The Ultimate Guide To Private Label

F O R S M A L L T O M E D I U M — S I Z E D R E T A I L E R S

T H E O F F I C I A L G U I D E T O

P R I V A T E L A B E L

2 asdoline.com - sourcedirectshow.com

I N T R O D U C T I O N T O T H E P R I V AT E L A B E L

“Private label” is a hot topic among inventors, designers, and retailers alike. Private labels are available in a wide range of industries, making them accessible options for retailers wanting to increase profit margins and inventors or designers wanting shelf space. Today, shoppers are responding more positively than ever to private label brands. Products that are natural extensions of other product lines are ideal private label collections. Establishing which products are in demand can be simple, but the process of connecting the right inventors, designers, or manufacturers with the right retailers can be more complex. Since ASD Market Week and SourceDirect are leading trade shows in which to find products, brands, and retailers, we decided to create The Official Guide to Private Label for Small to Medium-Sized Brands & Retailers!

A P R I V AT E L A B E L I S A L I N E O F P R O D U C T S

S O L D U N D E R A R E T A I L E R ’S B R A N D N A M E ,

B U T M A N U F AC T U R E D BY A N OT H E R C O M P A N Y .

D E F I N I T I O N


P R I V AT E L A B E L S T AT I S T I C S

T H E S E A R E A F E W F A S T F A C T S T H A T W I L L F U R T H E R A C Q U A I N T Y O U W I T H T H E S T A T E O F T H E P R I V A T E L A B E L I N T O D A Y ’ S E C O N O M Y :

» Private label brands are a significant player in today’s U.S. retail landscape, reaching $112 billion out of $643 billion in total retail sales as recently as 2013. – N I E L S E N

» A retailer selling exclusive items may be able to boost associated product margin to 45% from 35% — when compared to similar third-party products. – I N T E R N E T R E T A I L E R

» The number of retailers that say at least half of the merchandise they sell carries their own label has risen 31% since 2008, from 42% to 55%. – I N T E R N E T R E T A I L E R

» Perceptions about private label brands are favorable around the world, but value shares are higher in developed regions like Europe, North America, and Australia.

– N I E L S E N

» Private-label market share generally goes up when the economy is suffering and down in stronger economic periods. – H A R V A R D B U S I N E S S R E V I E W

» In 2012, just over 95 million U.S. residents consumed store brand or private label food within the last thirty days. – S T AT I S T A

» 70% of Millennial women see store brands as having excellent quality, while 80% of all shoppers believe that private label brands are equal to or better than national brands in terms of quality and packaging. – F O R B E S

» Consumers likely transfer their positive associations from the parent (brand) to the extension. – J O U R N A L O F M A R K E T I N G R E S E A R C H

» Two emotions drive private label super consumers: affection for the specific retailer and a deep level of pride about being a private label super consumer. – H A R V A R D B U S I N E S S R E V I E W

» Globally, nearly six in 10 (59%) respondents agree they would buy more private label if a larger variety of products were available. – N I E L S E N


5 STEPS F OR RE TA ILER S WHO WA NT TO LAUNC H A PR IVATE LABEL L INE

Research your consumers and relevant trends. As a brand, one of the most important jobs you have is to know who your customers are. That is, you should know your customers’ basic demographics as well as the psychology behind things that influence their purchases. Consumer trends go hand-in-hand with this information since they help you identify the products that your customers want. Our 2015-2016 Lifestyle Trend Report beautifully illustrates how to gather current information on how to sell the products that are in demand.

Find the right product and supplier. Once you decide on the product that you like best and your customers cannot live without, find your supplier partner(s). You can utilize your current business contacts, attend a trade show like ASD Market Week (ASDOnline.com), utilize SourceDirect’s Factory Matchmaking Services, or do an online search for terms like “private label manufacturers” to help you connect with the right suppliers.

Develop a business relationship with your chosen supplier. The beauty of working with a supplier that already has product you love is that you do not need to hire a team of designers. Instead, you can spend time working on the key elements of your business relationship, which include things like exclusivity, profit split, budgeting, scheduling, packaging, and samples. It is important to enter this phase with a collaborative spirit.

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R E T A I L E R S , F O L L O W T H E S E F I V E S T E P S I N O R D E R T O C O N N E C T W I T H T H E R I G H T I N V E N T O R S O R D E S I G N E R S A N D L A U N C H Y O U R P R I V A T E L A B E L :

Test and promote small product quantities first. In order to scale in an efficient, cost effective manner, it is best to test and promote products in small quantities first. Place your new, branded products on your store shelves and showcase the products on your website and social media channels. Also, feature the products in your broadcast email campaigns and in your media outreach. Once the products prove popular with your target audience, you can order and promote larger quantities.

Build your longer-term marketing strategy. Over time, collect test data and in-person feedback on your product from your customers. Use this information to plan your long-term marketing strategy. Collaborate with your supplier to develop a successful strategy that will work for both parties. Consider things like: who your target customer is, whether the product fits with your store brand, packaging and branding, and how big your next order should be.

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A S D M A R K E T W E E K A N D S O U R C E D I R E C T A R E G R E AT P L AC E S T O F I N D A N D E S T A B L I S H S U C C E S S F U L R E L AT I O N S H I P S W I T H W H O L E S A L E R S , I M P O R T E R S A N D M A N U F AC T U R E R S !

R E M E M B E R !


3 STEPS F OR MA NUFAC T URER S TO E STABL I SH SUCC E SSFUL RELAT I ON SHIPS WI TH PR IVATE LABEL BUYER S

I N V E N T O R S A N D D E S I G N E R S , F O L L O W T H E S E T H R E E S T E P S I N O R D E R T O F O R M P O S I T I V E A N D P R O F I T A B L E C O N N E C T I O N S W I T H P R I V A T E L A B E L B U Y E R S :

Understand each buyer’s competition. To ensure that your items will fly off your buyers’ shelves, it is important to study the competition of each buyer. Find out what makes your products stand out and how you can market your products better than each competitor.

1 32 Provide excellent support. Stand out by providing outstanding customer service and marketing support. Lending a friendly attitude, offering assistance in handling consumer problems, and being available to attend trade shows are a few things you can do to make your buyers happy.

Keep things simple. Ask the buyer for a purchase order, and then state that you will supply the product in the buyer’s package or modify it accordingly. You can also consider offering things like sales training, websites, and product displays.


EXPER T A DV IC E ON PR IVATE LABEL FROM L INH VU , MA RKE T ING D IREC TOR AT SOURC ED IREC T

SourceDirect (SourceDirectShow.com) is the fastest growing sourcing trade show in the United States. With more than 500 international vendors, SourceDirect is an international marketplace where importers, distributors, wholesalers, and mass merchant retailers can buy direct from manufacturers from around the world.

At SoureDirect, you can source from popular categories such as gift, home, fashion accessories, apparel and affordable footwear, general merchandise, electronic accessories, and beach/resort. Co-located with the largest general merchandise trade show in the world, ASD Market Week, the show is a perfect place for you to meet face-to-face with contract manufacturers and factories without leaving the states.

H E R E A R E S O U R C E D I R E C T ’ S F I V E T I P S F O R S O U R C I N G P R O D U C T S :

1. Log in to the Show Planner on SourceDirect’s website prior to attending the show to plan your itinerary and set up appointments with potential suppliers.

2. Download the official Show App prior to the show to search for exhibitors and their locations on the show floor.

3. Visit the Factory Matchmaking desk where a sourcing expert will help match you to suppliers on the floor based on your criteria.

4. Walk every aisle. You never know what products you may stumble upon.

5. Attend any of the free educational sourcing seminars during the show to learn from sourcing experts who currently source from various countries.

F O L L O W S O U R C E D I R E C T O N T W I T T E R @ S O U R C E D I R E C T U S A A N D I N S T A G R A M @ S O U R C E D I R E C T S H O W .


E X P E R T A D V I C E

We at YTC Group, Inc. (ytc925.com) are happy to report that private label is not as complicated as it seems. Yes, there are risks involved. However, if a retailer does their due diligence and trusts the manufacturer that they are working with, there is no reason why the process cannot go smoothly. Before considering private label, the retailer should first ask themselves if they are ready to do so. In terms of some risks, if the retailer wants to create their own designs, there are additional costs involved, including possible design or label fees and packaging. Packaging can also have an impact on shipping costs. Is the retailer able to absorb this cost without getting into a cash flow crunch? I have seen some companies start, then scrap their project because they did not budget additional costs.

L O G I S T I C S O F P R I V A T E L A B E L F R O M M A T T H E W C H O , P R E S I D E N T A T Y T C G R O U P , I N C .

T H E R E T A I L E R A L S O N E E D S T O B E A B L E T O T R U S T

T H E M A N U F A C T U R E R I N T H AT T H E M A N U F A C T U R E R

W I L L N O T T A K E T H E I R I T E M ( E X A C T S A M E D E S I G N

S P E C ) A N D T H E N S E L L I T T O O T H E R C O M P A N I E S .

I H AV E H E A R D H O R R O R S T O R I E S A B O U T H O W O N E

C O M P A N Y D E V E L O P S A D E S I G N A N D T H E N W I T H I N A

W E E K A N O T H E R C O M P A N Y H A S T H AT S A M E D E S I G N .

There are many other aspects of private labeling to consider – these are only two. This is not meant to deter a company from pursuing private label. Yes, there are pitfalls. However, if planned out with a trusted manufacturer, there is no reason not to go this route for a retailer. Branding is the only way to keep prices steady for a retailer. When you examine eBay, DH Gate, or Alibaba/Alibaba Express, the prices of generic product on these websites are incredibly low. Private label allows the retailer to keep or even increase their profit margins because the label affords the consumer a level of trust and quality. It is a level of comfort that cannot be obtained by purchasing a similar item from a company hidden behind a computer screen.


E X P E R T A D V I C E ( C O N T. )

At KIS Jewelry (kis-jewelry.com), we have found that by offering private label to some of our larger customers, they are able to take advantage of our FOB China or FOB California programs. Product can be carded, bagged, tagged, and packed to their specifications so it is ready for quick, labor-free distribution once it arrives. Private label is great for allowing distributors and retailers to:

F I N D I N G S U C C E S S W I T H P R I V A T E L A B E L F R O M J E F F R A P P O R T , C E O A T K I S J E W E L R Y

1. Promote their brand.

2. Work on higher margins.

3. Give a unified look to their product program.

4. Create unique product that is exclusive to the customer.

5. Use jewelry as a part of an inspirational project or other

category presentation.


1 0 E X A M P L E S O F P O P U L A R P R I V AT E L A B E L B R A N D S

H E R E A R E 1 0 S U C C E S S F U L B R A N D S F R O M L A R G E U . S . R E T A I L E R S T H A T I L L U S T R A T E T H E B E N E F I T S T H A T P R I V A T E L A B E L C A N O F F E R T O C O M P A N I E S A N D C O N S U M E R S :

1 . A R C H E R F A R M S T A R G E T

2 . B A R I I I M A C Y ’ S

3 . B A R N E S & N O B L E C O L L E C T I B L E E D I T I O N S E R I E S

4 . G R E A T V A L U E W A L M A R T

5 . H A M P T O N B A Y H O M E D E P O T

6 . N I C E ! W A L G R E E N S

7 . T R E A S U R E & B O N DN O R D S T R O M

8 . S E P H O R A C O L L E C T I O NS E P H O R A

9 . S O N O M AK O H L ’ S

1 0 . U L T AU LT A


T H E L E G A L S I D E O F P R I V AT E L A B E L

As you prepare to make big profits with your line, it’s important to consider the legal aspects of your contracts and your line. According to SCOE.biz, private label has several legal definitions that vary from the business definition in today’s market. It has resellers - those who don’t white label or rebrand the product in anyway - and sell it directly to consumers on behalf of the manufacturers, they are distributors.

R E S A L E , D I S T R I B U T I O N & P R I V AT E L A B E L

When a reseller wants to distribute unaltered, branded products, it’s important that their legal contracts have appointment clauses that outline the scope of the agreement. This includes where they have rights to sell the products, meaning the platforms (Etsy, Amazon, eBay), direct e-commerce and physical stores. The contract should also contain any exclusivity rights, a clear definition of the manufacturer's rights to also sell online, and an outline to compensation for contact breeches. These agreements usually have a three to five year time period attached to them. With them, make sure payment terms and product supply terms are clearly outlined, as well as defective/damaged good provisions. Also, if your distribution company is bringing the product to market, it’s important to outline who owns the I.P. associated with that brand.

With any relationship, it’s important to add a disclaimer to your contracts stating that you’ll do your best to sell the merchandise, but make sure you’re protected from any implied warranties. You want to limit your consequential, indirect and direct liabilities if a product doesn’t sell well in the market.

P R I V AT E L A B E L & L E G A L LY P R O T E C T I N G Y O U R B R A N D S

Under the most well-known definition of private label, a company or individual is taking possessions of goods, possibly altering the design or formula, and labeling (branding them) as their own product. Private label brands are big business, they offer enormous margins as well as exclusive product on the market. Once, private label’s growth was mostly in beauty and fashion, now it’s rapidly expanding to nutraceuticals, wellness and foodstuffs. There are many new manufacturers that are willing to consider exclusive deals to get products to market and build a steady revenue stream.

All of the legal clauses and outlines found in the reseller agreement are just as important in these legal contracts. The major difference here is that the contract usually lasts 7-10 years and as a seller, you’re much more legally responsible for the product sold. In these cases, it’s important to have clear liability contracts with your suppliers and carry liability insurance in case something happens with one of your products and harm is caused to a consumer. Make sure products you’re selling comply with the country laws in that product category.


WHAT I S ASD MA RKE T WEEK?ASD Market Week is the most comprehensive B2B wholesale trade show of its kind. The show brings the world’s widest variety of merchandise together in one efficient consumer goods trade show that’s as easy to shop as it is to love. The ASD Market Week showfloor is packed with quality product choices at every price point in the gift + home, fashion + accessories, smoke + vape, toy + novelty, convenience stores and sourcing categories. What’s more, we even have a cash + carry section where buyers can purchase jewelry + accessories on-site and have goods in their store that week! Attendees come here to discover new suppliers, new product categories, and new ways to build profitable businesses.

WHY ATTE ND ASD MA RKE T WEEK & SOURC E D IREC T SHOWASD Market Week and SourceDirect Show is an award winning retail event that features over 2,600 wholesale, import and manufacturing companies who bring tens of thousands of products. ASD Market Week and SourceDirect Show offer unparalleled service for buyers, from matchmaking services to educational business seminars to networking events, ASD Market Week and SourceDirect Show’s main goal is to make retailers and business owners successful in all aspects of their business. There’s no other event where business professionals can learn and earn in the way that ASD and SourceDirect Show provide!

REASON S TO EXHIBI TEvery March and August, over 45,000 people attend ASD Market Week and SourceDirect Show. Of those, 98% of attendees have major purchasing power. The average buyer spends $82,500 per show, equating to $2.8 billion annually across hundreds of product categories. 88% of our buyers are domestic and 12% are international. The countries with biggest international presence are Mexico and Canada. If you’re a company that manufactures retail goods, then ASD Market Week and SourceDirect Show is a show that you simply must attend.

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The Ultimate Guide To Private Label

Retail

Transcript of The Ultimate Guide To Private Label