Private Label Manufacturing
Private label manufacturing is when a retailer has its products made by a third-party manufacturer under its own brand name. These private label products are sold exclusively by the retailer. This business model works well for brands that already have an established audience or who do not have the means to produce their own products. A great example of this is Walmart’s private label brand ‘Great Value.’ Walmart does not actually manufacture their ‘Great Value’ products, instead, they find manufacturers all over the country and world to produce these products for them. Then they stick their label on them and sell them throughout all their retail stores.
Is private labeling right for my business?
Building a product from scratch can be extremely difficult, costly, and time-consuming. That is where private label manufacturing comes in. Instead of going through rigorous R&D, manufacturers will allow you to use their product under your brand name. Here are 5 of the top private label manufacturing industries right now:
- Food and Beverage
- Clothing and Accessories
- Health and Beauty Products
- Pet Products
Whether your business is big or small there can be advantages to using a private label manufacturer to produce your products. Say you have an established audience/customer, either online or in retail, and you want to brand some new products. Finding a manufacturer that already makes that product is going to save you a lot of money in the long run. Instead of starting from scratch you can use an already proven product and brand it as your own.
Likewise, if you are a large, national retail brand that sells thousands of products, it is unlikely you will have the means to produce them all ‘in-house’. By sourcing manufacturers for your retail brands, you can focus on other, more important facets of your business.
What to look for in a private label manufacturer?
Not all manufacturers offer the same level of quality and consistency. Here’s what you should be looking for from your private label manufacturer.
Go for a manufacture with at least 5+ years of experience manufacturing products in your desired industry. These companies will have established relationships with suppliers and more diverse supply chains than manufacturers that are just starting out. Find a manufacturer with 10+ years in the manufacturing business if you can. These companies are turnkey manufacturers and have robust quality assurance programs, safety measures and will be able to get you the best PPU.
Make sure the manufacturer you choose is following state regulations when it comes to all phases of production. If you are looking for additional assurance, certifications exist to ensure that quality and standards are upheld. Some common certifications for manufacturers include GMP (good manufacturing practices), USDA Organic (for organic foods), FDA compliance (follows all FDA guidelines available), Fair for Life (ensures producers are supported and treated fairly). The list of these certifications goes on and on. What certifications you are looking for will depend on the industry and product you are manufacturing. Do your research and choose a manufacturer that is certified by the organizations that make the most sense for your brand.
Communication is key! Find a manufacturer that is responsive and willing to work with your vision. The manufacturing process is as involved as you want it to be. You should be able to customize all facets of the product to make it uniquely yours to sell. If it takes a while for the manufacturer to get back to you, this may be an indicator of your future partnership. Go for a manufacturer with an open line of communication.
Benefits of Using a Private Label Manufacturer
Check out these major benefits of using a private label manufacturer to produce your products.
Work with an Experienced Manufacturer
Manufacturers that have been in the business for longer will have more expert knowledge and industry insights. Through years of experience, these manufacturers have been able to build long-lasting relationships with suppliers, other manufacturers, and retail partners to operate at the highest capacity possible.
Complete Customization Capabilities
Choosing to private label a product allows you complete customization of the product. From formulation to sizing, packaging, labeling, and even pricing, you have complete control over the product being produced.
Quickly Bring Product to Market
Building a product from scratch takes an enormous amount of time and money. By working with an experienced manufacturer who has already spent the time and money on R&D, manufacturing equipment, permits, certifications and quality assurance, you can quickly bypass the years it would normally take to bring a product to market.
Increase Profit Margins
Since the product is being produced at an agreed-upon price by the manufacturer, you as the brand owner have control over your profit margins. You can set the price of your product to fit your customer range and your business’s profit needs. Plus, by not spending money on in-house manufacturing equipment and labor, you are saving tons even more.
Because you have complete control over how your product is made, you will have exclusivity to sell it. This means that the manufacturer cannot resell your same product to another retailer. This is helpful if you have a loyal customer base because they will only be able to purchase the product from your business.