What is a Private Label Product? Explain it in Detail

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Do you want to know everything about the private label product? This article presents all the information relevant to the private label and the way it can help brands and companies.

What is a private label?

The private label product is manufactured by a third party for a specific brand or company. The production and packaging are handled by another company, while the promotion and branding are done by another.

How can private label products help?

Here are the main benefits of the private label products:

Allows brands to invest time in promotion:

By using a private label strategy, companies and brands can leave the manufacturing to the experts and spend more time on the sales and promotion of the product, which can yield higher benefits.

Do not have to handle work in progress inventories:

The brands do not have to manage the work-in-progress stock; thus making the work easier. It is a headache for the manufacturer.

Affordable prices:

As the brand purchases in bulk, the price they get per piece is often low, the benefit of which is enjoyed by the consumers in more discounts or by the company in the form of higher profits.

Disadvantage of private labeling:

Below are the main disadvantages of private labeling:

Fulfillment of minimum order quantity:

The minimum order quantity is usually set by the manufacturer. So, the companies have to order at least a particular number of items from the manufacturers.

Lack of trust by the customers:

In most cases, your customers will not even know about the private labeling technique unless you want to promote it as such. When the consumers find you are not the product’s manufacturer, the trust level decreases significantly. They consider you are not in charge, so the chance of quality deviation is high.

The wrong choice can spoil your business:

In case a business makes a wrong choice about a product line, it can destroy the entire business’s reputation and the company’s investment. In most cases, this is the case of misjudgment or wrong analysis of consumers’ expectations.

Where is private labeling used?

Private labeling is not specific to a particular industry. It is a common practice across the retail sector. Clothing, electronics, kitchen items, and accessories are the common domains where businesses establish themselves through private labeling.

Summing up:

Private Label Products can provide a chance for businesses to offer low-cost and high-value products. It is possible because of limited parties in the supply chain and other operational reasons. However, finding the right product and quality supplier is a challenge that you’ll have to overcome.

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