Answer
Dec 20, 2020 - 04:44 PM
Michael Dubin in the viral video that launched Dollar Shave Club, a successful private label brand.
Building a private label e-commerce brand should be your aim if you're trying to make it big nowadays so this is a great question. Because customers are loyal to brands and not products, building a unique brand is the most important thing you can do. Below are a few steps you need to take in order to build a successful private label.
1- Know Your Startup Costs
Because private labeling is going to be a bit costlier than drop shipping, you need to factor this in your plans.
The costs can be broken down into:
- Manufacturing costs including materials, labor, shipping, customizing, and packaging.
- Branding costs to make sure you have an attractive brand and logo for your products.
- Marketing costs so that people know about your private label and patronise it.
- Miscellaneous expenses because it pays to be prepared for any eventuality and a cost may accrue at the time you are setting up that did not exist a year or so ago.
2- Decide on Your Product
The product you choose will either make or break your brand because it will serve as the foundation. You need to find high ranking and high margin units to serve as your brand. Small and light products that don't have a short shelf life will work best so that you bring your overhead costs down.
If the product you first choose does not end up serving your purpose well, you can always switch and get something different and consider the costs associated with this as research fees. It is also a good idea to sell complementary products for your main item so as to have some variety. A long as you don't deviate too far from the main item, you are good to go.
3- Define Your Target Market
Think about who is most likely to purchase your product and align themselves with your brand. Your targeted customer will influence how you market because different methods will reach different demographics.
4- Differentiate Yourself from Your Competition
Any given product will already have some players in it. Look at them and try to find out where they come up short so you can fill the gap.
Your differentiating aspect is the cornerstone of your brand and it can be anything from price to tone to color scheme. Just make sure you give it some thought so it works to your advantage. Make sure that there is a group of people who will welcome your differentiated product and work with it.
5- Create an Experience
This is what will tie everything you have built together. It is how you communicate with your customers and what they experience when they interact with your brand as opposed to competing brands.
At this point, you need to give customers a unique experience with your brand. Create a color code for responding to people's comments on social media for instance, or come up with a quirky slogan that can fit at the end of your emails. This will make sure that people visiting your brand will be back if they identify with your experience.
6- Find a Good Supplier
The best supplier for you will be one that always delivers on time, is consistent in their production, and has experience in private labeling.
What you are doing is essentially taking a generic product and putting your brand on it to turn a profit. This means that it really matters how you package and if your supplier can help you with this - at a fee - then you will be better off than doing everything on your own.
You will have consistency which will make sure that customers are comfortable with your brand. They will know exactly what they are getting each time and you will likely win more people over.
7- Build your brand
Do this exactly as you would do for a traditional business. Social media marketing, website, copyrighted logo and name, etc. It is at this point that you can begin to truly differentiate your brand from the others in the same niche.
It's advisable to hire a graphic designer for your logo and aesthetics in order to get a professional look. Your brand name needs to be both unique and available for the sake of social media pages and a domain. If you are able to stand apart while making a splash, this is bound to give you great results.
Some Successful Private Label Brands
The most successful private label brands in recent times include Dollar Shave Club and Harry’s (also in the razor blade category). They did not make their own product. They simply sourced it, wrapped their brand around it, and marketed the hell about it! Both attained valuations of $1 Billion+.
Most health supplement brands are private label brands and this is one of the easier categories to succeed in if you have good branding, because the margins are high, unless you are selling protein supplements!
It is very hard to compete with Optimum Nutrition and MusclePharm's offerings. They offer super high quality products at a really low price and to do that they source the product at a gargantuan scale (so their cost per unit is low) that you cannot match on day one of your business.
These pointers should give you some insight in the preparations you need to make in order to build a successful private label. Now that you have a good idea, the best time to start is now so go on and leave your mark in the world of private labeling!
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