What is Private Label Service and How Does It Work?

Private label is an important concept for retailing. Private label service is widely used by many companies. Companies selling products under their own name or adding new products to an existing product line use it frequently. Many large companies use the private label service. Amazon, for instance, has its own private label brands.

Contracts or third-party manufacturers produce private label products. Or a retailer sells these products under its own name. Retailers provide details about the product using a private label. These details include package content, packaging style, and label appearance. The retailer specifies these details and pays for the product to be manufactured and delivered to the store. In a private labeling service, the situation is the opposite of purchasing products with a brand name on them.

Private labeling allows a company to outsource manufacturing, sourcing, importing, and shipping to another company. It can help you have access to the whole supply chain without requiring you to develop your own networks.

What is Private Labeling?

A private label product is manufactured by one company and branded by another. A private label product seller seeks items that they can brand and sell under their own name. Two of the most common private label items are clothing and cosmetics.

With private labeling, everything about the products is under the retailer’s control. This includes the product’s specifications, packaging, and everything else. The retailer receives the private label products and sells them. They’re the company’s ‘own brand’ products. Hair salons, for example, frequently develop their own branded range of shampoos, conditioners, and styling items that consumers can purchase. Private labeling is also the process of using a secondary company to manufacture an ingredient or component. The goal is to promote another brand’s product while avoiding clear acknowledgment.

Physical goods are the most common usage for private labels. A variety of cosmetics, clothing and household goods have a private label. Furthermore, the majority of consumers are unaware of the true origins of products.

White Label vs. Private Label

White labeling differs from private labeling. If a product line is sold only through one retailer, the method is called “white label”. The practice of distributing a generic product to several merchants who then brand and price it for the market is white labeling.

Private Labeling Process

Individuals or companies sign partnerships with private-label manufacturers. Their goal is to sell their products under the manufacturer’s name without attribution. Private labeling is most effective for products that provide value to other products.

To go into private labeling, a retailer should first analyze their current sales and consumer patterns. They can also undertake market research among their customers to get a sense of what they expect. For online retailers, consumer research is becoming easier. Because they can examine the online shopping environment.

The next step is manufacturing. Then begins the process of ordering samples, determining the quantity and terms, and creating a brand for the products.

Retailers that use private labeling often have a large customer base. They generally work with manufacturers which create a single product. Besides, these manufacturers do not have a large customer base. They know they can reach more consumers by offering their products under a reputable retailer’s brand. So, they support and allow private label service.

Advantages of Private Labeling

Control

With private labeling, you have control over production, pricing, branding, and profitability. Third-party manufacturers provide full control over product components and quality. These controls operate at the retailer’s instruction. With their control over the product, retailers also have the right to determine the cost of the product and the degree of profitability. Above all, is control over branding. The retailer is free to use whatever brand name and package design he wants.

Flexibility

Private labeling also offers great benefits to small retailers. Perhaps the most important of these is flexibility. With private labeling, small retailers can respond to their customers’ expectations faster than larger brands.

Wholesale Income

Numerous private label companies also function as wholesalers for their own brands. You can give other shops limited access to your brand this way. These retailers spend a significant sum of money to have your brand in their stores. As a result, using a private label service will help you earn more money and boost your brand’s visibility.

Higher Profits

If you’re the one who created the product, you’ll save a lot of money. Because the ultimate retailer is responsible for the production, packaging, and marketing. You just have to pay the product’s cost. Marketing campaigns will not burden you.

Disadvantages of Private Labeling

Dependency on Manufacturers

Because the product line’s production is under the control of a third-party manufacturer, it’s critical to work with good companies. If your manufacturer has difficulties, you may miss out on opportunities.

Minimum Orders

Many manufacturers have minimum order requirements if you want them to make customized products for you. The minimum order quantity, on the other hand, is frequently far higher than you would prefer.

How to Choose a Private Label Service Provider?

You should examine your target customers before deciding on a manufacturer. As a result, you will become more familiar with purchasing trends. You will also be able to make the greatest offer for potential private label brands.

Say Hello to Private Labeling with Turkish Goods

Turkish Goods provides services to its customers from seven continents in 13 languages. Our goal is to reduce the costs of doing business to invest in sustainable growth. We are moving towards our goal by supplying hundreds of millions of products every year. 

With the private label service of Turkish Goods, the products will reflect your brand identity. We approach every stage of our work with care and attention. We are working non-stop to create private labels to provide the biggest advantage to you. You can benefit from the Turkish Goods experience to have the best private label service. With Turkish Goods, you can eliminate all disadvantages and become a leader in the market.