A product sold under a retailer’s brand name is known as a private label since a third party developed it. Everything related to the product or items is within the retailer’s control.
The store receives private branded goods from selling after that. They are the business’s “own brand” goods in the eyes of the customer. An example would be introducing a private label line of conference call gear by a collaboration software vendor. Another company would make such goods. But they would be offered for sale under the brand name of the original company.
Both branded and private label product lines are present in most consumer goods categories. Examples of industries where private labeling is most common include the following:
Grooming & Personal Care: Private-label nail polish, shampoo, and other products may be sold at nail salons, hair salons, and other businesses.
Food & Beverage – Own-brand condiments, sauces, etc., from grocery stores
Clothes – Besides branded alternatives, high-street clothing businesses often market their collections.
Pet boutiques, with their branding, offer food, toys, and other animal accessories.
What steps make up the private labeling process?
Before starting private labeling, you must choose the industry or product you wish to operate in; what private label products you sell will depend on this. Some product categories will have larger margins, while others may need more volume to turn a profit on a large scale.
Locate a supplier you wish to deal with and ask whether private labeling is an option. There are several excellent private-label manufacturers from which to pick. From there, you may order samples and decide if you want to promote the product.
Always remember that if you operate a company that sells private-label goods, you’re searching for a product under your name and brand. Private-label manufacturers of common Private Label goods include apparel, cosmetics, and grocery store condiments.
According to Statista statistics, private label retail sales in the US reached $5.15 trillion in 2021 and are anticipated to reach $5.35 trillion in 2025. That is no surprise, given the prevalence of private-label goods at big-box retailers. For instance, Walmart offers Great Value, Costco offers Kirkland, and Target has its private label, Archer Farms. Almost every national brand in the US and worldwide sells items under its private label.
Retailers have complete control over a product’s parameters, including the components or substances utilized, the product’s appearance, packaging, and labeling. These merchants hire independent manufacturers to make these goods and ship them to the retailer’s location.
Private labeling is a technique that many merchants use often. Retail behemoths use the Kirkland and Archer Farms trademarks Costco and Target to market their private label products. Private labeling is used by more than just the biggest retailers, though. Intimate label goods are also widely available in other industries, such as clothes, food and beverage, grooming, and personal care.
Here are a few instances:
- Spas and salons that market private-label goods such as shampoos, hair treatments, and nail polish
- retailers that offer clothes that they sell under their private label in addition to other brands
- Food and drink items sold under a grocery store’s brands, such as cereals, juices, and sauces
Other subcategories of private labels include:
- dairy goods
- domestic cleaners
- Paper-based goods
Private labeling benefits
Private labeling for goods created and marketed by the business that makes them has both benefits and drawbacks. The following uses of private labeling could be mentioned:
Devotion: Building a loyal client base is essential for long-term company success. Building brand recognition via private labeling is a terrific method to win your consumers’ loyalty. Customers with restricted access to your brand get connected to it and feel like they are among the chosen few who own it, ultimately boosting customer loyalty and sales.
Exclusiveness: By using private labeling, you may set yourself apart from your rivals. Private labels offer numerous instances when you have the only right to sell the goods, which is one of their finest features. Since your business is the sole supplier of the goods, effective marketing will increase demand for it, which benefits you.
Income from wholesale: In addition to selling your product only, you might think about acting as a wholesaler for your brand and giving other retailers limited access in exchange for a high acquisition cost.