The Importance of Private Labelling in E-Commerce

Private labelling is one of the biggest trends in e-commerce at the moment and a brilliant way for both big and small businesses to not only create a brand identity but also help those with a smaller budget. Here is why private labelling is essential and a few of the best benefits.

What is Private Labelling?

Firstly, private labelling is the process of having a product made by a third party but sold exclusively under the name and branding of a particular retailer. This means that retailers can offer their unique products without needing to manufacture themselves. This can be done for almost any product with the use of correct label printers, from clothing to food products.

Benefits of Private Labelling

There are many benefits when going down the private labelling route, ranging from increased profit margins to saving time, money, and effort; here are a few of the most important benefits.

Exclusivity

One of the best benefits is exclusivity. Private labelling allows retailers to stock their shelves with products that reflect their brand identity and message and create a cohesive product range.

Creating a cohesive range helps to develop brand recognition and brand loyalty, which leads to increased sales and a solid customer base.

Enhanced Profit Margins

When you eliminate the need to manufacture the product yourself, you increase your profits. You are able to sell high-quality, branded products, but with enough oversight that you are able to control production and pricing strategies.

Adaptability

One of the biggest mistakes a retailer can make is not missing out on trends or not being able to react quickly to a changing consumer market. This will leave you behind, and consumers will turn to a brand that does fit their needs.

With private labelling, retailers are able to quickly change their offerings in the face of changing consumer needs, with little to no wait time. This means you can always be on trend and keep up with larger retailers.

Saves Time, Effort, & Money

As mentioned already, when you are able to partner with a manufacturer, a lot of the time, effort, and money that is needed for the manufacturing and design process is eliminated, and you are able to focus on sales and marketing, and save money.

This is huge for smaller businesses as manufacturing and everything involved with the manufacturing process can put a vast and unnecessary dent in your profits.

Small Quantity Orders

Private labelling allows you to purchase small quantities of products at any time, which is ideal for market research and testing out new lines of products. This also means you don’t have to invest in multiple crates of inventory and risk the product falling flat.

Having the ability to experiment with lower risk is one of the best ways to expand your product range in a way that doesn’t put you in the red.

Experienced Manufacturers

Lastly, being able to work with experienced manufacturers and not having to figure everything out yourself takes out a lot of the trial and error associated with creating a product.

They also tend to have far more experience and reach beyond what a small business could have, and if you are new to the retail space you are in, having this relationship with a manufacturer who has been in the niche longer than you can be a lifesaver.

Other Factors to Consider

While private labelling is an amazing choice for retailers, there are a few things you need to consider first; here are three of the most important ones.

Quality Control

One thing you need to be aware of is quality control. Since you aren’t part of the manufacturing process itself, and you don’t have the same control, and oversight as you would have if you did it yourself, quality can become an issue.

Because of this, you need to ensure you are doing constant product checks and quality control, and react quickly to any drop in standard you may experience.

Competition

There is a ton of competition in the private labelling world due to the amount of retailers recognising all of the tremendous benefits. Because of this, it can be hard to stand out from the crowd, and you need to be aware of what the competition is doing, how they are marketing, and how they are differentiating themselves from everyone else; once you know all of this, you can either take advantage of these methods or adapt.

You Don’t Own the Product

Finally, it is crucial to understand that the formulas used by the manufacturers are not yours; you do not own them. This may not be an issue for most, but it can be crippling in some instances that are out of your control.

For example, if the manufacturer were to shut down or pause production, you can’t take the formula for your product to another manufacturer. This means you could be left without product for weeks or months on end.

As you can see, private labelling has multiple advantages that can benefit both big and small businesses in different niches. Smaller companies that don’t have the money to manufacture goods can get high-quality, branded products on their or on their websites, and older businesses that are possibly stuck in their ways can adapt to newer trends more quickly.