If you run a business—whether an ecommerce operation or brick-and-mortar establishment—that sells inventory, you’ve likely looked into private label products before. Selling private label products is an extremely effective way to boost your profit margin while promoting your store and private brand. However, in order to successfully launch a private label of inventory, you’ll need to first find private label manufacturers.
There are many private label manufacturers to choose from and many ways to order inventory for your store. In this guide, we’ll give you a brief rundown on private labeling and why you might want to try it, then help you determine how to find the best private label manufacturers for your business.
What Is Private Labeling?
Have you ever visited a chain store like Target and purchased a product from Archer Farms or Good & Gather? These “brands” are actually private label products that Target sources to compete with top national name brands.
Private label products are the inventory a store orders from a manufacturer without any branding associated with it. For instance, if you own a small grocery store or convenience market and sell a large amount of chips, you could purchase generic chips from a private label manufacturer and market them as your own store brand.
You can create as many private label brands as you’d like. Typically, small stores will only have one or two private label brands, but depending on your store’s demand, it might make sense to create more.
Should My Store Sell Private Label Items?
Unfortunately, there’s no easy answer to this question, but many times, purchasing private label items and creating your own branding allows you to boost your sales margin. This is because when you buy name brand items from manufacturers, you’ll pay for the product cost as well as the branding cost. When you purchase private label items, however, you’re only paying for the cost of the product, allowing you to sell it for the same price or less than a name brand item, while making more revenue on each item sold.
While almost every store (online and brick and mortar) can typically benefit from creating their own private label line, it’s important to take a look at your revenue, research what your customers are buying, and test out private label products before taking the plunge. You’ll also want to create eye-catching and appealing labels for your private label brand.
What to Look for in a Private Label Manufacturer
Once you decide that private label products are a good fit for your business, you’ll need to begin researching private label manufacturers. While online search engines are a good choice for researching these manufacturers, it’s important to know what factors to consider when selecting one.
Here are a few top factors to consider when searching for a private label manufacturer:
- Product selection: This may seem obvious, but it’s important to understand and thoroughly research private label manufacturers’ product offerings before narrowing down your selections. For instance, just because you’ve used a manufacturer for food products, does not mean they’ll have the top selection of beauty and wellness products. Be sure to do your homework, find out exactly what types of products you’re interested in selling, and narrow down private label manufacturers based on their catalogs.
- Pricing: Finding the products you want at the right price will help you earn a greater profit margin on each sale. You’ll want to research the pricing on all of the products you’re looking to sell and make sure you take into consideration the amount of product you’ll need to order to score the lowest price. While buying in bulk can help you save on the per-unit cost, you’ll want to be sure you don’t over-order.
- Reliability: Your store is only as good as the inventory you have available. Finding a manufacturer with a good reputation and reliable delivery and restocking policy will be key to ensuring your orders always deliver as smoothly as possible.
- Product Quality: Lastly, but most importantly, you’ll want to find a manufacturer who supplies good-quality items. Most manufacturers will allow you to purchase samples of private label products, so you can thoroughly review and test them before committing to a manufacturer.
Domestic vs. Foreign Private Label Manufacturers
Another important factor to consider is whether or not you want to work with a domestic or foreign private label manufacturer. There are pros and cons to both options, but here are the main factors to take into account.
Domestic Private Label Manufacturers
Some customers are committed to buying locally produced items or, at minimum, items made in the United States. Depending on your clientele or product selection, it might make more sense to stock items from a domestic manufacturer.
Typically, working with a domestic manufacturer will guarantee a higher-quality product, could speed up delivery times, and generally ensures there is no language or currency barrier to work through. You’ll also be able to let your customers know that all of the private label products you sell are made in the United States.
On the downside, manufacturing in the United States is more expensive than overseas, which means either you’ll make less of a profit or your customers will pay more—sometimes, both. In addition, since not every type of product is manufactured within the country, your product selection might be limited.
Foreign Private Label Manufacturers
Many foreign private label manufacturers are located across the globe, typically in countries like China, Vietnam, India, Japan, and South Korea. It’s typically cheaper to manufacture products overseas since the source materials are generally less expensive. As a result, you’ll enjoy lower product costs and a large selection of products and private label manufacturers.
On the other hand, you might experience longer shipping times, could deal with tariffs or other additional import fees, and should expect products to be made more cheaply—though you can find higher-end manufacturers overseas.
Finding Private Label Manufacturers
Now that you know what to look for when researching private label manufacturers, it’s time to start your search. Depending on your industry and needs, you might find one private label manufacturer to cover all of the inventory your store will require, or you might have a few different private label manufacturers to cover all of your store’s needs.
Here are a few methods for finding private label manufacturers for your business:
- Online Search: To conduct a search on Google for a private label manufacturer, be sure to include all of the information that’s important to you: product type, domestic or foreign manufacturer, and niche. You’ll want to bookmark manufacturers that look promising, make a list of the top contenders, and then compare them before making a final choice. You can also search for customer reviews when paring down your private label manufacturer list.
- Alibaba: Not to be confused with AliExpress, Alibaba is a wholesale website that connects you to wholesalers and manufacturers across the globe. While most of the suppliers on Alibaba are located outside of the United States, you can refine your results to only include domestic suppliers, but the majority of the manufacturers are located in Asia.
- ThomasNet: ThomasNet is a free online directory of private label manufacturers, wholesalers, and other suppliers. To use this tool, simply input your keyword or the product type you’re looking for and search. You can even narrow down your results by country and zip code if finding a local supplier is important to you.
Contacting Private Label Manufacturers
Now that you’ve found one or more private label manufacturers, it’s time to reach out to them and begin your business partnership. We recommend reaching out via email or a web form and very clearly laying out all of your questions and business needs.
When contacting private label manufacturers, some questions to consider include:
- What is your minimum order quantity?
- Do you offer alternative sizes, colors, styles, etc. of X product?
- Do you offer product modifications? (Be specific about the modification you’re hoping for.)
- What is the PPU (price per unit) for X product?
- What is your production schedule and when would I receive my order?
- Do you offer product samples and if so, how much do they cost?
You can also consider asking to visit their manufacturing facility if it’s important for your business to know the labor practices of your suppliers. If the facility is located overseas, you can ask about labor standards and also ask if they’re authorized to ship to your country.
Once you’ve submitted your request, wait to hear back from the private label manufacturer and then order from whichever supplier best meets your business needs.
The Bottom Line
Sourcing private label items can make it easier for your business to make more money off of product sales. If you decide selling private label items would be beneficial for your store, do your research and decide what matters most to your company when partnering with a private label manufacturer.
If you decide to create your own private label line, remember that this line will serve as a representation of your company’s brand. Be sure to work with a reputable and reliable manufacturer to prevent inventory delays and low-quality production.