Whether you have an eCommerce business and would like to add new products or you want to start an online store and are looking for a product to sell, private labelling is a great option. We give you the lowdown.
Have you ever looked at an eCommerce fashion business and wondered where they are getting all their stock? In addition to their clothes do they have a load of accessories – perhaps shoes, belts, hats and tights – branded with the company name? Do they really design and manufacture all these things?
Chances are some of these items have been purchased from a manufacturer and are private labelled. Why go through the stress of finding a leather manufacturer and negotiating a new product when there are plenty already producing that product, successfully and cheaply?
What is private labelling?
Private label products are typically those that are manufactured by one company, but are sold by another under their own brand. Private label products are available in a wide range of retail categories, from food to accessories to cosmetics. The practice of selling private label products is so common that half of all Amazon sellers sell some private label products. And Wikipedia reveals that in the US in 2007, there was a pet food recall that impacted 100 brands, as they all had the same product created by one manufacturer!
A company that produces ‘phantom-brand’ products may specialise in one product, such as pizzas or belts, and sell their product to a range of other companies. The ‘branding’, which could be a label on the product, particular packaging, or even just a stamped name, is either done at the factory where the product is made or by the purchasing company once they have received the product. Some factories offer to do the labelling and others don’t though the ones who do will often push for a larger order if they are private labelling.
A benefit of purchasing a product from a manufacturer who does the private labelling is that, if you only sell that one product, you can consider delivering with the drop shipping method. This means that the inventory is sent directly to your customer from the factory, relieving you of the need to store it. However, with consumers expecting faster and faster delivery times, delivery may be considered too slow if the product is coming from offshore.
Finding products and suppliers
The easiest way to find potential suppliers is to do a broad Google search – typing in the product with keywords such as suppliers, wholesalers, drop shippers, private rights, white label and private label – or to go through a large online market place, such as Alibaba. In Alibaba, just type in the product you’re after and either contact the suppliers you’re interested in or add ‘private label’ to the search to go directly to those who offer private labelling. When choosing which manufacturers to contact, check out the ‘Supplier Types Key’ on the side indicating which traders are Assessed and offer Trade Assurance.
Contacting potential suppliers
Once you’ve got a list of suppliers to contact, it’s literally a case of sending out emails or hitting the phone. Be prepared for knockbacks and for this process to take a while. It’s important to sound confident, as many wholesalers don’t want to work with start-ups, and have a list of questions ready. These could include:
- What is the minimum order quantity?
- What quote can you give me on 50 units, 100 units, 1000 units …?
- Tell me more about the product – how is it made, what materials are used etc.?
- Will you supply me with a sample?
- What will it cost to ship xx units to Australia?
- What is the turnaround time if I order today?
- Do you allow private labelling? Do you put the label on the product or packaging? How much will that cost per unit?
- What kind of labelling or packaging options do you have?
- Do you offer drop shipping? What is the turnaround time for each order?
- Is my payment protected until I receive and am happy with the order? (For example, the Alibaba escrow payment system ensures the supplier doesn’t get payment until you have received and inspected the goods.)
Branding your products
Once you have your supplier, you will want to prepare your labelling or packaging. There are companies that create all sorts of labels, tags, packaging etc. – you can find such wholesalers on Alibaba also – as well as design companies that can help you with logo and layout if needed. (For tips on designing your own logo check out this article.) If your supplier is going to apply the branding at the factory you will need to get specifications from them, such as what size the label needs to be.
If all this sounds overwhelming, you might enjoy this blog post where a group gave themselves three days to find, private label and sell a product.