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Private label: The pros & cons, how to drive profitable growth for Shopify store

Private label: The pros & cons, how to drive profitable growth for Shopify store

What is private label?

Private label product, also known as “private brand”, is produced by a company but sold and labelled by a different brand. Retailers can make contract with manufacturers to produce their unique products. Moreover, retailers can make specific requirements such as quality, material, etc. Therefore, they don’t need to invest too much to start their own line of products.

Private label and white label mostly the same. The only difference is with white label, manufacturers can provide products to many retailers without modification. On the other hand, for private label, producers will produce products exclusively for a single brand. As a result, private label product will be more unique.

private label
What is private label?

Benefits of private label

Private label can bring retailers great benefits. Instead of spending money and effort developing their own product line, they will have a third party do that for them. Then, retailers can focus on branding and marketing. Here are some of private label advantages.

Better control over production

Retailers can make specific requirements, for example, quality, materials or designs. Then, manufacturers will make the products according to their requirements and needs. All of these demands will be recorded in the contract.

Control over pricing

Since you take control over the production, you can decide the price. Set the price according to manufacture pricing and  your profit expectation

Control over brand

You take control of production and pricing, therefore you totally control your brand. Moreover, private labeling will bear your brand names, logo and design. This will make your products stand out in the market

High adaptation

Market and customers perspective is changing drastically. Then, brands and companies are required to keep pace with the changes. Thus, private labeling is a great option.

First, thanks to low entry barriers, companies can quickly make decisions when needed. Also, retailers can easily contact with manufacturers to change or alter some details. 

private label
Private label allows you to quickly adapt to the situation

Become wholesalers

Private labeling can make retailers wholesalers. You can sell your unique products to other retailers. If you need more quantities, simply contact with the producers. This can grant you higher profit and raise brand awareness. Learn more about wholesale pricing.

You can become wholesalers

Higher profit

Private labelling surely can improve your income. First, you take control over the pricing. Therefore, you can set the price according to your profit expectation. Moreover, you’ll get private label products for lower price than those of national brand name. This will lead to higher profit margin. Also, you can sell your unique products in bulk to other retailers. 

Customer loyalty

You can deliver something different or exclusive to your customers with private label products. Also, you can use marketing campaign to build your own image and brand identity. Such factors, along with product quality, can encourage customers come back for more

Drawbacks of private label.

Every coin has both sides, and private label is not an exception. Despite all those benefits, retailers still need to consider carefully when it comes to private labelling. Here are some disadvantages of it

Dependence on manufacturers

You need a third party to produce your products. Therefore, you heavily depend on their schedule or equipment.  Outdated or broken contract, late delivery can negatively affect your business, or even damage it. At least the production chain will stop for a period of time.

Moreover, your manufacturer can accompany with other retailers. This will create a very stiff competitive market. As a result, it’s very important to maintain good relationship with the producers.

Competing with big brands

Despite unique image and great marketing strategies, it’s very difficult for you to compete with big brands name. First, they’ve had great influence on customers for a long time. Customers will likely to buy their trusty products rather than those from unknown brand. Secondly, big brands will have greater coverage compare to new ones. Their products can be found in many shop or stores.

private label
New brands have to compete with big brands in the market

Dead inventory

If you can’t sell private label product, you will be stuck with it. On the other hand, branded merchandise can return unsold products to the companies.

Time before launching

Third party producers allows you to spare some time for marketing strategies. However, you need to invest in many time and effort for image, logo, quality. Despite all those effort, you still might fail when implement them in the market. Moreover, you must draw strict contract with the manufacturers initially since you heavily depend on them. 

How to drive profitable growth for Shopify store

Private label is great for many retailers, especially for online business. Moreover, almost any consumers goods can be private label products. However, not every retailers become successful with this type of products. So how to drive profitable growth for your Shopify store with private labelling? What successful private-retailers have in common?

Look as good, or even better than brand name

New brand hardly can face with big brand name in the market no matter how well your marketing plans are. However, online store is a great option for you to draw customers attention. You can focus on product image and description. Highlight the benefits, uniqueness, what differs your products from others. Also, utilizing social proofs is also a great option.

Customers can easily find private label in relevant placement

First impression is very important. Therefore, you want private label products to appear in front of customers’ eyes the moment they visit your online store. You can place it in recommended section, catalog, cross-sell or often bought with section. This will raise people’s awareness of your products. Thus, you will gain customers trust and loyalty.

Understanding your market

Knowing your place is a crucial factor for both online and offline business. You need to assess the market. Spend time assessing competitors and understanding customers. Target your customers, which of their behaviors can affect your revenue. E commerce can help you gather data easily for analyzing. Such factors will help you create great marketing strategies to packaging.

We hope you know have overall view of private labeling. If you want to boost your sales revenue on Shopify, you need to contact ArrowHitech. Established since 2007, we now have 12+ years in e commerce. We can grant you great service, from giving advice for your business plans to developing Shopify themes and apps. Thus, we can deliver you modern, professional- looking website that suits your visions and expectation. Contact us here for more information or via email: support@arrowhitech.com or hot line: + 84 243 7955 813

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