The private label business model is not new, but with the success of amazon and Shopify it has gained significant momentum in recent years. We show you what private label is, how it works and how you can use private label for your business.
What is meant by private label?
Until now, private labels have been known primarily as private labels or private label brands. The best known are typical private labels such as "Ja!" from REWE or "balea" from dm. In fact, private label is much more widespread than many people think.
In simple terms, this means outsourcing production. Manufacturers with the appropriate machines take over product development, the purchase of raw materials, filling, packaging and many other tasks for you.
The result: a product with your branding on it.
What is the difference between white label and private label?
The terms white label and private label are often mixed up or used as synonyms. This is also because there is no clear definition and both models are used in different industries.
White label products are usually "ready to sell", i.e. already developed recipes and products that are only provided with your branding. This means: this product with these ingredients or ingredients can also be found at other brands, just in different packaging.
Private label products are developed specifically according to your requirements or existing formulations are adapted.
The advantages of private label products
- Full control over the composition, i.e. ingredients or ingredients
- This product is only available at your shop
- Since higher quantities are usually produced, the margin improves
The disadvantages of private label
- Often associated with development time and development costs
- As a rule, higher quantities, thus higher risk
- As the distributor of "your product" you have more legal obligations than a simple dealer, so you are liable for the product.
Your brand, your products: How does private labeling work?
Over the past 14 years, we have launched hundreds of products in food, supplements and cosmetics. If you're thinking about starting a private label business, here are a few tips:
- Know your target audience and their needs
- Think carefully about which products fit your brand and your existing assortment
- Market research helps you understand your competitors' strengths and weaknesses, get a feel for the selling price you can charge, and identify lucrative niches
- The better you know your business model and can plan your liquidity, the easier it is for you to buy private label products for your brand
This is how you find suitable private label products for your brand:
We ourselves have often been faced with this question: Where can I find suitable products that match our brand?
Why does product development and production still have to be so lengthy and complicated today? Where can I find the right contract manufacturers?
That's why we founded KoRo Source in 2022.
We help you create new products for your brand:
✓ find
✓ redevelop
✓ to launch
✓ and to scale.
Schedule a no-obligation video call and let's find out together where and how we can support you.
For whom is this business model suitable?
amazon Seller
The hype around private label in the last few years also has a lot to do with amazon sellers. The big advantage for you as an amazon seller is that private label products not only offer you a safe, trustworthy brand, but also the opportunity to scale your business and stand out from the competition.
Shopify merchant and e-commerce company
Often, Shopify merchants face very similar challenges to amazon sellers: competition is getting fiercer.
So, if you are just a retailer buying and selling well-known branded products, you need either competitive prices or very good arguments why customers should order this product in your store and not in another one.
However, if you offer a private label product with your brand that is only available in your store, you avoid this problem.
Lifestyle Entrepreneurs / Digital Nomads
The big advantage of private label is that you can offer products like food, supplements or cosmetics under your brand without having to invest in large machinery.
As a digital nomad, you can set up your private label business from virtually anywhere, regardless of location.
Startups
Private label for startups has the great advantage that it is relatively simple and quick to implement.
In addition, with private label products you can also test very quickly whether your business idea works or not.
If private label is an option for you as a startup, however, you should make sure that the products fit your brand and that your business is scalable.
Influencer
Influencers also have many advantages with private label, such as the ability to develop and try products whose target audience they already know.
In addition, private label influencers have the potential to monetize their reach very quickly.
By developing private label products that their target audience wants to buy and then promoting them through their own channels.
Retail
In the retail sector, private label (here we usually talk about private labels) has been common practice for years. Not only large retail chains such as Edeka or Rewe can sell private label products, but smaller retailers or retail chains can now also quickly and easily improve their margins by selling private labels.
How much does private label cost?
The cost of private label products depends on the particular products, the requirements and the desired production quantities.
Important: Those who are new to the private label business often underestimate the additional costs of a new development and production, as well as the bureaucratic effort compared to white label products or the pure trade of third-party brands.
These include, for example:
- Development costs
- Safety assessment and marketability certificate
- Products registration
- Packaging design and product photos
Conclusion: You want to sell products under your own brand?
Private label products have many advantages, but also bring with them greater responsibility and more initial costs and effort.
If you are thinking about adding private label products to your assortment, we recommend you take a look at our platform. Here you have the possibility to configure private label products quickly and easily.
Your personal contact will accompany you and your private label program from kick-off to scale-up. Register for free and let us talk about your private label project without obligation!
