Are you interested in launching a private-label product line? In the Physical Product Line article series, we cover
- different ways to add a product line to expand your service business
- how to launch a home decor line with your own original designs
- how to get into retail stores
- how to create a private label product line
- how to license your brand to create a collections
In this article, we cover how to create a collection with private labeling as your strategy.
We will answer the following questions:
- what is a private-label product?
- what’s the difference between a private label and ODM?
- how can you come up with product ideas and find manufacturers?
- how does it work?
- Private labeling is a business strategy where you sell products manufactured by another company but brand and market them as your own. It allows you to have control over product quality and create a unique brand identity without investing in manufacturing.
- Private labeling differs from Original Equipment Manufacturing (OEM) in that private label products are typically ready-made, with the brand’s logo added, while OEM involves highly customized products.
- Private labeling offers advantages such as minimal manufacturing experience required, faster product availability, smaller customization options, the potential for higher profit margins, and customer loyalty. However, disadvantages include limited customization possibilities, competition from similar products, minimum order quantities, and potential variations in quality.
- The choice between private labeling and OEM depends on your brand’s vision and goals. Private labeling is suitable if you want to expand your product line quickly and leverage existing designs, while OEM allows for more unique and customized products.
- A successful approach is to combine OEM and private label products, using OEM for flagship designs and filling gaps with private label products.
Private Label Definition – What Does Private Label Mean?
Private labeling is a business strategy that involves selling products that are manufactured by another company but branded and marketed as your own. It allows you to have more control over the quality of your products and create a unique identity for your brand without having to invest in the manufacturing process.
Private labeling can be used in many different industries, from food and beverage to apparel and technology. Many home decor brands use private labeling when they create collections – either as the only strategy or combined with ODM collections.
With private labeling, your company can focus on marketing your product with your own branding, and add additional products to your collections, while still taking advantage of the cost savings associated with outsourcing production.
Private labeling vs OEM
Original Equipment Manufacturers (OEM) sell highly customized products designed to suit a client’s specifications. If you want fully customized products, then OEM is the right choice for you.
A private label product is often a ready-made product where the brand owner can make some adjustments, but the differentiator comes from using the brand’s logo on the products.
Using a private label manufacturer when creating your collections, you can save a considerable amount of time and money. Instead of designing and developing products that you hope will sell, you can take advantage of private label manufacturers and invest in goods ready to sell with your branding added.
Should your brand offer its own labeled products?
Private-label products are often popular among consumers. They have seen similar items in other collections, and therefore want to buy the products once they see your brand carry the same products or styles. Of course, you need to consider that other brands will most likely have similar products in their collections.
If you want your products to be very customized and different from anything else in the market, maybe private labeling is not your choice. Then again, with the speed of brands copying each other being so massive, it’s very difficult to have completely unique designs, unfortunately.
When I launched my new collection at a design tradeshow in Stockholm, I noticed that a large importer had already managed to copy our patterned cushions and was offering them at a low-cost price in the hall next to the premium brand exhibition where my brand had a booth. It was such a shock, but something that happens in the design space all the time.
Advantages of a private label product line
There are both advantages and disadvantages of private labeling for products that are developed and sold by the company that produces them. The advantages of private labeling may include the following:
- No, or very little, manufacturing experience required: your chosen manufacturers know how it works and you can let them guide you to get started.
- You can get product fast: Manufacturers often carry a stock of the products so they can send you product samples quickly.
- Smaller customization is possible: while this model is not as customized as OEM, you can still ask for some customization. You can often change colors, materials, and other elements to create bespoke designs.
- If you have your own store that carries many brands, you will have bigger profit margins if you sell private-label products. You can also offer your private-label products wholesale. Also, you will build customer loyalty if your store is the only place where they can buy your products!
Disadvantages of a private label product line
- Not as many customization possibilities as when you decide to go OEM.
- Other brands might carry similar, or the same, items.
- Minimum quantities are often not tiny. You need to order a stock, but this is often smaller than if you’d decide to go the OEM route. Of course, both models have manufacturers who work with very small quantities, you just need to find them and build a relationship with them!
- Quality might vary: in many cases, the quality control is not as accurate as it is with OEM products.
Your strategy depends on your vision and goals
If you are building a brand and developing your brand’s unique DNA, private labeling may not be the best choice for you. With private labeling, your brand won’t receive the same credit for the products you choose to sell, compared to OEM.
A great mix of OEM and private label
Many brand mix OEM and private label products successfully They might create flagship designs as OEM, and then add additional products to fill the gaps, and increase profits.
In my collection, all my originally designed patterned products such as cushion covers and blankets were OEM products, and we also had gorgeous faux fur and cable knit blankets with our label, but not specifically manufactured for us.
“How do I come up with product ideas?”
If you have no design ready yet but want to add a privately labeled product, the best places to start looking for products are tradeshows and online marketplaces.
Alibaba.com is the largest online marketplace for privately labeled goods, and daily easy to use. You can also browse through your competitors’ products, particularly if your competitors are selling products in different markets than you.
What products are often sold under a private label?
Private labeled goods are found in all sectors and types of products from food and skin care to decor and clothing. There will be products suitable for your market too!
How does private labeling work?
It’s fairly easy to launch a private label collection. I would start with a few products that match your brand aesthetics – either your OEM collection or your services if you already have some. If you have none of them, you can still launch a private-label product line as your only business.
Finding products and manufacturers
As mentioned earlier, Alibaba.com is the largest marketplace for manufacturers, mostly in China, but also from all over the world. That’s a great place to start, you can browse collections online and make orders directly online.
When you browse the products available, you might get a small surprise when you realize how many of the products that you see in your favorite brands’ collections actually are available for your brand too.
Keep focused on your brand and what kind of products you want, and try not to get overwhelmed by all the possibilities. When you grow, you can start adding multiple products, but if this is your first time, just focus on the items you want to start with!
Tradeshows are another great place to find manufacturers! I found the best manufacturers at Heimtextil in Germany.
Choosing the right private label manufacturer
How to choose the right manufacturer? This is difficult because regardless of what you choose, you will most likely meet some challenges along the way. Product manufacturers are great, and producing your goods overseas is simple, but it doesn’t come without challenges.
Then again, business is filled with challenges, and that’s what we entrepreneurs are made to do: solve challenges, right?
- Do you get an answer to your queries? If yes, that’s a good sign. If not, move on.
- Do they have well-documented processes available?
- Are they helpful?
- Do they work with small businesses (if your business is small, i.e. your first orders are small)?
- Do you find them trustworthy?
Understanding the logistics of private labeling
Understanding logistics is equally important regardless of your chosen manufacturing model, so I’m adding a complete guide for logistics for you to read. In that article, we cover:
- minimum order quantities
- shipping and delivery details
- 3PL warehouses and tools for inventory management
So, should you launch a private-label product line?
Maybe, if that is what you want to sell. It’s definitely an easier option than going into OEM directly, but if you have unique designs, you do better if you choose the OEM route!
Frequently Asked about Creating a Private-Label Product Line
What is a private-label product?
A private-label product refers to a product that is manufactured by one company but is sold under the branding and marketing of another company. The company selling the product has control over the branding and can market it as its own, even though it did not manufacture it.
What’s the difference between a private label and OEM/ODM?
Private labeling involves selling ready-made products from a manufacturer and branding them as your own. Original Equipment Manufacturing (OEM), on the other hand, involves manufacturing products according to specific customization requirements provided by the client.
Private label products are generally ready-made with minimal customization, while OEM products are highly customized to suit the client’s specifications.
How To come up with product ideas and find manufacturers for private-label products?
To come up with product ideas for private-label products, you can attend trade shows, explore online marketplaces like Alibaba.com, analyze competitors’ products, and identify gaps in the market.
When it comes to finding manufacturers, Alibaba.com is a popular online marketplace where you can connect with manufacturers from around the world. Trade shows, such as the Private Label Manufacturers Association’s Annual Trade Show, are also great places to find manufacturers.
Should I choose private labeling or OEM for my brand?
The choice between private labeling and OEM depends on your brand’s vision and goals. Private labeling is suitable if you want to expand your product line quickly, leverage existing designs, and focus more on marketing and branding.
OEM allows for more unique and customized products but may require more investment in manufacturing and design.
Can I combine OEM and private label products in my brand’s product line?
Yes, combining OEM and private label products can be a successful approach. You can use OEM for flagship designs that are unique to your brand and supplement your product line with private-label products to fill gaps or increase profitability.