Over the years, there’s been an increase in the number of companies that have taken up private labeling as a business model. At first glance, private labeling seems easy enough. But, businesses have found that it can become challenging. Private labeling has a lot of benefits from a branding perspective. But, also has multiple barriers and hurdles. These can cause serious hold ups for entrepreneurs. One of the biggest hurdles in this obstacle course is sourcing the best private label manufacturer for your product.
Private labeling refers to a brand owned by a retailer or supplier who gets its goods made by a contract manufacturer under its own label. Companies who use private labeling pay less for their products. Naturally, lower prices equate to higher profit margins. On average, a private label retailer experiences 10% higher profit margins than traditional companies. While there are multiple benefits to private labeling, there are also risks to consider. Depending on your product, there are obstacles you should be aware of that could hurt your business. For example, retailers face issues with volatile changes in prices of raw materials, labor, and more. It’s because of issues like these that make it a must to choose the right manufacturer and product.
Redeure- Bridging the Gap between Manufacturers and Overseas Retailers:
Normally, retailers have little, if any, direct dealings with manufacturers. But, private labelers avoid this problem by operating by a different business model. By not selling branded items, private labelers have control of the look and branding of their products. If you are considering venturing into private labeling or have already begun, you must decide if the manufacturer is really the best fit for your business.
A manufacturer’s value is different for every retailer because each manufacturer has different specialties. You will have to source manufacturers that are able to create your product from raw materials and label the finished goods with your company’s custom design and packaging. Ultimately, deciding what manufacturer to go with really boils down to what goods you intend to sell. You will have to assess your product and find which manufacturers can produce a high-quality product at the lowest cost to you. When making this decision, there are several manufacturing logistics to consider. For example, you’ll have to determine which manufacturer can provide:
- The goods needed to produce product.
- The lowest factory direct prices.
- Highest product quality.
- Reliable on-schedule delivery.
- Lowest defects and damage to goods
Clients that find it too difficult to decide which manufacturer to choose, or want to avoid the uncertainties and complexities of working with overseas manufacturers, we will do the hard work. Just tell us what product you want to sell and we will help you source manufacturers who will print your brand on products with custom packaging. If you are an FBA seller, we will even deliver your product directly to Amazon. You don’t get the same hands-on experience and there are a few more extra fees to consider, but third-party sourcing is a good way to ensure you use quality overseas manufacturers.
Sourcing for the best private label manufacturer is one of the biggest challenges in private labeling. However, it’s oftentimes worth the effort. If you use these tips to your advantage, you will find the best private label manufacturer for your business and can expect to see lower prices and higher profit margins.