that, and branding through private labeling is a good approach to it. You’ll be able to sell more products made consistently, which helps bring in more customers that will remain loyal because of what you’re selling. Also, with limited accessibility, customers become attached to your brand, allowing them to feel as though they are among a select few that own it, which ultimately increases loyalty and sales among your customer base.

2. High Margins

Brands with private labeling usually have higher profit margins than resale products do. The reason for this is because it’s actually cheaper to make your own products, or at least have someone make it especially for you. This is true if the development and marketing of the products are made by you and are of excellent quality.  If you’re just a reseller getting pre-made products from an existing brand, the profit margins for those products won’t be much.

3. Wholesale Income and Exclusivity

One of the greatest advantages of private labeling is the option to operate as a wholesaler and have the option to sell the product exclusively. Since you’re offering something made especially for you by a private labeling company, you can operate as a wholesale distributor for your brand and provide limited access to other retailers interested in selling your products. You’ll be able to separate yourself from your competitors and market your product more effectively.

Conclusion

Private labeling is a lucrative strategy for brick-and-mortar retailers and eCommerce businesses. It takes the burden of manufacturing out of your hands while you shift your focus to marketing and selling. Partnering with a private label company gives you all the benefits of creating the product yourself, minus the cost and maintenance of manufacturing machines and processes.