How to Start a Private-Label Business

You may be thinking about starting your own business but are deterred by the thought of all the stresses and pressures that come with it. Yes, starting and running a business is no easy feat, but seeing what you've built is rewarding.

While not entirely new, the business model known as private-labeling is a great option for many looking to get their business off the ground running. It's also a great option for those who already have an established brand but want to expand their product catalog.

Selling private-label products (and private-label brands in general) is easily becoming one of the most profitable ecommerce business models.

About 36% of Bazaar Voice survey respondents said they planned to purchase more private-label products in the next year compared to previous years, while over half have switched to private-label products from their preferred name brands. With these stats, it's easy to see why more and more people are jumping on the private-label business bandwagon.

In this article, we'll provide a comprehensive guide on how to start your very own private-label business. Once we've established the basics to get things moving, we'll do a deep dive into some of the best products you can sell under your private-label brand.

Here's what we'll cover:

• What are private-label products?
• How to start a private-label business online?
• What are the top private-label products to sell online?

If you're keen to get all of our best tips and tricks on starting a private-label business, grab your coffee, a pen, and paper. Let's start!

Private-label products: what are they, and why should you be selling them online?

Private-label products are uniquely tailored goods that a retailer gets produced by a third-party manufacturer and then sells the goods under their (retailer's) own brand name. It allows the retailer to outsource the production while remaining heavily involved in the product specifications, design, and materials used.

The rise in popularity of private-label products boils down to the multiple benefits of using a private-label manufacturer.

In 2023, there was a 4.7% increase in private-label sales across the United States, reaching a total of $236 billion dollars. Some of the biggest private-label businesses include Amazon Basics and the Specially Selected range from ALDI.

Using the private-label business model is like having the best of both worlds. You simplify the product manufacturing process, which can often be time-consuming and overwhelming, while still having the freedom to make custom modifications to your products.

By streamlining the manufacturing process, you can get your products to market faster and with ease. Brands choose to sell private-label products because they can bring in sales without most of the manufacturing expenses (if you're using the on-demand fulfillment method).

In short, using private-label products means business operations are more cost-effective, yet you still have complete control over your products. Less stress, but higher rewards. Sounds amazing, right?

Let's talk about how you can get started!

How to start a private-label business online

So, you've decided starting a private-label business sounds right up your street. Now, it's time to get to planning. Here are the key steps to consider before starting your private-label business.

1. Create a business plan

Define your business goals and aims, and identify who your target audience is. Don't forget about proper financial planning. Create a budget and forecast business expenses.

2. Do market research

Conduct thorough market research by analyzing current market trends, identifying customer and target market needs, and studying your competition. You can use the information you gather in this step to influence what your niche will be and where you want to place yourself in the market.

3. Consider your product offers

Having conducted market research, you should have a better idea of what type of products you see your business focusing on. Ideally, you'll find products that are in high demand but have low competition and great profit potential.

4. Find a manufacturer

There are a bunch of different private-label suppliers to choose from, so it's important that you don't take the decision lightly. Finding a manufacturer who aligns with your brand ethos is important, and having a healthy relationship with your manufacturer will be paramount when getting your business up and running.

Some of the most popular private-label brands include Alibaba, Modalyst, and Appliq. Sites like Thomasnet and MakersRow allow you to search and connect with private-label brands all over the US.

5. Set up your store and add products

Start by choosing an ecommerce platform like Shopify, then customize your store to match your brand’s identity with matching colors, fonts, and logo.

Add products by selecting items from your supplier, customizing your private labels to reflect your brand, and uploading high-quality images. Don't forget about writing product descriptions to help sway shoppers. Set competitive prices that factor in your profit.

6. Develop a marketing strategy

Private-label companies have to work harder to establish their name in the industry, that's just the way it goes. To do so, venture into the world of social media and see how to promote products on TikTok and Instagram to boost your brand awareness. Once you find your ideal target customers and the content they consume, see how to feature your products there.

Best types of private-label products to sell online

When it comes to selling your own private-label products, there are a ton of different product ideas you can consider for selling via your private-label line.

Some private-label products will perform better than others due to current trends in the industry, that's why regularly analyzing the market will be extremely beneficial to your business. We have created a comprehensive list of some of the best trending private-label products that you could list on your online store.

The list isn't exhaustive, but here are our top 10 product ideas.

Supplements

Supplement use has been on the rise over the last decade as people are becoming more conscious of their health habits. 74% of adults in the US are taking dietary supplements, with 54% regarded as regular users. That's a money-making private-label product idea right here!

As with everyday supplements such as Vitamin D or iron, there's always a growing demand for fitness supplements. These include protein powders, pre-workout blends, amino acids, collagen, etc.

With a rising amount of people being more aware of what they're putting into their bodies and looking to take better care of themselves, there are so many supplement niches you could take advantage of for your private-label brand.

Supplements have become an everyday habit for so many people, so why not make your private-label supplements their habit?

Coffee

Let's enter the beverage industry and take a look at their white-label manufacturers.

Selling private-label coffee isn't that impossible.

Most people couldn't go about their usual morning routine without their cuppa joe. The coffee industry is huge. In a report from Drive Research, 3 in 4 Americans (that's 76%) drink coffee every day, and 36% of people drink 3 to 5 cups of coffee a day.

With an abundance of coffee producers and roasters, creating a private-label coffee company could be a very wise business move.

Costco's coffee brand, Kirkland, is a one of many successful private-label brands. Their private-label branding might be done by them but the coffee is produced and roasted by none other than Starbucks! Who knew famous national brands also use custom manufacturing?

Tea, matcha, and cacao products are also good for your private-label product picks!

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Print-on-demand products

Customizable items are a great private-label product to sell under your business. People love to personalize. It's the perfect go-to option as a gift for loved ones or for special occasions.

The beauty of print-on-demand products is that they can work on such a huge variety of items. From clothing to cushions, to custom prints for the home, to tote bags.

You can ensure quality control checks are performed to ensure the products meet respectable standards. Profit margins are variable since the types of material you choose to use will vary in price.

Skincare

With a growing focus on self-care habits and 10-step skincare routines, the cosmetics industry is more lucrative than ever.

Starting a private-label skincare business to compete with already established store brand items involves a strategic approach to product selection, branding, and marketing. You'll need to conduct in-depth industry research to identify in-demand skincare ingredients like retinol and hyaluronic acid.

Some potential barriers to entry for cosmetic products include high competition from brands that are already well-established within the industry. To have a successful private-label cosmetic brand, you have to invest time and money into powerful marketing strategies to establish credibility.

Target niche markets with products featuring natural or vegan ingredients with luxurious packaging. High-quality cosmetics can often have better margins due to their perceived value and effectiveness. Develop targeted ranges for different skin concerns and broaden your product range to include items like sheet masks and makeup tools.

It's also crucial to request product samples to ensure the quality standards and health and safety regulations are adhered to.

The cosmetics world is an ever-evolving market and moves fast, so stay on top of the current trends to meet consumer preferences.

Water bottles

Water bottles could easily be some of the best sellers in private-label products. There's a growing surge in the search for sustainable products, and now with single-use plastics finally on the way out, items such as reusable water bottles are in.

People have become more environmentally conscious and appreciate the convenience of hydration on the go due to busy lifestyles or while traveling. Premium water bottles have rising popularity, great profit margins, and easy customization, meaning you’ll easily get off the ground with this trending product.

You'll need to consider things like the material you want to use and conduct rigorous testing to ensure durability. If you decide to use a material such as stainless steel, you'll also want to check for its ability to maintain temperatures.

These kinds of features will allow you to sell at a higher price point and experience increased consumer demand. That is, if your custom designs will win your customers hearts.

Bedding and linens

Another popular private-label product is bed linen.

People are always going to need to sleep, so there is always going to be a need for bed linen, right? See, it's not really rocket science to figure out the type of private-label items that will perform well for your retail business.

Providing good quality bed linen and luxurious bedding could be a profitable business. You can still provide great product quality, but since you're cutting down on the manufacturing costs, you can sell at more competitive price point.

Within this product category, you can still hone in on specific niches, such as hypoallergenic pillows, silk pillowcases or bedding, weighted blankets, and more.

Home decor

Home decor can be a great option when it comes to white label products. While competition can be high, there is the potential for very high profit margins.

There are a multitude of possibilities for home decor. You can supply everything from posters, prints, stickers, custom cushion covers, and even trinkets. If you have a more creative side this could be a great option for you.

Creating aesthetic products that are currently trending and focusing on unique, handmade items will enable you to sell at higher price points.

If you're a creator looking to monetize your audience with decorative items, giving your customers the option to personalize pieces such as adding names or photos can also be a great route to take.

Phone cases

Phone cases have become somewhat of a statement piece and are increasingly popular as a fashion accessory, with many choosing to match their phone cases to their outfits. This opens up a whole new world beyond the standard phone case. When creating white-label phone cases, you can choose from producing designer or niche cases.

It's worth noting this is already a heavily saturated market, with many competitors offering low-cost alternatives, so it can be a tricky one to navigate.

You could use the opportunity to offer phone cases with enhanced protection features such as shock absorbency, waterproof cases, or those with built-in holders like pop sockets. Investing in higher-quality materials will support higher pricing strategies.

Candles

Candles offer the potential for a good profit margin, particularly with luxury or niche scents and designs. Seasonal candles such as autumnal or Christmas-themed collections are extremely profitable. Competition within the market is rife, so having a unique brand identity and branded products are key to attracting a loyal customer base.

There is the possibility to focus on candles made from different wax variations, such as soy wax, which is a natural ingredient said to be much less harmful than traditional wax used in candles. Using safe ingredients such as essential oils will also help you stand out.

Making smarter choices with the ingredients you use means you can create a marketing strategy that targets those interested in wellness and sell candles at a premium price.

Pet accessories

Producing private-label products doesn't have to be only for us mere mortals, oh no, they can be extended to our beloved pets.

The pet industry has a multitude of opportunities, from stimulating chew toys to designer pet beds, and even pet apparel. Offering a comprehensive range of products for various pet types, breeds, and sizes can broaden your market reach.

With 66% of U.S. households (86.9 million homes) owning a pet, private-label pet products could definitely be a market worth diving into.

Key takeaways

Starting a private-label brand can be a rewarding and highly profitable venture. Private-labeling isn't something you can just dive into head first, it still requires careful planning and strategizing before entering the market.

Choosing the type of private-label product you want to focus on will take some research. It's important to analyze each product's pricing potential, popularity in the market, and ways you can make your products stand out.

A commitment to maintaining quality standards and customer satisfaction is crucial. Sourcing reputable private-label manufacturers will be the most important step in starting your business.

Continue to analyze the market trends to see what is making waves in the private-label sphere, and don't be afraid to change things up every now and again.

Reach out into the world of social media and use it to your advantage in your marketing strategy. Remember—most private-label businesses will have to work harder to show credibility compared to that of store brand names.

By following these steps and staying adaptable to change, you can build a successful and sustainable private-label brand!

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