What is a Private Label?
A private label is a company that manufactures and sells products to other brands or retailers. The products of a private label brand are often available to a single retailer exclusively. Retailers, on the other hand, sell these products under their brand name. Cosmetics and clothing are some of the private label products in the e-commerce business.
Significance of Private Label in an E-commerce Shipping and Delivery
Retailers working with a private label brand often enjoy benefits such as exclusivity. Furthermore, the hassle of creating and testing the product is transferred to the private label brand.
- Product creation: Private label brands take up the burden of acquiring the raw materials, manufacturing the product and testing it out if needed in some instances. Retailers must only ensure the presence of adequate stock at all times and focus on branding and marketing.
- Exclusivity: A product from a private-label firm always stays exclusive to a retailer. It decreases the chances of high competition selling the same product to the same audience.
Prerequisites of Private Label and How It Works
The requirements for working with a private label vary per their protocols. These unique requirements must be communicated and discussed with a private-label brand.
Once a retailer has formed a partnership with a private label firm, the work is usually accomplished in the following ways.
- Product procurement: The retailer procures a set quantity per their monthly order rate.
- Sales and delivery: The products are marketed in various channels, sold and delivered accordingly.
- Restocking: When the retailer’s inventory starts to dwindle, they place an order with their rather private label brand, requesting to replenish.
Use Case with Private Label
A cosmetic brand in Australia has an average order rate of 2,500 units per month. Furthermore, the brand also releases clinical results in different channels to support its marketing efforts. However, the products and the test results are procured from a private label firm in Singapore. The retailer orders around 3,000 units of stock per month based on their average monthly sales.