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The Ultimate Benefits Of Selling Private Label

March 07, 2018 Allison Hess

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The Ultimate Benefits Of Selling Private Label

Private label categories are growing at an exponential rate in nearly every product category. This is especially true for online sellers, with nearly 50% of Amazon sellers involved in some sort of private labeling.

If you want to sell a unique, differentiated product on Amazon without making a substantial investment, private label branding might be the right solution for you.

Should you sell private label? What are the benefits of a private label?

What Is Private Label?

A private label brand is often as simple as putting your logo and brand name on a generic product manufactured by a third-party.

For example, you go into CVS to buy ibuprofen. You see brand names like Motrin and Advil, but you also see the CVS brand ibuprofen. That is CVS’s private label. They have put their stamp on a generic, non-patented product.

Or you go to your local hair salon, Cut And Dry. They are selling Cut And Dry shampoos and conditioners. Most likely, they haven’t created their own secret formula of hair care. They’re putting their private label on a generic type of shampoo.

Almost every category today offers some sort of private labeling. This includes personal care, cosmetics, beverages, household items (like Home Revolution), and even frozen foods.

If you can sell it, you can likely private label it.

Read: Reselling Or Private Labeling: How To Find Success On Amazon

How Do You Sell Private Label?

As an online seller, you have two avenues with private labeling. You can either create your own private label or partner with an established private label.

If you create your own private label, you work with a manufacturer to put your brand name on a generic product. Oftentimes, a factory will produce the same generic product for multiple clients, simply attaching different brand labels on the packaging.

For example, you could put your brand name on a toothpaste package or a water bottle. This means that you have your own logo and name, and those products “belong” to your brand.

You can also become a seller for established private labels as well. For example, you could sign up to be a Home Revolution seller. This means you would be selling our private Home Revolution brand as a registered seller. You don’t have to deal with labeling or procurement; you just have to sell the private label.

The Ultimate Benefits Of Selling Private Label online seller packaging products

Why Sell Private Labels?

1. Customers want private labels.

A study by Nielson found that 71% of global respondents have a favorable opinion about private labels, especially in North America, Europe, and Australia.

Most customers buy private label for the value. About 70% of buyers believe they get a better price on a private label, and they purchase private label to save money. 62% of respondents said buying private label makes them feel like a smart shopper.

Customers know that private labels provide the same value as the larger brand names but at a lower cost. As a seller, you want to optimize on this belief in order to provide significant value to your audience.

2. You have control of the product.

If sell a trademarked or patented product, you don’t have control over the product you’re putting out. You are instead a distributor for someone else’s product.

With private labeling, you have control over production and quality standards. You control what the label, packaging, and quality looks and feels like.

Even though it’s a generic product, you have a stronger say in your product than if you were reselling someone else’s product.

Even if you are a licensed seller for a private label, you still have more control over product qualities because you can maintain a strong relationship with the label owner. For example, if you sell Home Revolution products, we gather seller feedback to best determine quality standards for our products. You have a greater voice in the product you’re selling.

3. You create a brand identity.

With a private label, you put your own name on the package. You build your own business and marketing identity that:

  • Gains recognition and visibility
  • Enables customer loyalty
  • Promotes advertising
  • Drives sales

You are running your own branded business. For example, you can label yourself as the exclusive, luxurious brand or the discount, bargain brand or the eco-friendly brand. You can target your marketing to a specific niche and sphere to gain a foothold in a given market.

If you are a private label seller, you aren’t necessarily creating your own brand, but you’re benefiting from the marketing and visibility of the established private label.

For example, Home Revolution already has a foothold in the Home category. We have an extensive sales history and a list of loyal customers behind us. As a seller, you can optimize and pull on our established and growing private label success.

The Ultimate Benefits Of Selling Private Label online seller working at desk taking notes

4. You determine pricing and margins.

Because you control your product and brand, you can control your pricing in tandem.

When you sell another company’s product, they usually have strict requirements regarding pricing and distribution. They may limit you on how much you can sell, discounts and promotions you can run, and platforms on which you can distribute.

When you own your brand, you can set your pricing and distribution accordingly. For example, if you want to position yourself as a luxury brand, you can price higher than the industry average for that product. If you want to be a discount brand, you can price cheaper (if your manufacturing costs allow for it).

If you sell a private label, you can work with the owner of that label one-on-one to run promotions, deals, and pricing structures that work best for your business.

Plus, private labels usually have higher margins. The cost to make generic products is usually low, especially if you find a manufacturer already making that product efficiently.

With low margins and a control of customer pricing, you have a strong command over your own revenue.

There is no cap on your potential growth with private labeling.

5. You have flexibility.

You’re not inventing or manufacturing a new product. This means you have flexibility and adaptability to change your product portfolio with ease. You can move from toothpaste to candles in one inventory cycle. 

This means you can quickly adapt to customer trends and data. Private labeling gives you the freedom and flexibility to sell the products your customers demand when they demand it.

6. You gain an advantage on Amazon.

Private labels are usually trademarked. This means that only the owner and any registered sellers can offer that private label.

When you make your own brand, you’re instantly setting yourself apart from the competition on Amazon. No one else has the same private label as you. You aren’t sharing a listing with ten other sellers. Your brand name is unique, which makes your selling opportunities unique as well.

You have a competitive advantage in that you have complete control over your listing, branding, and optimization potential. 

What Are The Disadvantages Of Private Label?

There is only one disadvantage of private labeling: competition. You are selling generic products, which means that other private labels are selling the same products as you. You’re also up against major brand retailers who already have a loyal following. 

For example, Motrin customers are loyal to Motrin. They will only switch to CVS brand if it’s significantly cheaper or it has another sort of differentiating factor.

To overcome this perceived disadvantage, you need to build strong loyalty to your private label brand. If you can grab and engage customers with your private label, you instantly have a competitive advantage that will drive your business forward.

The Bottom Line

Are you interested in selling a private label? Not sure how to get started?

Home Revolution is an amazing option for private labeling. We work closely with our sellers to ensure you maintain business control while mutually growing the brand.

Sign up now to join the revolution!

Have your own private label in mind? Great! Check out our seller’s services to get started building a loyal customer following.

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