Understanding Private Label Products: A Guide for Ecommerce Growth (2024)

What is private label?

Private label products are those manufactured by a third-party manufacturer but sold under a retailer’s brand name. The retailer has control over the marketing, pricing, and packaging of the product, allowing them to create a unique offering for their customers.

How does private labeling work?

Private labeling works by finding a manufacturer to produce your product with your branding. The manufacturer may already have a product that you can put your label on, or they may create a new product for you. Once the product is manufactured, it is shipped to you and you sell it under your brand name.

Private labels vs. white-label products

Private label products are manufactured specifically for a retailer and cannot be found elsewhere. White-label products, on the other hand, are generic products that can be sold by multiple retailers under their own branding.

The benefits of private labeling

Private label benefits

  • A unique value proposition: Private labeling allows you to offer customers something unique that they can’t find elsewhere.
  • High profit margins: By cutting out the middleman, you can often achieve higher profit margins with private label products.
  • Customized pricing control: You have the freedom to set your own prices, allowing you to compete in the market.
  • Customized marketing control: You have control over how your product is marketed and positioned in the market.
  • Adaptability: You can adapt and customize the product to meet the needs and preferences of your target audience.

Private label drawbacks

  • Dependence on third-party manufacturers: Your business is reliant on the manufacturer to produce the quality products you need.
  • Less scope for innovation: With private label products, you may have less room for innovation compared to creating your own unique products.

Examples of private-label products

Private-label products

Private label products can range across a variety of categories, including:

  • Coffee
  • Pet food
  • LED lights
  • Phone accessories
  • Apparel
  • Smart backpacks
  • Personal care products

3 examples of private-label brands

1. Kirkland Signature

Kirkland Signature is a private label brand that is owned and sold by Costco. The brand offers a wide range of products, including food, clothing, and electronics.

2. Amazon Basics

Amazon Basics is Amazon’s private label brand that offers a variety of products, including electronics, office supplies, and home goods.

3. Harrods Own Label

Harrods, a luxury department store in London, has its own private label brand that offers a range of products, including food, beauty, and home goods.

Key points: What is private label?

Private label products are manufactured by a third-party manufacturer but sold under a retailer’s brand name. The retailer has control over the marketing, pricing, and packaging of the product, allowing them to create a unique offering for their customers.

Private labels FAQ

What does “private label” mean?

Private label refers to products that are manufactured by a third-party but sold under a retailer’s brand name.

What is the difference between private label vs. branded products?

Branded products are manufactured by the company that owns the brand, while private label products are manufactured by a third-party but sold under the retailer’s brand name.

Why would a store have a private label?

Stores have private labels to offer unique products to their customers, increase profit margins, and have more control over pricing and marketing.

What is an example of a private label?

An example of a private label is Kirkland Signature, which is sold exclusively at Costco.

How do you start your own private label?

To start your own private label, you need to find a manufacturer to produce your product with your branding, create a unique value proposition, and then market and sell the product under your brand name.