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Our last article outlined 4 product business models that will help you make money online. Today, we want to take a closer look at one of those options: private labeling.
Let’s start by stating the obvious. We’re BIG fans of this method. We’ve been in the private labeling business for several decades and still think it’s the hottest product strategy for online sellers.
Private labeling is the act of placing your own brand or label on a product that you have manufactured. As a retail strategy, private labeling is not new. For years big grocery stores have taken generic items, labeled them as their own, and set them on the shelf right next to products with household brand names.
But for independent online sellers, private labeling is about identifying a niche away from the main competitors. It’s about wholesale inventory purchases from overseas suppliers. It’s about trademarks and copyrights. And it’s about packaging the product to ship to your customers.
The goal of every private labeler is to:
- Increase the perceived value of a generic product by adding their own brand name and logo
- Have a creative marketing strategy to sell the product
- Include unique, creative instructions and packaging to provide better product information.
- When applicable, make design modifications to address customers’ needs (or differentiate themselves from competitors)
- Bundle products with accessories bearing the same branding
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Some of the benefits to private labeling include:
- Using FBA to gain access to a huge marketplace: there’s no doubt about it, nothing compares to having access to Amazon’s online shoppers.
- Leverage your product pages on Amazon: you won’t have to generate your own website traffic
- There are no FBA inventory requirements
- You own your brand!
Some of the challenges to private labeling include:
- Inventory investment: because you are manufacturing and buying your products in bulk, there is a much larger upfront cost.
- Contacts overseas: you gotta know someone! If you’re overwhelmed thinking about where to source your products from, don’t worry — you’re not alone.
- Cross-cultural communication: sure, lots of factories have at least one person who speaks English. But not all of them do…
- Trademark/copywriting scams: you may have seen our recent post about a trademark scam circling Europe and the States right now. Unfortunately, this is just one of many examples! We recommend finding a good lawyer or business coach to help you decipher between real and falsified letters.
Here’s the good news.
You don’t have to figure it out on your own. We have spent nearly 40 years uncovering the hidden secrets of product sourcing, manufacturing, labeling, importing and online selling. Our client list includes some of the largest retail stores in the world along with hundreds of entrepreneurs, just like you. We love coaching, training, teaching, and of course – selling! We warmly welcome you to book a FREE 30 minute phone consultation. We can’t wait to meet you!