In our post influencer world, the phrase “you do you” has taken a new meaning altogether. It was just a few years ago that YouTube and (now more so) Instagram started to grow and foster a new group of celebrities. After years of the media trying to understand this new group of people, the word “influencer” was born. Along with the rise of ‘micro fame’ and ‘web fame’ there was also another rise; the rise of social products. When influencers and (following their lead) experts realized that their followers were in need of advice on different types of products they saw an opportunity to create their own product and sell it to their followers directly. This is when the private label industry was reborn.

What is Private Labelling (PL) you ask?

Private labelling is selling products one business manufactures, under another business’s or individuals’ brand, like yours. It’s an easy way for influencers (like yourself) to tap into manufacturing companies core competency and expertise to sell products branded by you or your business, completely removing the overhead and headache that comes with operating a manufacturing facility.

The Growth of PL

As the COO of a private labelling and contract manufacturing business I’m surprised more companies and influencers aren’t leveraging these services to generate additional revenue. According to the Private Label Manufacturers Association, “Private label market share has reached nearly 25 percent of unit sales in the U.S. and is expanding faster than national brands.”

Not only is this segment exploding in growth and continuing to do so, but customers WANT private label brands. “In their annual consumer survey ‘Power of Private Brands’ from earlier this year, FMI and IRI found that 60% of shoppers said it was very, or somewhat, important for a retailer to have a good assortment of private brands…” So, what are you waiting for?

Who is Private Labelling good for?

Private labelling is good for three types of uses cases:

· The influencer looking for ways to monetize her or his following.

· The business looking to offer a complimentary product

· A growing company that needs to focus on building their brand and not manufacturing.

Influencer

This is the biggest opportunity that is underutilized.

Maybe you fear the daunting task of getting into the business of selling products; but with private label services that exist today and the power of Amazon which we will discuss later, it doesn’t have to be difficult.

Or maybe you don’t think your followers will buy your products; but as illustrated above, more and more people are gravitating to private label brands. If you’d like to read up on an influencer who went the private label route read Arielle Charnas’ story here.

Complimentary Offering

Businesses looking to expand their sales by offering a complementary product or service, but don’t want to invest in manufacturing the product themselves are a great candidate for private label services. Take our client with the imaginary name George for example, he owns a men’s clothing brand and noticed that a lot of the customer’s were asking him what brands he would recommend for hair styling products. Instead of referring these customers to a brand other than his own and losing out on the potential revenue generated by his recommendations, George engaged Petra to develop a line of hair pomades that he could sell under his own brand. The initiative took two months to get up and running, and this past year he added an additional $140,000 in revenue to his business.

The growing brand

This isn’t exactly a private-label example, but still worth mentioning. Often growing companies who manufacture their own products come to a point in their trajectory where they need to measure opportunity cost; do I invest my finite resources in expanding our manufacturing capacity or do we outsource this responsibility and allocate our resources elsewhere, like marketing and/or sales? We often see brands opt for the latter and double down on their sales initiatives to continue to grow and utilize services from a contract-manufacturer (a lot of whom also private label) to handle their production requirements.

How do you build a private label business?

There’s no need to overcomplicate building a private label business, you’re not reinventing the wheel. You simply need to do the following steps:

1. Pick a product

2. Pick a private-label manufacturer

3. Brand the product

4. Pick a distribution channel

5. Product Listing

6. $$$

Step 1 Picking the Product

What to sell? What to sell? If you’re starting from scratch without one iota of an answer, this can feel overwhelming. A great place to start is by looking on Amazon or Ebay to see what categories exist and then choose a category that you feel passionate about.

Then you’ll want to look for trending products within your chosen category. Thankfully there are free software’s to help with this process, like Junglescout or Algopix. Whatever method you choose to source your list of options you’ll need to pick a product that has a ranking of less than 1,000 and has less than 1,000 reviews to ensure that the market for the item isn’t oversaturated.

For existing business or influencers, the answer is usually right in front of you;

What would complement your current offering?‍

- If you’re a fashion blogger, maybe it’s a fashion accessory (you don’t want to cannibalize your audience)

- If you’re a hair-dresser maybe, it’s a line of hair pomades or after-shaves

If you’re an influencer; why do people follow you? What are you known for? What kind of recommendation will your customers trust from you?

- Maybe if you’re a fitness influencer it’s a vitamin, or face wash for after activity care.

- If you’re a make up artist, maybe it’s a simple lip-gloss or face oil.

The options really are endless, take your time, but after some time make a decision. Don’t get perfection-paralysis and let other people take your sales.

Step Two: Pick a Private Label manufacturer

Where do you go to pick a private label manufacturer? Go to Asia. I’m kidding, but most likely you’ll need to outsource your manufacturing to a far away country like China that is known for their manufacturing prowess and competitive pricing. They have a manufacturer for that. For what? For whatever you need. And thanks to sites like Alibaba, it makes it easier than ever before to engage with these companies from the comfort of your home or office. However, if you’re producing something that is heavy and in smaller quantities, overseas wouldn’t be the best option, because you’ll have high shipping costs, and that will eat into a lot of your gross profit margin.

If the idea of outsourcing your brand overseas is a scary thought, you can look for a private-label manufacturer in the United States, but you’ll have to look a lot harder to find a vendor that can make what you want, at a quantity and cost that makes sense. Unless you’re looking for a cosmetic or personal care item in which case you can use https://www.petrasoap.com.

When it comes to paying your manufacturer it’s good to keep in mind that most will not accept PayPal, this is normal. Most manufacturers will insist on using a cashier’s check or a money wire, so be prepared.

Step Three: Branding

Private-labelling will often succeed or die on the branding, so it’s important you get this right.

Make sure you have the four A’s (yes, I just put an A in front of each, but it sounds better):

· A name

o When choosing your name, make sure it’s still available. You can use good or a service like namechk. Ideally, your name will have a domain, social media and trademark ability still available.

· A logo

o Unless you’re a designer, don’t do this at home. You’ll want to hire a designer to do this for you. Depending on your budget I’d recommend using sites like the Tim Ferris endorsed 99designs.com which will cost you around a $1000, or a cheaper service like Fiverr that can cost as little as, you guessed it, $5.

· A label

o Your private labelling manufacturer will take care of this for you.

· A slogan

o Have fun with this. It’s something that should help sell your product. And it shouldn’t be longer than seven words. A good question to ask yourself is, what is the tension that’ll grab attention.

Step Four: Distribution

Now that you have a branded product, it’s time to sell it. But how and where?

Choosing the platform to facilitate sales; your best two options are either Shopify or Amazon. The drawback about Shopify is you’ll have to figure out the shipping component. But you can utilize third party shippers like FedEx to handle this for you. The pro about using Shopify, is you get a platform with much more control to build out your brand.

However, if you’re just starting out, I suggest starting with Amazon and their FBA service, which stands for Fulfillment by Amazon. By leveraging Amazon, you get immediate access to their 300,000,000 customers and the world’s best logistic services. It’s straight forward and they handle everything for you. Yes, it will cost you more, but who wants to worry about the backend like shipping.

Step Five: Optimize and Iterate

You have what you’re selling, how you’re getting it made, and where you’re selling it, the last thing is to create a product a great product listing, so your customers know exactly what they’re buying and why. It’s the last 10% but it’s an incredibly important aspect of selling a product, that many sellers neglect.

Your listing checklist:

· SKU

· Title (Brand — Product Line — Material Or Key Feature — Product Type — Color — Size — Packaging/Quantity)

· Bullet points that indicate the features and benefits of the product.

· A call to action!

· A meaning description that answers questions your customers might have about the product

· FAQ Section

· Multiple Professional photos

· Back End Search Terms

· Get Reviews

And there you have it folks, you can now sit back and watch the orders come in. If you have any questions about private labelling or contract manufacturing, especially if it pertains to cosmetics and beauty products, feel free to reach out to me via email vince@petrasoap.com or check out our website https://www.petrasoap.com/private-label-contract-manufacturing. Wishing you all the best in your Private Label endeavors.

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