7 Major Benefits of Private Label

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As a company, we are focused on providing our customers (usually large scale retailers or foodservice companies) with a private label solution that will work for their brand, it is usually a new piece of innovation that is working particularly well in another market or discovering a need in the market we believe their brand is perfectly suited to fill. 

Private Label is essentially the process of using the manufacturing capabilities of another company that has a unique range of products and labelling them with your brand, sometimes also referred to as ‘white label’.

So why do our customers look at a private labelling as an option? Why are we so heavily focused on selling other people’s products as a service? And lastly, why should you be interested in selling another manufacturers products?

We thought we would share are a few of our stronger selling points.

 

1)   Infinite Innovation

There are countless companies that provide private label options across the globe. These include some of the largest manufacturers in the world. Even those companies that do not openly offer private label as a solution are more often than not still happy to have a conversation about your brand, especially if it does not directly compete with their own products, in their own market.

 

2)   Innovation without capital Expenditure

There is no need to integrate a new multi-million dollar line into your plant when you can just find another company that is already producing what you are looking for and is prepared to add your brand. Think about that for a second, you used to have to spend millions of dollars just in infrastructure to get a product ready for market and that is before you spent a single dollar on marketing.

 

3)   Speed to Market

Forget all the setup and trial runs as outlined in #2, you have a product that could be ready to sit on shelf in a matter of weeks, possibly days, depending on how quickly the product can be produced and how quickly it can be distributed from your end. This is a tremendous competitive advantage if you see an opportunity in the market that you want to immediately take advantage of.

 

4)   Proven Product Ranges

A number of times we have found innovation because the products is receiving press or they are gaining significant traction within their own market. So when it comes to markets that are similar to each other, Australia and the U.S. for example, the product would very likely succeed in one market if it was already working in the other. While it is not foolproof, given the large number of new product failures this is something that should definitely de-risk your new product launch and give you a greater deal of comfort.

 

5)   Price Advantage

You may be inclined to believe that private label products might not be as profitable then the products you manufacture yourself (in-house) because there is another player involved and therefore another margin. This however; is not often the case.

Sure innovation usually does cost that little bit more, anything that is new needs sometime to get the economies of scale, but this is also the same reason you maybe able to get an incredible price. If you find a manufacture that is producing an unbelievable amount of volume, you will likely be able to purchase your products cheaper than you could produce them yourself. To give you a concrete example…we found a private label manufacturer from the U.S. that produced the same amount of volume in one day that a major manufacturer in Australia produced in an entire season, the result...even with the freight component we were still cheaper than the Australian manufacturer.

 

6)   Lean Manufacturing

Lean Manufacturing or 'Lean Production' was created as a ‘systematic method for the elimination of waste’. Private Label allows you (depending on the minimum order requirements of the manufacturer) to order a reasonably small volume and/or only the volume that you may require. This can save you warehousing costs, shipping as required and minimise your loss if for whatever reason the product doesn’t work.

It also gives you the ability to order smaller batches to test and validate the market you seek to exploit, before moving into a major production run or the investment necessary to do so. As an example this could be done by narrowing the launch to a particular state before a national roll-out.

 

7)   Leveraging your brand

All of the benefits above could be used by a new entrant to the market, what we have not talked about at this point is the tremendous advantage an already established brand can have if they chose to extend their range or enter new categories with a brand the consumer already knows and loves.

Having a brand that is already positioned in the consumers mind can only amplify the success of a new product. You see a new product on-shelf it is different from anything else that surrounds it and the benefits are obvious, are you more inclined to pick it up if it is from a new brand or a brand you are familiar with? That is a loaded question because here at the Private Label Lab we hope you will pick it up in each instance!

Hopefully that has given you an informative overview of why private label can be extremely beneficial to your business, so if you are interested in having a chat or you already have a product in mind, don’t hesitate to give us a call.