Distributor Experts Give Refresher on Best Private Labeling Practices
When paired with the right manufacturer, marketing plan and target audience, private labeling can serve as a brand recognition catapult for putting effective products on the map — both to the benefit of end users and the cleaning distributors looking to promote them. For several years, however, supply chain issues and other logistical hurdles from the pandemic have significantly hampered the potential of many private label initiatives.
While many of those difficulties persist to some degree, the removal of many restrictions is restoring a sense of normalcy. Distributors are getting a breath of fresh air when it comes to private labeling opportunities — or are at least better equipped to anticipate and overcome issues. Those who are actively involved in private labeling, had to take a hiatus, or are considering their first avenue into the market can always benefit from a refresher on best practices and strategies. To provide the freshest perspective, Sanitary Maintenance asked three industry experts to comment on private label benefits, ideal products to market, common challenges and more.
How long has your company been involved with private labeling and what prompted the decision to get started?
Melzer: Our company has had some sort of private label for decades. There are a few reasons why we have used this strategy. Historically (before the internet) it helped provide customers with a simple way to reorder and possibly provide more exclusivity. As the years progressed, we used this as a strategy to have a unique brand that differentiated us in the market, and we could resell to other distributors. Our most recent strategy has been to complement the national brands to create awareness for our company name and brands in the market.
Attman: Acme Paper & Supply has been involved with private labeling for over 50 years. Originally, it was a great way to increase brand recognition in the marketplace with little-to-no additional cost. Fifty years ago, the ability to market your company was limited compared to what is available today.
Schneringer: From an Envoy Solutions perspective, having our own “exclusive brand” has been a part of our strategy from the outset of the company’s formation about three years ago.Because Envoy is made up of several well-established distribution companies across the country, which already had their own market-tested exclusive brands to select from, our primary objective was to rally around the strongest brands. The WAXIE brand for cleaning chemicals has been around for over 75 years, with images and even a container or two of products going back to the 1950s! The decision to get started is related to being afforded more control over pricing, distribution, and sales promotion/marketing, as well as opportunity to further promote our company.
For those interested in getting started with private labeling, what resources should they consult/consider?
Attman: Your organization should have a strong marketing arm to create powerful imagery and branding. A manufacturing partner with experience in these areas makes it easier, as well.
Schneringer: The answer to this question will somewhat be influenced by the type of products being private labeled and the size and scale of the project — but in general, you will want to have a product manager to oversee development and execution of the exclusive brand strategy for that product category or group of products being manufactured. It would be beneficial to have marketing for packaging design and product promotion, but sometimes the manufacturer can also assist with these tasks.
Melzer: First, it is important to have a clear strategy around the reason to private label. In addition, consulting with other distributors, marketing organizations in our space and our vendors play a key role in determining if this is right for your organization.
Which products are easiest to market as private label and which are particularly challenging?
Schneringer: It wouldn’t be fair to say that any of this promotion of exclusive brand products is necessarily “easy”, but there are some categories which are certainly more challenging. Cleaning chemicals can be particularly challenging based upon all the regulations related to product labelling — Safety Data Sheets (SDS), worker safety, the registrations related to disinfectant products at both the federal and state levels, and the certifications related to particular applications (like in foodservice), or for products which are more environmentally preferable. And we haven’t even started to talk about product formulation to make sure you can offer a product which works at a competitive price, or marketing to help establish your brand, or training to instruct users on how to properly utilize the products. Other types of products may not have as many layers of complexity, but there is still a lot of work that needs to go into product testing, product labeling and packaging, product marketing and promotion, and training.
Melzer: This is completely dependent upon the manufacturing partner you work with, their capabilities and desire to manufacture private label products. We have found that categories such as chemicals, can liners, air fresheners, mops, and dispensers for skin care and towel/tissue are more available for private labeling.
Attman: It really depends on the vendors that you partner with and what their requirements are for private labelling. Items like disinfectants can be more challenging because you need additional certifications based on the claims you’re making about the product. The same thing applies with third party certification like Green Seal. It really comes down to working with your manufacturers to determine the best options for you.
What are some of the most common misconceptions about private labeling?
Melzer: I think the biggest misconception would be that private labels are meant to be of lesser quality than a nationally branded item.
Attman: A common assumption is that a private label means the product will be cheap. This is not true, and you don’t always have to use the cheapest product. Plenty of manufacturers provide quality products which are cost effective.
Schneringer: A common misconception for a distributor is that it is super easy to just add a label to a product and call it all good. A common misconception for a customer is that an exclusive brand product is going to be inferior in quality to a national brand product. While in some circumstances, this conception is true, it is not always the case for all exclusive brands, which are every bit as good as their comparable national brand products.
Have you run into any challenges with private labeling as a result of the supply chain crisis and/or inflation?
Attman: The pandemic challenged manufacturers, and many stopped private labeling, but are now interested in starting it up again since the pandemic has eased.
Schneringer: Absolutely! These products, unfortunately, have been impacted by the supply chain crisis just like all of the other products we distribute. Lead times have been extended, and raw materials have been constrained and subject to inflationary pressures related to labor, transportation and availability.
Melzer: Maintaining a consistent supply base for all products has been challenging over the last few years. As manufacturers struggled with their supply chain, we had to be more flexible to ensure that we had supplies for our customers. This included the need to temporarily sub in the manufacturer’s (national) brand for our own. Additionally, some of the manufacturers shifted their strategy on private labeling based on the need to control costs through minimizing manufacturing process changeovers and buying packaging in larger quantities.
What’s the biggest advantage a distributor gains by private labeling a product?
Melzer: I think the biggest advantage can be company and brand awareness. This can be compounded if the distributor can provide great service and a product that performs well.
Attman: Brand recognition is a big advantage.
Schneringer: One of the biggest advantages is that if these exclusive brand products offer good performance at a good value, these products can help to get our name out there and promote our company in a positive light. It is always great to meet people from different parts of the country and in different industries who will recognize the brand and comment favorably on their experience. Other advantages include having more control over pricing, distribution, and sales promotion/marketing.
What appeal do jan/san private-label products have to end users?
Attman: Jan/san private label products can provide a more uniform offering in the end user’s building and can also bring trust to the distributor since they are putting their name on it.
Schneringer: Perhaps the biggest appeal is that typically an “exclusive brand” product is going to provide a better overall value to the customer than a national brand product.
Melzer: It should make it very simple to reorder and, depending on how the product is labeled, the end user would know who to go to for the product.
Have you noticed any significant changes to the private label market in the past few years?
Melzer: The largest private label change is related to the strategy and capabilities of the manufacturers. Due to the supply chain challenges, inflation, and consolidation with the manufacturers, some have been forced to reconsider whether private labelling is still something that fits within their strategy and is a place in the market they want to play.
Schneringer: Yes — we have noticed that there are more and more distributors who have decided to incorporate their own private label products into their overall offering. This trend can also be seen, even more prominently, in the retail industry where grocers and other retailers are leaning into more private brand products as customers continue to look for the best value.
Attman: A lot of manufacturers pushed away from private labeling because of supply chain restraints but are now reinvesting to lock in with their distribution partners.
A graduate from the University of Wisconsin-Madison, James DeGraff joined Trade Press Media Group in 2019 as an associate editor. He creates and oversees content for Contracting Profits, Facility Cleaning Decisions and Sanitary Maintenance magazines, as well as CleanLink.com.