Most Successful Private Label Brands

So, in recent years you’ve probably witnessed the successes of Target, with Archer Farms. Or Amazon, with Amazon Basics. Walmart, with Great Value. Tesco, with Everyday Value. Likewise, Costco, with Kirkland. And the plethora of entrepreneurs using Amazon FBA. And other than them! But how did they achieve these successes from their respective private label brands. Within their respective niches. What is the secret to their financial success stories? So, in this article we take a closer look at the ingredients you need to build your own heavyweight championship private label brand. So, let’s reverse engineer our way to the next best brand. International or local! So, here’s some valuable lessons to learn from the most successful private label brands. Make sure you read to the end. Especially our action-based conclusion. Let’s do this!

What is a Private Label Brand?

So, a private label brand is where a company sells products – that were manufactured by another company – under its own brand name. Thus, private label branding involves two suppliers. And likewise, two buyers. But how? Here’s how:

Observe the example of Company A, Company B & the End-Consumer:

So, Company A is the manufacturer that supplies 5000 units of Tongkat Ali Capsules Bottles to Company B. Along with printing and assembling Company B’s unique branding on each bottle. So that Company B then receives their order of 5000 units of Tongkat Ali Capsules Bottles completely ready to be sold. Thus, Company A is the first supplier. And Company B is the first buyer. Thereafter, Company B can use their different marketing tools (like an eCommerce website) to sell their product to the End-Consumer. Therefore, making Company B the second supplier or seller. And the End-Consumer becomes the second and final buyer.

Did You Know?

• Firstly, the UK has the highest private label brands share of the grocery market in all of Europe.
• Secondly, US private label sales grew 6% last year, reaching $217B.
• Also, more than 40 percent of all goods sold in Germany are private labels.

3 Key Differences Between Private Label Brands & Name Brands

1. Ownership: Firstly, private label brands are owned by retailers. Whereas name brands are owned by specific companies specializing in those products.
   
2. Manufacturing: Secondly, private label brands are usually made by third-party manufacturers. Whilst name brands have their products manufactured in their own facilities.
   
3. Pricing: Thirdly, private label brands tend to be cheaper than name brand goods due to lower marketing costs and profit margins.

So, How Do Private Label Brands Become Successful?

Private Label Brand Prices are Cheaper than Name (National) Brands

So, private label brand products tend to be cheaper than national brands due to the following brief points:

• Firstly, manufacturers that supply private label goods do not have to invest as heavily into their marketing and advertising. As their clientele are other businesses. Whom tend to make more sensible purchasing decisions than the average retail consumer. Thus, costly and extravagant marketing campaigns can be counterproductive. As businesses will most likely do that extra research… Contacting and comparing multiple manufacturers before ordering. Checking the finer details and not simply accepting what is advertised.
  
• Secondly, many retailers that offer private label brands source or buy directly from the manufacturer. Cutting middlemen companies out. Thus, these retailers are able to pass on that saving to the end-consumer. Resulting in private label brands being cheaper.
  
  
• Also, private label branded products tend to be more simplified in Branding and packaging. Further, contributing to their lower prices that appeal to end-consumers especially in times of difficulty. Like increased inflation.

And it’s this that gives one of the most successful private label brands (like Walmart, USA) the edge in their respective markets. Indeed, a growing number of Americans have been turning to Walmart. In an effort to make the most of their grocery money. And one of the drivers for Walmart’s success is inflation, as explained by CNBC’s retail & consumer reporter Melissa Repko. In fact, Walmart’s lower prices have even been reported as resonating with higher income consumers.

Key Issue & Solution:

So, surely companies that have some of the most successful private label brands like Walmart, Costco… And Kroger’s “Smart Way” Brand are able to use their bargaining power to negotiate lower prices at higher qualities. So, how would you compete with them?

• So, one strategy is to reduce your markup (the amount added to the cost price of goods to cover overheads and profit.). But bear in mind that these most successful private label brands may have markups as low as 14% of the price offered to consumers. Therefore, reducing your markup may not make business-sense.
  
• Another would be to add value to your private label brand. Value that justifies the consumer paying a higher price. Ultimately, manifesting a sense of brand loyalty and attachment to your brand. So, in the case of Tongkat Ali, that could be the presence of a 2% level of Eurycomanone. The active ingredient associated with the health benefits found in Tongkat Ali. Other private label brands may not have this quality.

Amsoil vs Walmart • Case Study Example:

Likewise, Amsoil vehicle engine oil is widely regarded as the best in the USA. Respected by niche consumers like those within the drifting community. So, even if Walmart’s Super Tech’s engine oil is half the price (or more) of that of Amsoil’s… Consumers (especially in niche markets) will show brand loyalty to Amsoil. Possibly even sacrificing other luxuries. Or even necessities to purchase from Amsoil. Due to their perceived superiority that cannot be substituted.

• Another way may be to avoid these highly competitive markets completely. Settling for niches that are easier to conquer. This could be certain types of products that larger private label brands do not cater for. Possibly as the demand for them is not enough to warrant entering those markets. Like in the case where these products aren’t yet known well enough. So, you’d get into the market early and get a head start. Which in turn could make you an industry authority… Warranting brand-loyalty as cheaper alternatives enter the market later on.

So, as far as prices go, the lower the better. Especially in times of economic hardship. So, a no-thrills approach that many successful private label brands adopt… Whilst meeting quality standards… In order to keep costs & prices down… Is part of the portfolio of the most successful private label brands!

Set-up Costs for Private Label Products are Lower than Name (National) Brands

Research and Development Costs

Another factor that contributes to the superiority of the most successful private label brands are lower R&D expenses. Correct! Private label brands often re-engineer the successes of other companies. Thus, their R&D processes are often a lot less complicated in comparison to name brands. Who may invest extensively to create unique formulations. Technologies. Or designs that differentiate them from their competitors… As they fight to appeal to consumers. So private label brands can gain a financial edge by avoiding this completely. And alternatively, simply following established and successful market trends. Therefore, this saving in R&D can be passed on to consumers. Resulting in lower prices. And more potential sales as lower income earners are attracted to buy.

Production Efficiency

Name brands that execute costly and complex research and development processes… May also have more costly and complex production requirements. Further giving successful private label brands an edge as all their manufacturing is outsourced. So, their contract manufacturing agreement can protect them from cost increases. Whilst name brands must bear whatever occurs in their manufacturing process. As it’s executed in-house.

Amazon Basics • Case Study Example:

So, as you may already know… Amazon Basics is one of the most successful private label brands. Owned by eCommerce giant Amazon. This brand offers a wide range of products, including electronics. Home goods. Even office supplies. And more! But what’s their secret?

Well, one key strategy that has contributed to the success of Amazon Basics is its outsourcing of production processes. Yes!

Amazon Basics strategically outsourced their production process to specialist third-party manufacturers. Allowing them to benefit from their cost efficiencies and expertise. Therefore, Amazon are able to concentrate on their competencies. Such as:

• Marketing.
• Branding.
• Distribution.

Leaving the entire manufacturing process to their experienced suppliers.

So, a more efficient production process is another factor contributing to the successes of the most successful private label brands. Like Amazon Basics. Not only will they most likely benefit from lower costs. Directly due to their outsourced production processes. But also, they’re more efficient in their internal affairs. And are able to focus on their strengths.

Action-Based Conclusion

Normally you may expect a brief summary of points covered in this article. But here were going to give you something better! Yes! If you are serious about starting your own successful private label brand, then go for it! Start today! How? Well, we’ve chosen to present it to you in an inspiring poem…

How to Start a Successful Private Label Brand

1. Dream the Vision

In the quiet corners of your mind, let ideas bloom,
A brand that whispers elegance, dispelling all gloom.
Sketch your dreams on paper, let passion ignite,
For every great venture begins with a light.

2. Research the Market

Dive deep into waters where competitors swim,
Analyze their strengths and weaknesses—don’t let your hopes dim.
Understand the trends that sway consumer hearts,
For knowledge is power; it’s where success starts.

3. Choose Your Niche

Find a space that resonates with your soul, e,
A niche that feels right, where you truly belong.
Whether beauty or wellness, tech or delight,
Select wisely; this choice will guide your flight.

4. Source Quality Products

Seek artisans and manufacturers who share your dream,
Quality is key; let excellence beam.
Negotiate terms with care and precision,
For in every detail lies your brand’s vision.

5. Craft Your Brand Identity

Design a logo that exudes grace,
Choose colors and fonts that reflect your brand or relate.
Create a story that speaks to the heart,
For branding is art.

6. Build an Online Presence

In the digital realm where connections are made,
Craft a website that shines like sun on glade.
Utilize social media to spread your wings wide,
Engage with your audience; let them be your guide.

7. Launch with Purpose

Prepare for the moment when all comes alive,
With marketing strategies designed to thrive.
Host events or promotions to create a buzz,
Let excitement ripple—this is what was!

8. Gather Feedback and Adapt

Listen closely as customers share their voice,
Adapt and evolve; make it their choice.
Continuous improvement is the path you must tread,
For in listening lies growth—let innovation spread.

With each step taken on this poetic quest,
Your private label brand can rise above the rest.
Embrace the journey with courage and grace.
In this dance of commerce, find your rightful place.