Private labeling is a term used to connote where someone sells a third party’s product under his own brand name.
According to Statista, in 2018 the market share of private label brands in the US was 19.3%, this amounted to 128.6 billion US dollars.Statista.com- US Private label market- Statistics and Facts
A private label entrepreneur often has exclusive sale rights of that product and he or she can alter the product to suit his own needs.
This means that the product manufacturer is giving the seller the right to sell that product under his or her own brand name.
Private labeling is often a path any small business person can choose to start his own line of products without manufacturing the product himself.
It is usually a win-win situation for both the manufacturer and the seller.
The manufacturer gets to sell as much product as they want without having to market the product.
While the seller who sells under their own brand name sells a product he likes without having to touch anything manufacturing.
It means they can focus on getting the product to sell rather than manufacturing it.
Sometimes a small-time manufacturer may get a big brand name to adapt their product and hence get more sales than they will have gotten had they been selling the product themselves.
An example of a private label product that is successful is vivianlou.com a company that is selling insoles for women who wear high heels.
Why Private Label
-It enables you to jumpstart a branded product business without having to manufacture yourself.
-Cuts down the time to market and reduces the cost of having to manufacture your products yourself.
-You can spend your time selling the product instead of manufacturing it.
-It’s a market that is on the rise, consumers are tending towards private label brands as an alternative to already established name brands which tend to be pricey.
-You have control over your packaging, profit, and production.
-You can take advantage of a niche product and maximize the profit because you are a small business and can move quickly to meet consumer demands.
How To Start a Private Label Business.
1. Choose a Niche
Before you start a private label business, do one thing which every small business does, that is to decide what your niche will be.
What niche will you like to play in? This will enable you to find products that fall into that category.
To brainstorm and find a niche for your product, grab my home business planner
For example, health food is a niche that many people are starting their private label businesses in.
A niche can be narrow or broad, for example, green products is an example of a broad niche.
A person selling in that category can sell anything ranging from food to clothing material as long as it meets the qualification of being a product that helps to keep the earth safe.
2. Source for a product
The next thing to do after choosing a niche is to choose the product you want to sell in this niche.
For example, using our Green products niche example, you can sell reusable water bottles made from either glass or aluminum.
By doing this, you are promoting less use of plastic water bottles. You can also choose to sell shopping bags made from recycled materials.
Whatever you choose to start with, make sure it’s a product which the market needs that is, there is a demand for it before you go ahead to start marketing it.
3. Find you Product manufacturer
A bulk of your profit will come from how cheap you are able to get your product manufactured. You need to take the time to look carefully for the right manufacturing partnership.
This is because your entire business will depend on how successful this partnership works out.
You do not want to choose manufacturers who will stand you up at the last minute or do not have the capacity to produce the quantity your market demands.
You also have to be willing to use people who understand that you will have the exclusive right to sell their products.
This is where you will need to have someone who knows how to draw up a contract that prevents another person from selling the same products.
You can also go as far as patenting the right to that product.
A good place to start sourcing for your products is to go to a platform where you have a lot of curated overseas factories ready to help you manufacture your product. The platform that is able to do this is sourcify.
Sourcify has a lot of factories from all over the world who will help with your manufacturing process and cut down the time you will have spent searching for manufacturers on your own.
Another platform you can use is Alibaba, in this case, you will have to source for the manufacturers your self and prequalify them by yourself. There are also others like esources.com too.
4. Create a brand
Once you are done with getting your manufacturer and initiating a partnership, the next thing is to create a brand for your business.
I have written on how you can brand your home business in a previous article, so please read it for more knowledge.
5. Market and sell
To sell your products, of course, you will need an online store, this is where you get to decide which online selling platform you will like to use.
I wrote a post about online store versus online marketplace, in that post I enumerated the advantages and disadvantages of using either one of them.
They provide you with the opportunity to have an online shop where you can showcase your goods to your customers.
If you are a small business owner just starting out with a small budget, I will suggest you go with Wix, their prices are cheaper and you get a lot of free add-ons that will cost you less to operate.
Niches for private Label products
-Personal care products: e.g. shampoos, Body cream,
-Green Products; recyclable goods and products made with care for the earth
To round up this post, I would like to reiterate that the world of e-commerce business is moving toward private labeling as a way to build small brands by small business owners to create value and also to offer alternatives to more costly established brands.
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