The covid-19 pandemic has shown the fragility of global supply chains. Furthermore, it forced retailers and business owners to shift their sales from offline to online. Therefore, it’s no coincidence, that consumers got in contact with a variety of new products and services, especially those products that were available online. A lot of the beneficiaries were direct-to-consumer and private label brands. Those kind of independent businesses are mostly specialised in a very specific product category and sell products under their own name, with their own story and “features” their customers value, just like “organic” or “hand made”.
So what is private label manufacturing?
Basically, private label is a very broad term. But in general, private label manufacturing means that instead of manufacturing products yourself, you partner up with an existing manufacturer, who has experience in building products in your desired domain and you outsource the production and in many times even the overhead tasks like bottling, filling and packaging. There are many producers out there who are specialized in this kind of manufacturing. Either they have ready-made products which they produce according to their experience (and some adjustments you specify). Or they produce a new product according to your fixed specifications just like an own recipe, design or formula.
Direct-to-consumer (D2C) & private label are a giga-trend
The times are gone, where customers only buy from the big brands. The internet was a catalyst for launching young, independent brands, that are built around the idea of private label. This includes the ability for customers to purchase goods that are specifically made and branded by a specific business, rather than a huge corporation. The business typically outsources the production of their products to a specialized manufacturer. In connection with the “direct-to-consumer” distribution strategy, this is a powerful setup to produce and sell goods independently. Because one of the benefits of Direct to Consumer (D2C) is that it (doesn’t have to but often) bypasses other retailers and resellers. This makes things easier for brands who are looking to get their products onto shelves, but don’t want to deal with all the negotiations required in conventional strategies.
In 2020, the share of private label within all consumer good sales in Europe was 30%. In Germany, even 40% of consumers stated, that they are open to private label products. Given that number, there is a big opportunity for new and existing businesses to launch own products via private label manufacturing and in connection with the direct-to-consumer distribution strategy.
Why private label can help you start and grow 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 to build their own brand identity as well as 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 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.
Who should launch their own private label product line?
There are a lot of manufacturers available who offer production with low minimum order quantities (MOQs). This is why private label manufacturing can become an attractive tool for any kind of business. But we see a special opportunity, if you are identifying yourself as a member of one of the following groups:
Existing local retailers
An own brand can give you more independence from your suppliers and can also lead to higher margins. Your big advantage is, that you know your customers who visit you every day, because you talk to them. It is easy for you to understand what current customer needs are. Launching or extending your business through a private label brand with an own product line can accelerate your customer relationships and by definition also provide products to your clients only you have.
Our tip: Identify what products work well in your shop and choose products, that you feel comfortable selling under your own name. Start small, focus on 1 or 2 products first and test out if private label is a strategy that can work for you.
Example: Andreas Allmoslechner is an optician in Austria. He realized, that his customers value fairly produced glasses with a story, rather than the typical big brands. He started his own eyewear brand, Kitzbühel Eyewear. All of the frames are hand-crafted in Northern Italy. Since 9 years, Kitzbühel Eyewear has been on the market and a success story.
Aspiring, newly founded (e-commerce) businesses
If you are excited about e-commerce and the future of retail and if you want to be part of the revolution of commerce, starting off with selling your own products through a private label strategy might just be the right thing for you. Firstly, because it allows you to build your own brand with your own products from day 0. Secondly, private label manufacturing gives you the ability to outsource manufacturing, so you can focus on market your products, build your brand and serve your customers. Also, when you are starting up, it is way cheaper to outsource production than to purchase the production machines yourself. So the production process accounts as 100% variable costs for you.
Influencers and creators
As a creator yourself, you have a huge advantage towards a lot of businesses and brands – your authentic followers that are willing to pay stuff, products you recommend. So why promoting someone else’s products and only get a fraction of the sales price if you can just build your own brand and sell your own products? The creator economy is expected to be the next big thing in commerce. And if you are a creator, this is something you should Definitely not miss out.
Which products shall I build?
There are probably a million product ideas and a good amount of producers that can make your idea work. Depending on your industry, interest and expertise it is completely up to you what to build. But we know it is not so easy to get started, therefore, we curated a few ideas for you.
Are you looking for a private label producer in Europe?
We are producerslist.com, the first and only European-based launchpad for private label brands, that connects aspiring entrepreneurs with best of class private label manufacturers. It has never been easier to start your own direct-to-consumer (D2C) brand through private label.
Just tell us about your product idea and we do the heavy lifting for free. You will be able to find the perfect producer for your product idea – without having to go through hours of research or spend days contacting different companies. All our producers are based in Europe so shipping is fast and cheap! And don’t worry about minimum order quantities – we have low MOQs that make it easy for anyone to get started with their D2C brand.