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What are the disadvantages of private labeling?

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Private labeling has grown by leaps and bounds the past decade... but is it hype? Does it work?

Well, it's grown year after year, so the growth trajectory alone... shows that private labeling is bringing success to most companies.

But, stats are stats. They are only one variable. They may not be enough to make you feel confident to plunge into a new venture.

Luckily, we don't have to rely on statistics in regards to private label... since we've been private labeling for companies for over 20 years now!

So, in the real world, after working with so many customers from small to large, we can tell you that the person that completely fails with their own brand, is such a small percentage, that it likely wouldn't be you.

What can make you fail at private labeling?

street sign that says "loser street" on it for text that describes how dishonest owners can fail at private labeling

In our own personal experience, we've only seen a few failures over 20+ years and they were primarily due to:

  1. Dishonesty Lying to customers and putting claims on your website and/or marketing materials that break the law and/or are misleading

  2. Not having enough money to launch a brand To help a few customers out that were in dire straits financially, we practically gave the product away and/or gave such low minimums to start, that it was basically charity. You would think that would help someone have an edge and have a great success story. But, almost all of them failed. If you don't have enough money to scrape two dimes together... then it just means it's not yet time to launch! But, don't feel bad about yourself. We started our business on a shoe-string budget too! So, if don't have any available funds, just realize that your current job isn't to launch a brand... it's to earn enough money to launch a brand! Stay focused on that goal and then you will be setting yourself up for a real launch later.

The good news is that the vast majority of our customers ARE successful. So, the odds are in your favor. We can't help you with the dishonesty part. If your plan is to take shortcuts at the expense of others, we can just tell you that you won't be around long.

In regards to finances, it's amazing how you can figure out how to make enough money somehow... when you have a goal. So, set your goal of launching a new product (or brand of products) and get busy making it happen. Then, you can be your own entrepreneur sooner than you think!

But, let's say that you are ready... you have the funds and the desire. What are the potential drawbacks if you decide to start private labeling?

The disadvantages of private labeling:

  1. It does take time.  You have to work with us on the phone and email to decide which products to carry, talk through what your packaging will look like and place an order. If you have time for a few phone (or Zoom) calls and emails, then you won't consider this much of a hindrance. But there is a real cost, in that it takes more time to do something new, rather than to stay the course and make no changes to your business.

  2. It takes some money.   Yes, there is an investment to get started with private labeling. The upside is that it really is an investment and not a cost. Afterall, once you sell the products, you make extra $. Since you don't lose the reorder to a cheaper online seller (like when you markup and sell someone else's product), you actually make much more profit over the year. But, you do have to start somewhere. Like we discussed above, you have to be ready to purchase product and do the bare minimum to start selling it.

  3. You have to think and put your "creative cap" on for a week or two.  While it may be super easy to order a national brand, mark it up and resell it... with your own brand, it takes a little thought. Do you want to push the benefits of "being a natural product"? Do you want the packaging to look more technical, so people see you as an expert? Do you want it to be a fun brand, with humorous graphics? We can help you with those questions, since it likely just takes a little brainstorming. Most people know what they want, we just help them figure that out. But, there is some thought to put forth, as opposed to going online and just ordering more product from a distributor and marking it up!

image showing boys wearing homemade thinking caps

If you feel the disadvantages are something you can pretty easily overcome, but still need a little help getting started... then we would be happy to help! We have been doing it for a long time and we are ready to make it easy for you. See the natural products we manufacture and the types of packaging we make for you here:

If you do have hesitations, just make sure they are the natural ones we all feel with something new. But, don't pause on something that can make a bright future for you, because you are hung up on a perceived negative, as opposed to a real one. Read below to make sure!

The reality of private labeling vs. the misconceptions:

I have seen personally, that most of our customers are willing to overlook the disadvantages to private labeling, because the advantages far outweigh the costs. However, I've also seen (over a couple decades) that many don't get started, because they think the "obstacles" that are looming over them, are just too high and they would rather not stress themselves with a new project. It's new to them, so it feels much more difficult than it is. The trick to getting started, is to understand the real costs (listed above) but not getting derailed by a misconception vs. the reality of it!

Here's a few misconceptions some have in regards to private labeling their own line of products:

  1. It's way too complicated.  It's not too complicated. But, luckily, it just seems to be! So, what do I mean by that? Think about it... if you haven't started your own brand of products yet, but your competitor has... what are the first thoughts you tend to have towards that competitor? Would you think they just took a large step backwards in their businesses? Of course not! You would be more inclined to think "wow, they are really getting ahead of me"! Or maybe you would just think they are more bold, creative, connected in the industry, etc. Well, that's what we tend to think when someone has their own brand of products! That is also what your customers will think of you! So, you actually WANT it to appear more complex and complicated than it is! But, in reality, if you have the best private label product manufacturer backing you... it can be far easier than you could ever imagine!

  2. Why would someone want to buy my products, when they are familiar with the national brands that do a lot of advertising? Well... this one is easy. They want to buy from you because... it's you! They want to buy from someone they know and trust. Or, from a similar type of person as them. The look you choose and the way you sell your products in the market will connect with people that are similar to you! Why do we know this? Because we've been private labeling for a long time and customers of ours are always surprised with how receptive their customers are towards buying their products over national brands.

  3. What if I never sell my products?  Of course that is always a risk. It's just not the reality that we have seen play out over the years! While they may not be selling like hotcakes out of the gate (although many do), sales do get made. There's something about your own line that gets you excited about it. It just happens! Sales are made and more importantly, the reorders start happening too! That's probably the biggest advantage to private labeling... securing reorders! You don't lose business when a customer finds a similar product on another online platform... for a lower price. In addition, your products are sitting in front of your customers, with all of your contact information on them! It's a great reminder for them to go back to you for more.

That last point above reminds me of a customer of ours. She contacted us to private label just one product. In the end, she decided to start out with 6 different products so she could have a whole line. She told me 1 year later that a few products were selling incredibly well and she was surprised at how well they had done and they weren't even ones she thought would do as well. She really excited about it. Another few sold consistently well and she could always rely on them. She said two products were slow movers compared to the others. The funny thing is though, after two years, she still reordered them! So, the reality is that you will sell them. You just don't always know which products will sell best.

That's why it's so important to start off your brand with multiple products being sold and not just one or two. We wrote an article about this in more detail that you can read here:

Our company has been set up for over 25 years now with one thing in mind... helping others start and grow their businesses! So, please contact us to talk about your ideas and we will be here to help you! You're not alone in this. We are your private label manufacturing partner and it's our job to help you be successful! We will connect with you in any manner that is convenient for you!

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See the natural products we manufacture and the types of packaging we can make for you by clicking below!

empty bottles with text that says we can design custom labels for a private label line of products

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