Choosing a Business Model in eCommerce: Why Private Labeling is the Best Choice
There are different business models, like private labeling, for an ecommerce store and each model requires different execution. All these models are in the hope of making money with an online store.
- Drop-shipping: Happens when a business takes orders online without keeping inventory. They sell either on an online site listing or they own an online store.
- Retail arbitrage: Happens when one buys clearance products from stores and sells them at a higher price.
- Listing own products on major ecommerce sites or selling on a personal website.
- Private labelling: Placing own brand and label on a product that is provided by a manufacture.
These models can be combined or operated differently. When choosing a business model for e-commerce one has analyze the barriers toentry, competition, inventory management, profit velocity, sustainability andof course the investment needed to start.QuickBox Fulfillment has proven time after time private labeling is the best way to go when wanting to offer a guaranteed product proven to generate sales.
Private Labeling eCommerce Model 101:
Private labeling has seen the most growth over the recent years, both with adoption and profit margins generated. It is slowly becoming a global phenomenon. Adoption to this model is different across international markets and product categories due to diverging needs in different economies.One thus has to follow some steps to ensure they are ready to start a private label business and if it is the preferred method for the target customer and the product.
What Is Private Labeling?
This is whereby a product is manufacture by a contractor or third party manufacturer and sold under a retailers brand name. The retailer is responsible for defining the preferred way to package the product and design the label. They then have the manufacturer deliver the product to them or directly to their customers if their private labeler is also a fulfillment company, like QuickBox Fulfillment.Anexample case is with cosmetic brands who often create their own branded skincare products for their customers. The products are then packaged and labeled to fit that store’sbrand theme, but normally sourced from a third party manufacturer.
Basically, a product is manufactured by one company but packaged and sold (distributed) under another company’s brand name.
Almost all consumer goods categories are a part of a private labelling businessmodel. These categories entail:
- Natural supplements
- Skin care products
- Frozen food
- Soft drinks
- Household goods
Key Steps to Follow When Creating a Private Label eCommerce Business:
- Research the product you want to sell
- The real challenge here is finding a product that will make a profit. Currently there is a wide range of products beingsold online and hence competition. Find the gap in the marketwith this research and fill it. Check on consumer demand, thecompetition and also the cost of investment in that product.
- Research can be done online on online retail outlets. This can include Amazon, EBay and you can use their sales data to predict the best product to venture into.
- Find a supplier or manufacturer for the product and a place that designs and prints labels. QuickBox Fulfillment provides a wide varity of beauty products and natural supplements. We also provide private labeling design and application.
- Having chosen a product and identified a manufacturer, request a sample product to be sent to you for testing. This should come with a quote on the charges for the supply and any other charges that can be incurred and requirement needs you need to meet to resell the product.
- Design your brand, logo and packaging for the product. This is the key thing that will drive sales and differentiate you fromthe competition and hence need to be thorough. Choose packaging and labelling that will appeal to your target market forthe product at hand. Let your brand tell your story.
- Decide how you want to get the products to the customers and fulfill their orders.
- Plan out how you will store the products and get them to the customers when they arrive. This can range from having a warehouse or drop shipping products to customers directly from the supplier.QuickBox Fulfillment also allows you to store your product in its warehouse and has a full shipping processing center to handle all of your order fulfillment.
- Having checked the order details regarding the shipping cost,import requirements and delivery date, make your order for the preferred quantity. It is advisable to start off with a low order that you can keep increasing as you learn of the market needs over time.
- By this time, you should already be set up with a selling plan. Whether it’s listing on major ecommerce sites or even starting your own site.You can even opt for social channels like Facebook for the first sale or create a site on Spotify.
Advantages of private labelling brands:
- Control over the products needed: As you get to define how you want to present your brand. You can specify this to your supplier.
- Control over product pricing: After getting the product from the reseller,you can now set a price for the products as you now own the brand.
- Adaptability as the product grows: Growing a brand is a form of iteration and you can add twists to your packaging and branding as the sales grows to adapt to market needs.
- You create your own brand and shape the customer loyalty with it. You own thebrand and so are at liberty to control it.
- Minimal capital investment as compared to starting your own line of business from scratch.
- Staying within a niche zone: Following low entry barriers and quick time to test out with few customers, retailer is able to respond well to market trends and demands.
- Help build and raise brand awareness for the retailer as branding is a key element of private labelling. This eventually leads to customer loyalty.
If you would like to learn more about how you can get started in the private label health and beauty business feel free to contact QuickBox Fulfillment here.