5 Reasons to Embrace Private Label…and 5 Key Steps to Get Started
2. Find the best partner for you: “A store brand is a manifestation of your brand identity, so it’s critical that the product is of the highest possible integrity,” says Rishi Sehgal, managing director, Private Label Division, Mile High Labs, Boulder, CO. “Consumer trust is one of the biggest factors in buying decisions. Your customers already trust you and when they see your products in-store, that trust carries through to the products.”
You ensure quality by asking questions, adds Honiotes. “Does the manufacturer have long standing relationships with their ingredient suppliers? Do they do testing in house, and if so how extensive is their set up and what kinds of tests do they conduct? If they use a third party lab, ask which ones. Ask at what stages they test and if that includes testing the finished products. What third party inspections and certifications do they have? Think about it as if you are vetting products to give your children.”
Provenzano also advises questioning: “Is their product made in a cGMP facility? Is it regularly audited? Are the raw material vendors qualified?” To help ensure success, he stresses, “Look into the partners credentials’ and qualifications, reviews, BBB listings and the like. Do not take chances.”
As Lucich notes, “It is the law that all manufacturers follow GMP guidelines, so your provider should be in compliance, and in good standing with the FDA. The supplement industry has become like a gold rush in recent years, and there are a lot of new prospectors and claim jumpers out there looking to make a quick buck. Ask how long they have been in business. You should try to look for a supplier that has a long history of serving the health food industry, as this is typically a good sign of legitimacy, quality and service. A few, Licata Enterprises included, have been long-standing, trusted providers for several decades.”
Another key line of questioning: “Ask questions early about minimum order quantities, cost of each item, will they warehouse for you and only ship when needed? Will they offer terms? Be willing to look at other vendors doing similar products if the core Vendor is too expensive or has too many demands,” Brown advises, stressing the importance of being aware of the true cost of the project. “Vendors will ask for minimum runs, guarantees on packaging if it is things they don’t normally carry, guarantees on labels, etc. They may not be in up-front cost but still a part of the total cost of a private label SKU.” And be willing to rethink a product for private label if it becomes too cumbersome and costly to carry, he adds. “Not all products fit well in a private label format.”
Beyond that, Flores suggests asking: “What makes you unique? How can you help me differentiate? What are you doing that will bring value to my brand and to my customers? What type of support will you offer?”
Also pay attention to what they ask, adds Lucich. “A good representative for a company will ask you questions to assess what your needs are, so they can properly address them. If serving your company’s needs isn’t their number one priority, you may want to keep looking. And they shouldn’t always agree with you. It’s far better if they express disagreement on an issue, if their insight might keep you from a bad business decision.”
Bottom line: “Do your homework,” Flores urges. “Make sure your Private Brand partner has the resources available to support you and your brand’s success.”
3. Make your brand shine. “If you are going to build a successful Private Brand you must be committed,” says Flores, adding that retailers with successful programs feature the store brand, give it premium placement, promote it with consistency, and make it clear across the organization the importance of building the store brand.
Indeed, Provenzano, contends, “There are no winners or losers, just bad marketing attempts. A product could always be made better or with better ingredients. But you can have the best idea and fail to draw the attention needed to sell it.”
Starting with the label, Honiotes says, “There are two different but equally important components to label design: The label art should reflect the store well and the information on the label must meet legal and regulatory requirements. We provide options that make it simple: Stores can select from a variety of eye-catching stock designs, they can provide their own artwork, or the label can feature their store’s image. All of those options lead to labels that look professional and meet label requirements.”
In terms of style, Lucich suggests, “Keep it simple. Focus on your brand message in the logo, and perhaps a slogan. But for the most part, customers are looking to be able to easily identify the products without confusion. We have seen customers spend a lot of time, effort and money trying to create elaborate labeling, and customers who just go with extreme simplicity. In the case of private label, it seems that simplicity has a slight edge.”
4. Price it right. Brown notes that a pricing strategy depends on the store and the category. “If it is a commodity based item, go low. If it is a premium or unique product, then don’t be afraid to be higher. However most consumers consider the private label to be cheaper than the [national] brand.”
That said, Honiotes notes, “Your store brand shouldn’t be the least expensive on your shelves, because what does that say about your store? Don’t price your private label product too low unless it is on sale. Find a quality manufacturer with a program that seems supportive of your efforts to launch your own brand, work with them to design the line that is best for your store, and give yourself a slightly lower margin than you would with premium brands.”
Above all, says Provenzano, “Always price fairly. Understand and emphasize what makes your product different and always include the unique, added benefits of your product in all of your marketing materials and when mentioning the price.” And remember, he adds, that there are many things that can be done to increase brand awareness and exclusive benefits of the store brand such as BOGOs, or Loyalty Reward programs.
5. Optimize sales. “When you launch your line, make sure it’s visible,” says Honiotes. “Merchandise it on an end cap, highlight it in your newsletter, and announce it on social media. Start with an introductory discounted price to incentivize trial. And make sure you have enough inventory on hand.”
Education is key, Provenzano says. “If you don’t have a person in store to educate a consumer when they are inside the store and your product is sitting on a retail shelf, your only option is an eye-popping product. The best advice is to make a quality product with an appealing label and train your store personnel well!”
Lucich sums it up: “In directing the customer to the store-branded item, it helps reinforce that store’s quality message, the store brand, customer confidence and loyalty. It helps battle the competition from the big chains, Amazon, and the general market. It helps keep volume at a level so as to gain a margin advantage through higher-volume discounts. In essence, the store brand helps build the store and make it stronger.”
Legal Issues to Consider—and Pitfalls to Avoid
“One of the nice things about using a qualified provider for your private label needs, is that your provider has you covered on product liability,” says Lucich. “A good provider will carry its own product liability insurance that covers all the products they sell you.”
Be clear, though, on what is covered. “Is the manufacturer able to provide a Certificate of Insurance on what is in the bottle and stand behind the products they make for you?” asks Honiotes. “Are they able to assist you with any current FDA/FTC label changes so your label is compliant and meets claims?” But remember, she stresses, “your company’s name is on the label, so ultimately you are responsible for label accuracy and product safety.”
Provenzano adds, “With our manufacturing services, we support all products made in-house with additional insurance riders, but that is only for a manufacturing defect, or material workmanship. We strongly advise brands to have their own product liability insurance as well as for anything that might come up because of their marketing.”
Brown advises: “Be sure the Vendor will stand behind the product as much as their potentially Branded product. If not the same Vendor, do research on what kind of legal or recall issues the Vendor has had. Are they known for shortcuts or not putting ingredients in products that are on the label? A lot can go into choosing a Vendor. Someone you know and trust goes a long way. A private label product has the store’s name on it. Treat it like you made it.”
Other pitfalls to watch out for:
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Ordering too much of a product to start. Lucich explains, “You will want to make sure you can sell-through the product before it gets near its expiration date.”
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Ordering too little. “It will be hard to build sales of a product if you do not have supply on hand when the customer comes back to make a subsequent purchase,” Lucich says. “It’s the same as with your other, non store-branded products, but since it has your name on it and they can’t go pick it up somewhere else, it becomes an inconvenience and an opportunity for them to switch brands, which takes your store out of the loop.” And know the manufacturer’s lead time, Honiotes says, so you don’t run into a problem with supply.
“It’s going to be your company’s name on the products, so make sure the manufacturers you deal with have your best interest in mind,” says Lucich. “After all, this is a partnership. As your line grows with a manufacturer, they become increasingly important to your company, and you become more important to theirs. Being important to your partner benefits you in return, and vice-versa.” WF
Article source: https://wholefoodsmagazine.com/front-page/5-reasons-to-embrace-private-label-and-5-key-steps-to-get-started/