Let’s start with logic and reason. According to statista.com, 17.7% of the entire U.S. retail market is based on Private Labeling. To put it another way, 199 BILLION in U.S. Dollars PER YEAR.
We’ll look at the what, why and how of private labeling products in your company.
Here’s my question…you wanna piece o’ that? Let’s take a quick look at some.
WHAT-is private labeling. In many instances, private labeling is simply a branding issue. As a 20 something kid, I worked in the dairy industry for a national dairy company called Borden (now defunct). I remember working on the “Dressing/Dip” line and as the generic containers were filled, I’d slap a Vons lid on a batch, then an Albertson’s lid on, and so it went. The mix was identical, just the lids were different. Same for whipped cream. Same mix, different cans…
The same is done today in the following markets (to name a few):
- Gaming Chairs
- Ring Light
- Massage Guns
- Gaming Headset
- Yoga Mat
- Yoga Pants
- Wireless Phone Chargers
- Beach Towels
- Water Bottles
- Temporary Tattoos
- Laptop Bags
- Fake Eyelashes
- Vegetable Chopper
- Nail Extensions
- Reusable Bags
- Hair Wigs
- Travel Mug
- Rain Poncho
- Keychain
- Flooring
- Vinyl Windows
- Various Tools
In the Aldi Grocery Store Chain, 77.5% OVER ¾ OF THEIR SALES, are private label products! Trader Joe’s 59.4%. Paint, gardening tools, windows, flooring, certainly “non OEM” car parts, tools, etc. Walmart owns 4 of the top 5 private label brands! That’s the what.
Here’ just 1 of countless reasons why Private Label products may make sense for your company: https://regencypluswindow.com/the-benefits-of-selling-private-label-replacement-windows/
Now, the why. Well besides the obvious 199 Billion reasons, there are some other intrinsic reasons:
Far less competition: The public, by and large, can’t compare a “No Name” window to a Jeld-Wen window. All the know is, they look the same, or kinda similar, but who cares? They’re both white, made out of the “same” vinyl, and have “special” glass and a lock. What’s not to love at the same price?
Simply take the Pharmaceutical sector. Let’s use everyone’s favorite drug punchline: Viagra. Per Healthline.com, it is going for $91.00 PER PILL!!! WOW! VS Sildenafil which they say goes for about $8.50 per pill. Hummm.
I’ve compared meds in the store and found some are basically identical to the name brand. So why the big difference? 1 word…Marketing. R & D to manufacture the pill, then TONS of marketing to make it a household name. Someone’s got to pay for that. When the Rite-Aid generic brand has similar packaging, similar composition & components, and even says, “Compare to Advil PM” or whatever.
Higher profit margins: Many Private label products have little to no development cost than the “original” products they emulate. In many cases, you simply put on a different label as shared. “Brand” like Revlon or Nike. So, your ensuing cost of the product is much less. Usually, it’s sold cheaper, thereby creating a sense of value, but not at the same amount of discount so, higher profit margins!
Creates Loyalty: Let’s say you become a fan of Kirkland (Costco’s Private Label). If you need say, Bath Towels, or Laundry Detergent or really, anything in the future, there is a higher probability you’ll look for your fav Kirkland brand 1st. But even if you don’t look there 1st, you very well may end up looking at Costco before you decide to buy because they can’t purchase it anywhere else!
So if you are looking for a way to do any of the above, dig into the world of private labeling. Have a discussion with your suppliers. You may be pleased at who is willing to work with you to private label. And it doesn’t cost you anything to ask!
