February 3, 2020

The Growth and Benefits of Private Labeling

Sellers are becoming aware of brand name’s heavy supply chains, which minimize sales and profit margins, but sellers are helpless against the all powerful factories controlling this “game.”

Thus, sellers, both in stores and online, are moving towards private label brand. Private labels are in essence products and services by a “third party” supplier or company. These private brand companies either offer a single, specialized unit or a variety of product lines for wholesale. They are able to provide higher quality, lower price goods due to a minimized supply chain and direct procurement methods. These private brand companies cut out the middlemen and work directly with manufacturers and factories to ensure clean and simplified sourcing, producing, and providing.

Why are sellers turning to private brands?

By cutting down on the supply chain, these private suppliers deal directly with their sources. In this way, the sellers also have direct communication with their suppliers and manufacturers, enabling more control and a louder voice in their products. This relationship and direct communication with the wholesaler improves everyone’s success, as all areas of the product distribution are closely interconnected.

In addition, a diminished supply chain usually enables products to be made for cheaper by reducing the number of hands in the pot. This allows private label items to be more profitable for sellers while also giving them control of their pricing options. It also gives sellers more power over their volumes and inventory (better regulating minimum order quantities) by having a direct contact and understanding with their suppliers.

There is also more control over pricing, marketing, sales, and distribution for sellers. Private label sellers are in the minority compared to brand sellers. Brand sellers often have to stick to a strict regimen of how they go about selling the product. Private label sellers often have more control over their brand image and marketing identity. With the right marketing tactics, this means that there can be stronger customer recognition and loyalty for these private brands.

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