What Is Private Label? A Beginner's Guide to Private Labeling
What is a private label? This beginner's guide explains how private labeling works, its benefits and challenges, and examples of successful private label brands.
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Most retailers and established brands in most industries—both online and in physical stores—source their products from suppliers. Other brands manufacture and sell their products directly to their customers, and although this is increasing in numbers, it’s still far from being the norm. Some e-commerce sellers, retailers, and entrepreneurs sell products without their own brand name—unless they choose to pivot to private labeling.
In this article, we will help you navigate the world of private labeling, its benefits, challenges, and how to get started with your own private label brand.
As a retailer, you've probably asked the question: "What does private label mean?"
Private label refers to products that are manufactured by one company but are sold under another company's brand name. These products are typically produced by third-party manufacturers and are marketed and sold by retailers or brands with their own logo, packaging, and branding.
An example of a private label product would be a grocery store's brand of cereal. The cereal is made by a third-party manufacturer but is packaged and sold under the store's own brand name. The store does not produce the cereal itself; they just market it with their branding, often at a lower price than national brands.
In this case, the store owns the brand and is responsible for marketing it, while the actual production is handled by a different company.
Private labeling offers multiple key benefits for retailers and other businesses aiming for improved brand presence and profitability.
Private labeling allows other retailers—especially small to mid-sized retailers—to work with third-party manufacturers. This means that they can leverage existing supply chains, reduce production overhead, and make sure that there is a steady flow of inventory without needing large-scale investments.
A new product launch is too costly, but with private labeling, it is actually a cost-reduction process. Private label sellers can receive top-quality merchandise from manufacturers to leave them a little room to introduce new private label products under their house brand at almost zero cost. That implies easier experimentation with new markets and volume growth with fewer financial risks.
Private label products typically enjoy greater profit margins compared to selling third-party brands. Since retailers are now purchasing directly from manufacturers, they have greater control over costs. This can result in improved pricing strategies and profitability.
Providing private label products assists retailers in creating a unique brand identity. Customers who trust and identify with a brand are more inclined to purchase again, resulting in greater customer loyalty. This is particularly important in competitive markets such as beauty, fashion, and grocery, where customer retention is key to business expansion.
Retailers are able to respond swiftly to market and consumer trends by changing their private label product lines. In contrast to national brands that take more time to innovate, private label retailers are capable of launching new variations, seasonal offerings, or better formulations without relying on outside suppliers.
Private labeling enables the retailer to exercise direct control of product quality to ensure uniformity across branded products offered. In collaborating with manufacturers, they are able to dictate definite standards in terms of ingredients, materials, and packaging, sustaining consumer confidence and limiting risks for variability in product quality.
Going into private label business requires cautious planning and strategic decision-making. Here are the major steps to launch and build your private label line successfully.
Find products with high market demand and less competition. This means keeping an eye on and staying in the loop with trends, customer pain points, and niche opportunities that meet your business objectives.
Identify the right private label manufacturers that have good production, competitive prices, and accommodating customization. You can also compare and contrast suppliers, ask for samples, and check their production capacities before deciding.
Define your objectives, target market, pricing policy, and projected expenses. Include production, branding, marketing, and logistics to make a profitable and sustainable business model.
Building your private label brand involves creating a unique identity with a memorable name, professional logo, and eye-catching packaging. Your marketing strategy should focus on positioning your product, selecting the right platforms (social media, influencers, email campaigns), and engaging your target audience. Consistent branding and a solid plan will help differentiate your product, attract loyal customers, and establish credibility for long-term success.
If selling private-label goods is for you, here's how to select the right supplier for you:
Get to know your main customers and their desires. Examine competing products in your space:
- What are the customers' favorite features?
- What are they complaining about?
Spell out your product specifications in detail, such as materials, design elements, and unique manufacturing procedures such as fabric processing for garments or flash freezing of food products. Set your initial order quantity and budget to account for per-unit and manufacturing costs and associated expenses like warehousing, shipping, customs duties, and testing, if applicable.
Find manufacturers that have experience working in your category. Compare the cost, services, and capacity to determine which is the most suitable for your brand. Also, reviews have a significant impact on your decision-making process, so make use of internet websites which are the most convenient databases to search for private label manufacturers.
Ready to find the perfect manufacturer for your brand? Explore Torg's vast network of trusted food and beverage suppliers. Compare options and make confident sourcing decisions—all in one place. Sign up to connect with the best manufacturers!
A reputable manufacturer will want you to order samples, so don't miss this step. Product samples demonstrate precisely what you'll be selling to your customers.
When ordering samples:
- Request samples created with the same materials and processes planned for production
- Order samples from several manufacturers to compare the quality
- Test the samples extensively for durability and functionality
- Inspect packaging options if applicable to your product
Now that you've narrowed down the task of finding the right private label supplier, let's proceed with the criteria you should keep in mind before sealing the deal:
Getting just the right manufacturer is a tough challenge. You have to locate someone with specific experience in making your kind of same product, as well as their own history and success at making it themselves.
They must also be able to provide production samples, documentation, and comments from previous customers who ordered similar products or services through them before you make the final decision on whether they are what you need to get done.
Search for quality in your private label producers by checking them out on forums and eCommerce websites for reviews from past customers. It's always a good idea to order samples first before buying.
A great deal goes on behind closed doors during production, so some sellers even go into factories themselves to see production processes, and health and safety regulations to get an eye-witness view.
Private labeling is an excellent method of putting your branded product in the hands of customers at competitive prices. You can negotiate and obtain quotes from a number of manufacturers to secure these deals.
Find out their minimum order quantities, any sample products on offer for sale, and volume discounts offered on production if you purchase large amounts in bulk.
Manufacturers have stringent and tight delivery schedules–you're not their only customer! To get your private label product on time, ensure that the manufacturer has a good delivery history. You'll have to discover costs to ship in bulk, the order turnaround time, custom rules for shipping overseas, etc.
When you feel like you want to contact a supplier, then due diligence needs to be conducted on the firm to ensure that they are a rightfully registered business and licensed with all proper business and manufacturing approvals.
Similarly, your business has to be of the same caliber with proper business documentation, registrations, and bank accounts.
Private label companies provide moisturizers, serums, hair, and personal care products based on varied skin and hair types. The business of beauty runs on brand names and customizing.
Most wellness and health companies rely on private labeling to retail dietary supplements, protein powders, and vitamins under custom brands. One of the popular private label supplement brands is Kirkland Signature.
Retailers of fashion produce their own branded clothing lines of athleisure, loungewear, and eco-friendly fashion products via private labeling.
Private label products like coffee, gourmet foods, and organic food are commonly offered under different brand names in supermarkets and over the Internet.
With the increasing interest in eco-friendly products, private label biodegradable cleaning products, reusable packaging, and organic laundry detergents have become in demand.
Private label success takes more than manufacturing ability—it takes quality, efficiency, and a definite competitive advantage. Here are some common downsides of private labeling:
Intense Competition – Increasing private label demand has attracted more manufacturers, increasing competition, and making it more challenging to differentiate. This is why brands often prefer manufacturers who can provide distinctive value and quality apart from low costs.
Meeting High Manufacturing Demand – Brands tend to need bulk orders with short timelines. Startups can find it difficult to meet such demands without compromising on quality, particularly when there are numerous competitors waiting in the wings.
Relying on Brand Success – Private label manufacturers do not develop their own brand name, instead, they depend on the success of the brands they manufacture for. Without contracts from several private label lines, long-term business growth is uncertain.
Staying Ahead of the Curve – Technology advancements in manufacturing make it more efficient and productive. Private label manufacturers need to invest in the latest machinery and production techniques in order to remain competitive.
Having a Unique Selling Proposition (USP) – A good USP allows manufacturers to obtain long-term contracts. However, quality consistency and one-of-a-kind products are the things that can set a company apart in an over-saturated marketplace.
Unique Products for Strong Brand Identity
Stand out in the marketplace by offering unique products and focusing on a signature product that symbolizes your brand values while addressing consumer needs. Be unique with a compelling story, consistent visuals, and repeated messaging to build strong branding that drives customer loyalty and awareness.
Optimize Compelling Product Descriptions for Search
Spend high-quality photos, detailed descriptions, and clear benefits to make products more enticing. A properly written listing builds trust and drives conversions. Aside from that, employ keywords and phrases associated with your products within your product titles, descriptions, and tags to maximize search result visibility and attract more purchasers.
Harness Social Proof and Take Advantage of Social Media
Collect consumer reviews and testimonials to create trust. Word-of-mouth enhances sales and believability, but aside from that, know that you can also take advantage of investing in social media advertisements which can engage your customers, create hype, and drive traffic to your store.
Provide Outstanding Customer Service
Reply promptly to questions, resolve problems well, and deliver a hassle-free shopping experience. Great service translates into repeat business and word-of-mouth marketing.
Monitor Market Trends
Keep yourself informed on industry trends and adjust your product lines to catch up with changing customer tastes. This makes your brand current and competitive.
Private labeling is a business model that offers opportunities for sellers to start their own brands, forge customer loyalty, and get maximum profitability without the hassle of manufacturing the goods. If you’re a seller who’s interested in expanding your product line, an entrepreneur seeking new market opportunities, or a business owner who wants to take charge of quality and pricing, you should know that private labeling is a game-changer.
Success in private labeling, however, hinges on careful planning, thorough research, and strong partnerships with the right manufacturers. With an understanding of the process, utilizing market trends, and maintaining quality standards, you can create a thriving private label line that competes in a busy marketplace.
1. What is a private label with an example?
A private label is a product made by a third party but sold under a retailer’s brand. Example: Costco's Kirkland Signature.
2. What is private label on Amazon?
It’s when sellers create branded products using third-party manufacturers and sell them on Amazon, like AmazonBasics.
3. Is Apple a private label product?
No, Apple designs and sells its own products, unlike private labels that rebrand third-party goods.
4. What is the difference between a brand and a private label?
A brand creates its own products, while a private label sells third-party products under its name.
In this article, we will help you navigate the world of private labeling, its benefits, challenges, and how to get started with your own private label brand.
What is Private Label?
As a retailer, you've probably asked the question: "What does private label mean?"
Private label refers to products that are manufactured by one company but are sold under another company's brand name. These products are typically produced by third-party manufacturers and are marketed and sold by retailers or brands with their own logo, packaging, and branding.
An example of a private label product would be a grocery store's brand of cereal. The cereal is made by a third-party manufacturer but is packaged and sold under the store's own brand name. The store does not produce the cereal itself; they just market it with their branding, often at a lower price than national brands.
In this case, the store owns the brand and is responsible for marketing it, while the actual production is handled by a different company.
Benefits of Private Labeling
Private labeling offers multiple key benefits for retailers and other businesses aiming for improved brand presence and profitability.
1. Access to Established Supply Chains
Private labeling allows other retailers—especially small to mid-sized retailers—to work with third-party manufacturers. This means that they can leverage existing supply chains, reduce production overhead, and make sure that there is a steady flow of inventory without needing large-scale investments.
2. Cost-Effective Market Entry and Expansion
A new product launch is too costly, but with private labeling, it is actually a cost-reduction process. Private label sellers can receive top-quality merchandise from manufacturers to leave them a little room to introduce new private label products under their house brand at almost zero cost. That implies easier experimentation with new markets and volume growth with fewer financial risks.
3. Higher Profit Margins
Private label products typically enjoy greater profit margins compared to selling third-party brands. Since retailers are now purchasing directly from manufacturers, they have greater control over costs. This can result in improved pricing strategies and profitability.
4. Brand Recognition and Customer Loyalty
Providing private label products assists retailers in creating a unique brand identity. Customers who trust and identify with a brand are more inclined to purchase again, resulting in greater customer loyalty. This is particularly important in competitive markets such as beauty, fashion, and grocery, where customer retention is key to business expansion.
5. Flexibility and Adaptability
Retailers are able to respond swiftly to market and consumer trends by changing their private label product lines. In contrast to national brands that take more time to innovate, private label retailers are capable of launching new variations, seasonal offerings, or better formulations without relying on outside suppliers.
6. Quality Control and Consistency
Private labeling enables the retailer to exercise direct control of product quality to ensure uniformity across branded products offered. In collaborating with manufacturers, they are able to dictate definite standards in terms of ingredients, materials, and packaging, sustaining consumer confidence and limiting risks for variability in product quality.
Getting Started with Private Labeling
Going into private label business requires cautious planning and strategic decision-making. Here are the major steps to launch and build your private label line successfully.
Brainstorm Private Label Product Ideas
Find products with high market demand and less competition. This means keeping an eye on and staying in the loop with trends, customer pain points, and niche opportunities that meet your business objectives.
Research Private Label Manufacturers
Identify the right private label manufacturers that have good production, competitive prices, and accommodating customization. You can also compare and contrast suppliers, ask for samples, and check their production capacities before deciding.
Create a Business Plan and Budget
Define your objectives, target market, pricing policy, and projected expenses. Include production, branding, marketing, and logistics to make a profitable and sustainable business model.
Build Your Private Label Brand and Marketing Strategy
Building your private label brand involves creating a unique identity with a memorable name, professional logo, and eye-catching packaging. Your marketing strategy should focus on positioning your product, selecting the right platforms (social media, influencers, email campaigns), and engaging your target audience. Consistent branding and a solid plan will help differentiate your product, attract loyal customers, and establish credibility for long-term success.
How to Choose Private Label Manufacturers
If selling private-label goods is for you, here's how to select the right supplier for you:
1. Research & Define Your Product Categories
Get to know your main customers and their desires. Examine competing products in your space:
- What are the customers' favorite features?
- What are they complaining about?
Spell out your product specifications in detail, such as materials, design elements, and unique manufacturing procedures such as fabric processing for garments or flash freezing of food products. Set your initial order quantity and budget to account for per-unit and manufacturing costs and associated expenses like warehousing, shipping, customs duties, and testing, if applicable.
2. Compare Options & Read Reviews
Find manufacturers that have experience working in your category. Compare the cost, services, and capacity to determine which is the most suitable for your brand. Also, reviews have a significant impact on your decision-making process, so make use of internet websites which are the most convenient databases to search for private label manufacturers.
Ready to find the perfect manufacturer for your brand? Explore Torg's vast network of trusted food and beverage suppliers. Compare options and make confident sourcing decisions—all in one place. Sign up to connect with the best manufacturers!
3. Request for Samples
A reputable manufacturer will want you to order samples, so don't miss this step. Product samples demonstrate precisely what you'll be selling to your customers.
When ordering samples:
- Request samples created with the same materials and processes planned for production
- Order samples from several manufacturers to compare the quality
- Test the samples extensively for durability and functionality
- Inspect packaging options if applicable to your product
What To Look For In Private Label Manufacturers
Now that you've narrowed down the task of finding the right private label supplier, let's proceed with the criteria you should keep in mind before sealing the deal:
1. What Is Their Product Specialization?
Getting just the right manufacturer is a tough challenge. You have to locate someone with specific experience in making your kind of same product, as well as their own history and success at making it themselves.
They must also be able to provide production samples, documentation, and comments from previous customers who ordered similar products or services through them before you make the final decision on whether they are what you need to get done.
2. How is Their Manufacturing Quality Standard?
Search for quality in your private label producers by checking them out on forums and eCommerce websites for reviews from past customers. It's always a good idea to order samples first before buying.
A great deal goes on behind closed doors during production, so some sellers even go into factories themselves to see production processes, and health and safety regulations to get an eye-witness view.
3. What Is Their Pricing Structure?
Private labeling is an excellent method of putting your branded product in the hands of customers at competitive prices. You can negotiate and obtain quotes from a number of manufacturers to secure these deals.
Find out their minimum order quantities, any sample products on offer for sale, and volume discounts offered on production if you purchase large amounts in bulk.
4. What Are Their Shipping and Delivery Terms?
Manufacturers have stringent and tight delivery schedules–you're not their only customer! To get your private label product on time, ensure that the manufacturer has a good delivery history. You'll have to discover costs to ship in bulk, the order turnaround time, custom rules for shipping overseas, etc.
5. Are They A Legitimate Business Enterprise?
When you feel like you want to contact a supplier, then due diligence needs to be conducted on the firm to ensure that they are a rightfully registered business and licensed with all proper business and manufacturing approvals.
Similarly, your business has to be of the same caliber with proper business documentation, registrations, and bank accounts.
Private Label Product Examples
Beauty and Skincare Products
Private label companies provide moisturizers, serums, hair, and personal care products based on varied skin and hair types. The business of beauty runs on brand names and customizing.
Dietary Supplements and Vitamins
Most wellness and health companies rely on private labeling to retail dietary supplements, protein powders, and vitamins under custom brands. One of the popular private label supplement brands is Kirkland Signature.
Clothing and Apparel
Retailers of fashion produce their own branded clothing lines of athleisure, loungewear, and eco-friendly fashion products via private labeling.
Coffee and Specialty Food Items
Private label products like coffee, gourmet foods, and organic food are commonly offered under different brand names in supermarkets and over the Internet.
Eco-Friendly Home Cleaning Products
With the increasing interest in eco-friendly products, private label biodegradable cleaning products, reusable packaging, and organic laundry detergents have become in demand.
What are Common Private Label Challenges?
Private label success takes more than manufacturing ability—it takes quality, efficiency, and a definite competitive advantage. Here are some common downsides of private labeling:
Intense Competition – Increasing private label demand has attracted more manufacturers, increasing competition, and making it more challenging to differentiate. This is why brands often prefer manufacturers who can provide distinctive value and quality apart from low costs.
Meeting High Manufacturing Demand – Brands tend to need bulk orders with short timelines. Startups can find it difficult to meet such demands without compromising on quality, particularly when there are numerous competitors waiting in the wings.
Relying on Brand Success – Private label manufacturers do not develop their own brand name, instead, they depend on the success of the brands they manufacture for. Without contracts from several private label lines, long-term business growth is uncertain.
Staying Ahead of the Curve – Technology advancements in manufacturing make it more efficient and productive. Private label manufacturers need to invest in the latest machinery and production techniques in order to remain competitive.
Having a Unique Selling Proposition (USP) – A good USP allows manufacturers to obtain long-term contracts. However, quality consistency and one-of-a-kind products are the things that can set a company apart in an over-saturated marketplace.
Tips for Building a Successful Private Label Brand
Unique Products for Strong Brand Identity
Stand out in the marketplace by offering unique products and focusing on a signature product that symbolizes your brand values while addressing consumer needs. Be unique with a compelling story, consistent visuals, and repeated messaging to build strong branding that drives customer loyalty and awareness.
Optimize Compelling Product Descriptions for Search
Spend high-quality photos, detailed descriptions, and clear benefits to make products more enticing. A properly written listing builds trust and drives conversions. Aside from that, employ keywords and phrases associated with your products within your product titles, descriptions, and tags to maximize search result visibility and attract more purchasers.
Harness Social Proof and Take Advantage of Social Media
Collect consumer reviews and testimonials to create trust. Word-of-mouth enhances sales and believability, but aside from that, know that you can also take advantage of investing in social media advertisements which can engage your customers, create hype, and drive traffic to your store.
Provide Outstanding Customer Service
Reply promptly to questions, resolve problems well, and deliver a hassle-free shopping experience. Great service translates into repeat business and word-of-mouth marketing.
Monitor Market Trends
Keep yourself informed on industry trends and adjust your product lines to catch up with changing customer tastes. This makes your brand current and competitive.
Final Thoughts
Private labeling is a business model that offers opportunities for sellers to start their own brands, forge customer loyalty, and get maximum profitability without the hassle of manufacturing the goods. If you’re a seller who’s interested in expanding your product line, an entrepreneur seeking new market opportunities, or a business owner who wants to take charge of quality and pricing, you should know that private labeling is a game-changer.
Success in private labeling, however, hinges on careful planning, thorough research, and strong partnerships with the right manufacturers. With an understanding of the process, utilizing market trends, and maintaining quality standards, you can create a thriving private label line that competes in a busy marketplace.
Frequently Asked Questions
1. What is a private label with an example?
A private label is a product made by a third party but sold under a retailer’s brand. Example: Costco's Kirkland Signature.
2. What is private label on Amazon?
It’s when sellers create branded products using third-party manufacturers and sell them on Amazon, like AmazonBasics.
3. Is Apple a private label product?
No, Apple designs and sells its own products, unlike private labels that rebrand third-party goods.
4. What is the difference between a brand and a private label?
A brand creates its own products, while a private label sells third-party products under its name.