Starting an Amazon FBA business is a great way of being a business owner without worrying about timely shipments, delivery issues, and other problems that may make you feel skeptical about taking this big step. Apart from the many benefits of running an Amazon FBA business, there can be many challenges, especially if you outsource your products from private label manufacturers.
Are you planning to run an Amazon FBA business and looking for the right private label manufacturers for your product or brand? Are you struggling with how to choose the right one for your company? If you answered yes, then I've got you covered. In this article, I have thoroughly explained everything you need to know for embarking on a journey to find the best private label manufacturer for your product.
What is private labeling?
Private labeling is the process by which suppliers or retailers get their products manufactured by a contract manufacturer under the label of their own company. It is an effective way for companies to manufacture their products at lower rates and earn high profits. It is estimated that private label companies earn 10% higher profits as compared to traditional companies.
Potential risks of private labeling
As a retailer, private labeling can be risky for you, depending on the products sold by your company. So, to ensure that your business does not suffer from the technique of private labeling, you should consider the hurdles in your way. Let me give you an example. There can be volatile deviations in the prices of raw materials for your business, the labor costs, and many other inputs that go into running your business. These issues can confuse you about hiring the right manufacturer and the product.
Benefits of private labeling
In contrast to the risks associated with private labeling, there are great benefits as well. Some of the benefits of private labeling are:
- Direct deals with your sources and suppliers
- The scope of building your brand's unique image
- Regulation of pricing, marketing, distribution, and sales
- Quick product deliveries for the retailers
Who Are The Private Label Manufacturers
Private Label Manufacturers are individuals or companies that compile and create saleable goods from raw materials with the help of technical machinery and human inputs. They usually produce goods at wholesale levels and sell them to retail companies at wholesale prices. In this case, retailers have very little or almost no direct dealings with the manufacturers. That is not a problem with the private labeling companies because they run their business based on a different model. Private labeling companies have the choice of regulating the external looks and branding of their goods.
Suppose you are thinking about setting your foot in the private labeling business or have already kick-started your journey. In that case, it is a wise decision first to consider the suitability of the manufacturer and then take the next steps.
How to find the best private label manufacturers?
While looking for private label manufacturers, it's obvious that not all manufacturers will be right for your business. Each of the manufacturers has its unique capability and features. So you have to look for the one who can produce your goods from the raw materials and then put a label of your company's personalized design on the finished products.
The choice of the manufacturer roots from the type of goods your business aims to sell. So you have to assess your products carefully and make the right choice of the manufacturer that gives you the best quality products at minimum costs. To find the right manufacturer for your business, consider the following points.
- The goods or raw materials required to produce finished goods
- The lowest direct prices of the factories offered
- The highest quality of product delivered
- Reliability and timely delivery
- Lowest scope of defects and damage of the goods
When looking for manufacturing companies to get finished products, you may choose domestic or overseas manufacturing. Domestic manufacturing refers to the manufacturing of goods by companies based in the United States. In contrast, overseas manufacturing refers to companies outside the United States, mainly India, Taiwan, and China. Both of them have their pros and cons attached to the concept of private label sourcing. In most cases, though, it's cheaper for the companies to outsource their products from overseas.
1. Domestic private label manufacturing
- Finest quality of manufacturing and standards of labor
- No worries about the language barriers
- Market appeal of products made in America is more
- Faster and hassle-free shipping
- Security of payments and resources
- Verification is easier in the case of reputed manufacturers
- Limited variety of products
- High manufacturing costs
2. Overseas private label manufacturing
- Lower costs of manufacturing
- Variety of manufacturers to choose from
- One-stop solutions like Alibaba have eased out the process of navigating among the suppliers
- Perceived quality of goods from customers is low
- The manufacturing and labor standards are quite low
- Very low protection of intellectual property
- Barriers to communication and language
- Verification of the supplier is difficult and needs to be done by going on-site
- The shipping period is longer
- Differences in the culture of business practices
- The hassle of product imports and custom clearances
- Low payment security and resource security
Ways To Source Best Private Label Manufacturers
Suppose you have decided on outsourcing your products from a private label manufacturer. In that case, your next question will be where and how to find a private label manufacturer for your product. There are many platforms and ways to find the right private labeler for your business. So, let me give you some of the easiest ways to find a private labeler for your business.
• Screen through the stores specializing in your product category
When your research about the products you will sell is complete, hit the retail stores and markets to find similar products. Pick the products up and note down the answers to a few questions like “Who is the manufacturing company?”, “In which country is this product manufactured?”, “Is this a luxury product or a bargain product?”. Once you find the answers, begin another research about the manufacturing company and see if it is right for your business as per your needs and demands.
• Go through the Alibaba website
Alibaba is an online marketplace that sells products worldwide. Therefore, you can use it to outsource the products you have decided to sell or find the manufacturers for your private label company. If you scroll down on the product page you would like to sell, you will see the product descriptions. If you spot terms like custom accepted, white labeling, or original equipment manufacturer, it indicates that you can contact them to get your products manufactured by them.
• Check out third-party sourcing
Some companies do this task for you if you don't want to go through the hassle of finding the manufacturers, contacting them, laying out your requirements, and verifying them. Companies like Trillion Source find the best quality overseas manufacturers for your brand. All you need to do is tell them the product you want to sell, and they will extend a helping hand in finding the right manufacturer for you.
The manufacturers will print your brand on the finished products and provide custom packaging for you. For an Amazon FBA seller like you, they will even do the task of delivering the products to Amazon. There will surely be some added expenditure, but it is a great way to find a suitable manufacturer for your private label brand.
• Check out the manufacturing directories and surf the internet
Today, every business owner has a vast online presence that exposes them to their potential buyers and creates a buzz among the customers about their business. So you can easily find a manufacturer for your private label company by simply entering some keywords like “white label manufacturers,” “private label sources,” “domestic private label manufacturers,” “overseas private label manufacturers,” and so on. This method can be a little time-consuming as you must contact the seller, dig deeper and find a suitable manufacturer. It is a good way to gain experience, negotiate the costs, and cut down on expenditure.
Browsing the web can also offer you a manufacturer directory. Online directories have high-quality manufacturers listed on their websites to help you find the perfect match for your private label business. ThomasNet, MakersRow are some online directories that have the details of domestic manufactures, whereas Alibaba, AliExpress, and IndiaMart provide the details of overseas manufacturers.
1. What is a private label manufacturer?
Private label manufacturers are the manufacturing companies that produce finished goods for sale under the name and packaging label of a different company.
2. What is an example of a private label brand?
Target is an example of a private label brand. They sell products of other companies like General Mills and Frito-Lay, but they also sell their chips.
3. Is private labeling profitable?
Yes, private labeling can be highly profitable if factors like product popularity, ease of development, and the scope of bulk manufacturing are analyzed.
4. Is private labeling legal?
Yes, private labeling is legal, provided both the parties, namely retailers and suppliers, agree on the terms and conditions of the activity.
5. Is Nike a private label brand?
Yes, Nike is a private label brand. They buy products from a manufacturer, change the product and sell it under their name and label.
6. Is private labeling dead?
No, private labeling is not dead, and it can never be if you are following the right path. It cannot be profitable if you are selling something which 20 other sellers sell. If you have a unique brand, quality, and demand for the product, private labeling can never be dead.
7. What is the difference between private labels and white labels?
There is one main point of difference between private labels and white labels. In private labels, the control of the products' specifications, designs, and ingredients is in the buyer's hands. On the other hand, in the case of white labels, deciding the product attributes like specifications, design, and ingredients is in the manufacturer's hands. The manufacturer can, however, offer a limited range of customizations.
8. How do I choose a brand name for a private label?
While choosing a brand name for a private label, consider different parameters like the impression of the product you want to leave in buyers' minds and the customers you would like to attract towards your brand. Don't add anything inappropriate which limits the use of your brand name.
Finding the best private label manufacturers for your brand can be challenging and tedious. By following the guidelines and tips given in this article, you can easily find the right private label manufacturer for your company that offers high-quality products at a lower cost. It is, however, recommended to do thorough research on the manufacturer before handing the contract to the manufacturer.
You can compare, contrast and evaluate past work, clients, prices, and products to other people. Consider your needs and if they're available. If you use the Amazon FBA service, you can look for an additional service of delivering the products to Amazon offered by the manufacturer.
Never go for the first manufacturer that you come across. Please do your research and weigh the pros and cons of each of them. In addition to this, carry out similar research before deciding on the product that you will sell. Study the competition for the product, the companies selling the same product, the demand for the product, the existing problems you can overcome, and create a better version for your customers.
If you want to get more updated information about Amazon FBA, you can read my other blog on How To Start Amazon FBA Private Label Business. If you are ready to start the Amazon FBA business, you can check the Amazon FBA course to learn deeper step-by-step A to Z starts from scratch. They will help you If you have questions or you need help during your learning. Most importantly, it will help you to build your Amazon FBA online business successfully.
“We are limited not by our ability but by our vision.”