The packaging industry is a diverse industry. One of common services provided by packaging professionals is private label packaging. In its simplest terms, private label products are those that are manufactured by one company and sold under another company’s brand. A popular retail practice, private label packaging is not always obvious to consumers. Indeed, many times you purchase a company’s own brand, you are purchasing a product that is manufactured by another company.
Some of North America’s largest retailers, including Costco and Amazon, have a long list of private label products. Experts in the labelling business estimate nearly a quarter of all sales in North America are represented by private label packaging. Growth in private labelling exceeds growth in brands where companies manufacture and label their own products.
Private labeling is often seen as a win-win situation. For the company manufacturing the product, they have considerably more sales avenues than they would without private labelling. On the other hand, companies that are purchasing the product and then engaging in private label packaging are also increasing their margins. In many cases, private label packaging allows an organization to carry and sell a product that they normally would not be able to manufacture. Additionally, private label packaging provides these companies an opportunity to expand their brand and reinforce customer relations.
Another application of private label packaging is for products that include a single component or ingredient that is provided by an external organization. These ingredients are not usually identified as coming from an outside source and offer some added benefit to a product.
The process behind private label packaging is fairly straightforward. A contract or agreement is made between manufacturers and the brand to sell the product under a private label. Included in these agreements is a deal that allows the products to be sold independently and without specific attribution to the manufacturer. While the manufacturer does not get recognized for the product, they will benefit from added sales. This can lower their overall costs and provide income for their own brand and product development, distribution, and marketing.
When it comes to choosing a manufacturer for a privately labeled package, research and planning are critical. Know your market, your target audience, and your competitors so that you can choose a manufacturer that will boost your return on investment. Compare different manufacturers and test their products for yourself. Also, take the time to negotiate with your shortlisted manufacturers. Not only do you want to get a great product for your money, you also want to ensure you can establish and maintain a sound business relationship with your manufacturer.
Remember, private label packaging represents products that are created by one company and sold under the brand of another. It is a process that allows both organizations to improve sales and deliver quality products to the marketplace.