What are Private Label products?
Products or even services provided or manufactured by a particular company under the brand of another company is called a “Private Label”.
Sounds confusing? Here’s an example.
Scenario: I want to sell my own spice mixes and seasonings but I don’t know the formula or any recipes to make them. Also, I don’t have the money to open up a factory to manufacture them.
Solution: There’s a company that has these already made and all they need is the customer(you) to place your label or brand on it.
That is what “Private Label” business is, in the simplest form. You find the manufacturer offering the Private Label solutions, then you select the product you want and then label them as your own.
Such products could add major margins to a business when executed correctly, it creates trust and credibility with the shoppers of your store. Private labels are everywhere and at one point in time, you have probably purchased one from a retail store or supermarket.
Why Create a Private Label Product?
Private label branding is suitable for when you want to build a food business. Many starting entrepreneurs in the Retail Food Industry are drawn to the Private Label business model because of the ease of obtaining a product without building it from scratch.
A private label is an excellent way for the self-regulating retailers to go and compete with the national chains as well as boost the loyalty of the shoppers to their brand. Reports published by the IRI Group states that the costs for private labels could be as much as 30 percent more affordable than the international or national brands which translate to, better value for the shoppers and retailers.
Some other benefits of making your private label products are as follows:
• Entice the curious customers and trendsetters who like something different.
• Have the product which will reflect the overall identity of the brand.
• Differentiate the business from the race.
For more details and research results on Private Label growth: Download PDF IRi Private Label Growth
Private label items are currently present in almost each shopping category just like Costco’s “Kirkland Signature”, Wal-Marts “Great Value” and more. Sometimes it is difficult to distinguish the quality and taste of Private Labels foods versus popular Name Brands. This is why there has been a huge boost in creation and production of Private Labels in today’s market.
The Process of Making a Private Label
The two main Private Labels are:
- Products that should tie or reflect directly to a present brand
- Products that should be in their name and merit
Things to consider when creating a Private Label.
- Decide which colors, sizes and weight of the product.
- Name of your product.
- Design the package of the item and make it consumer-friendly. The logo and typography should be kept simple and easy to distinguish between other brands on the market.
- Manufacture and ship the finished products to the stores and you’re done.
What about the Cost?
From online sources, it is possible for one to get started in running a private label business with $5,000 USD. All you need to do is go out there and make the human connections and get a feel for what the current market has to offer. It also depends on additional factors like:
- Premium versus Standard products
- Size of inventory
- Where are you selling the products from?
- If using the drop ship method, the fees associated with online e-commerce sites like Amazon or eBay.
To ensure the success of your food business, I encourage you to do further research and not base your business plan on a single source found online or from one person’s advice or opinion. The business opportunity with Private Labels may come off as something easy to do and it may distract you from the work part of the business. The reason why I’m saying this is because as you scale your business, there are more angles and elements to look at when making a successful brand. You don’t want to miss any important steps in building your foundation. These guidelines either get you started or point you in the direction to starting a Food Business with Private Labels. The “Success” portion comes with the hard work and all the hours you push into your business.