The Dawn of Private Label Manufacturing Post-COVID
The Covid-19 pandemic has underscored the vulnerability of global supply chains, prompting retailers and businesses to migrate from offline to online. It’s no surprise that consumers have been introduced to an array of new products and services, particularly those accessible online.
The major beneficiaries of this shift are direct-to-consumer (D2C) and private label brands — independent businesses specializing in specific product categories, selling under their brand name and showcasing unique attributes like “organic” or “handmade.”
So What Is Private Label Manufacturing?
So, what exactly does private label manufacturing imply? Essentially, private label is a versatile term. At its core, it signifies that instead of producing products in-house, you collaborate with an experienced manufacturer in your preferred domain and delegate the production tasks, often including responsibilities such as bottling, filling, and packaging.
Numerous producers specializing in this kind of manufacturing are available. They can provide ready-made products, which they craft based on their expertise (with your specified tweaks), or they can create a brand new product following your detailed specifications, like a unique recipe, design, or formula.
The Emergence of D2C & Private Label as a Gigantic Trend
The era when customers would only buy from massive brands is fading away. The internet has acted as a catalyst, triggering the birth of youthful, independent brands centered around the idea of private label. This concept includes customers purchasing goods specifically manufactured and branded by a particular business, instead of a colossal corporation.
Businesses typically entrust the production of their products to a specialized manufacturer. Paired with the “direct-to-consumer” distribution strategy, it’s a potent setup to manufacture and sell goods independently. One of the advantages of D2C is that it often sidesteps other retailers and resellers, simplifying the process for brands aiming to get their products onto shelves without wrestling with the usual negotiation process.
In 2020, private label products accounted for 30% of all consumer good sales in Europe. In Germany, 40% of consumers voiced their openness to private label products. Given these figures, there’s a substantial opportunity for both new and existing businesses to launch their own products via private label manufacturing, complemented by a direct-to-consumer distribution strategy.
Leveraging Private Label to Kick-start and Expand Your Business
According to a variety of both online and offline retailers, aspiring businesses, but also creators like influencers, private labeling is an essential part of their current commercial success and many believe that this will define their success even more in the future.
This trend has been steadily increasing with more entrepreneurs recognising how much it can help them build their own brand identity and keep up with very individual customer demand instead of relying on big suppliers. Since more and more big brands like Adidas are trying to cut out middlemen like small shoe retailers, a private label can also be a chance for small and medium-sized businesses to get more independence from their corporate suppliers, while connecting with their customers in a more authentic way.
Pinpointing the Ideal Candidates to Launch a Private Label Product Line
While numerous manufacturers offer low minimum order quantities (MOQs), making private label manufacturing a viable option for many businesses, particular groups stand to gain substantially from this strategy:
1. Existing Local Retailers
Launching your own product line under a private label can deliver you greater independence from suppliers and potentially amplify your profit margins. As a local retailer, you’re in a prime position—you engage with your customers daily, affording you deep insight into their evolving needs and preferences.
Our tip: Spot the products that perform exceptionally in your store and select those you’d feel proud to sell under your own brand. Begin with a small assortment, focusing on 1 or 2 products initially, and evaluate whether private label is a strategy that can drive success for your business.
Success story: Take the example of Andreas Allmoslechner, an optician from Austria. Recognizing his customers’ preference for ethically produced eyewear with a compelling backstory over mass-market brands, he launched his own eyewear brand, Kitzbühel Eyewear. Each frame is meticulously hand-crafted in Northern Italy, creating an offering that’s resonated with his clientele. Now, after nine successful years in the market, Kitzbühel Eyewear is a testament to the potential of private label.
2. Newly Founded E-commerce Businesses
For those captivated by the future of retail and keen to be part of the e-commerce revolution, opting to launch your own product via a private label strategy could be a perfect fit. This approach enables you to carve out your own brand identity with unique products from day one. Plus, private label manufacturing allows you to delegate manufacturing, freeing up your time to market your products, build your brand, and cater to your customers. Importantly, outsourcing production during the startup phase is significantly more cost-effective than investing in production equipment, making your production process a variable cost.
3. Influencers and Creators
As an influencer or creator, you possess a distinct advantage over many businesses and brands—your authentic followership. This engaged audience is willing to support products you endorse. Why merely promote someone else’s products and receive a fraction of the sales price when you can build your own brand and launch your own product line? The creator economy is set to be the next frontier in commerce—a wave you shouldn’t miss as a creator.
Deciding on the Ideal Product for Your Private Label Line
Navigating the realm of product ideas for your private label can seem daunting, given the plethora of options and manufacturers ready to bring your vision to life. Your choice will depend on your industry, interest, and expertise. However, we understand the challenges in making a start, so we’ve curated a few ideas to inspire you:
1. Embrace the Eco-friendly Trend
A significant shift in consumer behavior towards environmentally friendly and sustainable products offers a promising avenue for your private label line. Whether it’s eco-friendly cleaning products, sustainable fashion, or biodegradable utensils, there’s a wealth of options to explore. Check out our guide on how to make your business more eco-friendly.
2. Tap into the Wellness Market
As more individuals prioritize their health and wellbeing, products in this industry are gaining popularity. Consider creating your own range of organic foods, natural skincare, or fitness accessories to cater to this growing demand.
3. Delve into Customizable Goods
In a world increasingly craving personalization, offering customizable goods could be a lucrative move. From customizable jewelry to made-to-order furniture, giving your customers the freedom to co-create their desired product can set your brand apart. Check our jewellery trends to get some inspiration.
4. Experiment with Gourmet Food and Beverages
The food and beverage industry is perennially popular, and there’s always room for innovative, high-quality products. Whether it’s artisanal coffee, gourmet sauces, or craft beers, a private label food or beverage product line can cater to the discerning palate of today’s consumers.
5. Explore Niche Beauty and Skincare
With growing awareness about the impact of ingredients used in beauty products, there’s a ripe opportunity for niche, clean beauty and skincare brands. Think organic face masks, vegan lipsticks, or paraben-free lotions. Our guide on European private label skincare brands could be a helpful starting point.
The options for launching your own product are nearly limitless, with manufacturers and suppliers ready to collaborate and make your idea work. Start small, test the market, and grow from there. Remember, the key to a successful private label product line lies in offering something unique and valuable to your target audience. With Wonnda, we’ll help you connect with the right European manufacturers and empower you to launch your own product line, tailored to your brand’s vision and your customers’ needs.