Tips To Start Private Labeling Products
BY Cynthia Kincaid
SponsorsDeveloping, marketing and selling a line of private label products can set a company apart, build it’s image, and boost the bottom line — if it’s done right. But there are pitfalls to be aware of, and processes that need to be followed, to start private labeling products successfully.
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Control your manufacturing: When Robert Cronyn became president of Los Angeles-based Empire Cleaning Supply in 1994, the first thing he did was look at the cost of the company’s operations. He found their manufacturing equipment and procedures to be old and outdated.
“I thought we either needed to get out of manufacturing and have someone contract package our formulas, or we needed to invest in a brand new state of the art facility,” he says. “We chose to get out of manufacturing and grew from $2 million a year in volume in 1996 to $20 million in volume now.”
Most private label sellers find that outsourcing their private label manufacturing is the way to go. But, distributors should still continually monitor the entire manufacturing process to guarantee the product still meets their expectations for quality.
Demand Consistency: Make sure that the manufacturer is consistent in how they develop the product. They should use the same processes and the same ingredients, according to distributors’ specifications, every time.
“You don’t want to put your name on something that’s good today and then three months later, they don’t care about consistency and use lesser paper or ingredients for your products,” says Cronyn.
This point is why monitoring the manufacturing process is so important. Some distributors will bring manufacturing operations in house for quality control.
Avoid manufacturers that sell to your competitors: When private labeling products, distributors are creating items customers can’t buy anywhere else.
“You need to make sure you’ve got some kind of exclusivity; that’s a hallmark of branded products,” says Jack Schmid, founder of Mission, Kansas-based J. Schmid & Assoc., Inc., specialists in direct and multi-channel marketing. “You have to find someone who has the quality and the skills to produce the product, but will not compete with you by developing the same product for someone else.”
Be mindful of location: Distributors should use a manufacturer close to them in proximity, says Schmid.
“If your manufacturer is far away and is going to take a long time to ship to you, and you’re out of something, your customer could be waiting quite a while to get that product,” he says.
Seek expert legal advice: Laws for selling products, particularly chemicals, can vary from state to state. Research the legalities of creating and launching a private label line.
“We sell private label disinfectants, and we have to make sure they are registered in all the states we sell in,” says Keith Schneringer, marketing manager for San Diego-based WAXIE Sanitary Supply. “As we enter into new markets, we have to make sure we add those registrations.”
Cynthia Kincaid is a freelance writer based in Columbus, Ohio.
POSTED ON: 5/22/2012