How to Private Label Products for Profit Successfully in 2023
Meaghan has provided content and guidance for indie retailers as the editor for a number of retail publications and a speaker at trade shows. She is Fit Small Business’s authority on retail and ecommerce.
Agatha Aviso is a writer of the Reviews Section at Fit Small Business, focusing on order fulfillment and eCommerce platforms. Agatha has a decade’s worth of experience writing online content for small businesses and marketing industries. She also served as a content strategist and digital marketing manager for many entrepreneurs.
This article is part of a larger series on Retail Management.
Private-label products are goods made by a third-party manufacturer and sold under a retailer’s brand name. Private labeling is a common practice by retailers, allowing them to create brands by outsourcing product sourcing and manufacturing. Also called “white-label brands,” private labels are applied to the packaging only when it is time to sell the product.
| PROS | CONS |
|---|---|
| Control over production, pricing, branding, and marketing | Manufacturer dependency |
| Higher profit margins (almost or the same as a wholesaler) | Competition over loyalty toward household brands |
| Adaptable to trends and consumer needs | Lingering poor consumer perception about quality |
In this article, we discuss how to start a private-label brand and how to stay competitive and relevant once inflation subsides and consumers have more control over their buying decisions.
Step 1: Figure Out What You’re Going to Sell
If you’re just getting started with private-label products, it’s a good idea to focus on a niche first. Finding a niche helps set your business apart from the competition by targeting a specific audience or filling a specific market need.
Did You Know?
Private label saw rapid growth in 2022, in large part because of consumer concerns over inflation. When inflation peaked last year, value-based retailers’ sales increased by 10%, with private-label sales now taking up nearly 18% of total consumer packaged goods (CPG) sales in the US.
So, how do you find a niche market?
- List your interests. Selling products you are interested in will help keep your business exciting.
- Determine the audience potential. Use tools like Google Ads and Google Trends to ensure plenty of other customers share your interests.
- Research potential profits. Make sure the concept is profitable by determining interest, estimating costs, and doing market research to see price points for similar products.
Many products are available from private-label suppliers: kitchen goods, electronics, specialty foods, cosmetics and skin care, tools, apparel, and fashion accessories, to name a few. The real challenge isn’t finding a product you can private label—it’s finding one that can make you money. Consumer demand, competition, and cost each play a role in a profitable private-label program.
Here are some online websites where you can research products to sell in your niche.
TIP:
The first step is the most important aspect of private labeling. You want to find a niche that is not saturated in the market and steer clear of products that don’t have demand. It may feel counterproductive to say this, but it is more important to be hyper-focused on a specific niche than to be more inclusive in your offering.
For example, you want to offer condiment bottles. To further focus, you might consider offering condiment squeeze bottles or going even further to condiment squeeze bottles for kids. You might get anxious about being hyper-focused on such a specific niche but with proper research using the tools mentioned earlier, you can validate the demand for that particular product and move on to the next step.
Step 2: Find Private-label Suppliers
There are many ways to find manufacturers that cater to private-label resellers. Where you start your search depends largely on what type of products you want to sell under your private label. You can import or manufacture large orders of private-label products, place orders at trade shows, or work with suppliers to dropship private-label products.
To minimize supply chain issues, when choosing a supplier, consider:
- Going local. The shorter and simpler the route, the less likely you will run into shipping delays and complications.
- Having backup. It’s a good idea to diversify your suppliers in case one has issues fulfilling your order.
Click through the headers below to learn more about where to find suppliers for your private-label brand.
There are many online directories for wholesalers that sell private-label products. Many of these marketplaces and directories validate the supplier before they’re allowed to list; some may even include reviews or buyer protections.
- SupplyMeDirect: Private labeling available for beauty and fabric products
- Apliiq: Dropshipping for private-label apparel, focusing on trendy products such as woven labels, pocket tees, liner hoodies, and patch beanies
- Modalyst: Dropshipping for private-label athleticwear; in partnership with Savoy Active
- Printful: Comprehensive private labeling, including brand logo, packaging, custom product development, and other elements of brand identity
- Dripshipper: Private-label coffee products
One of the top names in product sourcing, Alibaba is a great resource for new sellers. It lists millions of products from manufacturers worldwide, mostly in China, on both the Alibaba and AliExpress marketplaces. The sites make it easy to search for any product imaginable. Plus, you can sort the results in many ways, including by price, material, minimum order, and even the supplier’s ranking.
Alibaba is a typical wholesaling platform, meaning many sellers require buyers to purchase hundreds or even thousands of each product piece when ordering. While placing and paying for such a large order upfront can be nerve-wracking, especially if you’re a newer business, safeguards are in place, including Alibaba’s Gold Supplier seller rating. If you stick with reputable marketplaces and use high-ranked sellers, you should be safe from scammers. AliExpress, on the other hand, has no minimum order requirements but slightly higher prices.
Once you have a few candidates, contact each retail supplier to see if they offer private-label packaging. Many do, even if they don’t mention it in their listing. Don’t be afraid to negotiate a lower order minimum or price—many expect this and are willing to negotiate.
Google search helps find manufacturers worldwide or specifically in the US. This is an excellent way to find US-based private-label suppliers for products that must meet health or safety requirements, like specialty foods, seasonings, supplements, and vitamins.
Let’s say we want to sell bamboo T-shirts and prefer to find a US supplier. We’ll use Google to search for “bamboo T-shirt private-label supplier us.” This gives us a complete list of private-label suppliers to review and contact.
You can find private-label suppliers by doing a quick Google search.
Wholesale buyers markets, such as the Dallas Market Center, are one-stop shops for access to manufacturers in every industry, from home decor to fashion accessories to specialty foods. These markets hold private-label opportunities since all sorts of manufacturers attend, and many accommodate private-label needs. Other popular markets include AmericasMart Atlanta, LA Mart, and the Las Vegas Market.
There are also many temporary or pop-up wholesale trade show markets. These events are typically only open to business owners and allow retailers to shop for products from hundreds or thousands of vendors at once. Popular temporary trade shows include:
Each trade show operates a little differently, but most of them are order-writing shows open only to business owners. At order-writing shows, retailers place orders with vendors on the show floor. Payment is collected at the booth or through an invoice after the show. Many shows also have a cash-and-carry section, where you can purchase smaller amounts of products to take home that day.
See more of the best retail trade shows for product sourcing.
Your favorite stores can be a goldmine of manufacturer names for products you want to sell under your private label. Most product labels feature manufacturer names and locations, and some even include manufacturer websites. You can use this information in a Google search like “product name private label city state.”
You can also download apps on your smartphone to scan barcodes to pull up the manufacturer’s details. Armed with a smartphone camera, you can gather manufacturer contact information during visits to the mall, specialty boutiques, and big-box stores.
Step 3: Request Quotes & Sample Products
After choosing the products you want to sell and confirming the suppliers will private label for you, it’s time to request quotes and samples. Quotes should include these four things:
- Product prices for the quantity ordered
- Any private labeling or packaging fees
- Shipping fees to your fulfillment location
- Any import requirements and duties you’ll need to meet or pay
Some suppliers send free samples if you’re an established company with a website to show them. However, others charge for sample requests from new buyers. In the latter case, it’s very rare to purchase samples below wholesale cost, as samples typically cost more than the wholesale price. However, even if you have to pay for samples, it’s usually well spent as it gives you a chance to review your product thoroughly to ensure it’s what you want to represent your brand.
How long it takes to receive your private-label product samples depends on many factors, both in and out of your control. For complex products with custom product development, expect a longer timeline. For simpler product needs, you could have samples within a week. However, it’s important to note that COVID-19 still impacts many supply chains across all industries—and this includes shipping.
Remember: Your customers see your brand, not the manufacturer’s name. Products must be worthy of your name because you’re the one who has to stand behind them.
Step 4: Design Your Logo & Packaging
Designing your product packaging is crucial to the success of your private-label brand. From the look of your logo to package styling, your creativity can deliver an image to buyers and drive sales. First, you’ll need to create a brand identity, which will include a logo. When that is done, you’ll be able to create custom product packaging.
Step 5: Decide How to Fulfill Orders
Before placing your product order, you need to decide how you’ll store products and get them into your customer’s hands. You need to know this upfront so that you can give your supplier the correct delivery address when you place your order.
If you plan to sell your private-label products in your retail store, this is an easy step. However, if you plan to sell online and ship products to buyers, you need to decide how you’ll fulfill orders, meaning how you’ll store products and pack and ship orders.
You have four primary choices for order fulfillment:
Step 6: Order Private-label Products
After researching products, it’s finally time to order. As a new buyer, you’ll likely have to prepay for your order, including shipping. You’ll also need to understand order minimum requirements—unlike samples, you’ll need to place a bulk order. Order minimums vary widely and may be based on a dollar amount or a number of units.
Review your quote or purchase agreement thoroughly and double-check the following for accuracy:
- Product pricing and shipping charges match your quote.
- Delivery date, or date range if importing, is clearly stated.
- Import requirements or duties are included, if applicable.
- No surprise add-on fees appear that weren’t on your original quote.
Remember, suppliers need to account for both production and shipping time, so check for details about when the order will ship and how long shipping is expected to take. These time frames vary, but many suppliers take five to 14 days for production. Shipping is based on location, shipping method, and any uncontrollable external factors like holidays, COVID-19, or weather delays.
Once you’re happy with the purchase agreement, you can place your order and pay. Wire transfers, credit cards, and even PayPal are common payments accepted by suppliers.
While you wait for your order to arrive, the next step is getting your website and other selling platforms like Amazon up and running.
Step 7: Build a Website & Market Your Products
There are several ways to market your products. Some sellers stick to their own platform and social channels for all of their sales, whereas others focus solely on Amazon or sell through both their website and Amazon.
To build a brand, you must have your own website, even if you plan to sell on Amazon. These big marketplaces bring in sales, but creating a unique identity is hard if that’s your only platform. Plus, you’re at their mercy if you only sell on Amazon or eBay. Any day can bring a change in seller fees, requirements you have to meet, and so on.
A website is essential for any business, even if you sell in-store. Having a website makes it easier for new customers to find your business and will help bring in more sales. There are many affordable tools for small business owners to create ecommerce sites.
Popular Ecommerce Website Builders
Best for: | Monthly Fees from: | Setup Guide: | |
|---|---|---|---|
 | Most private-label sellers | $39 | |
 | Growing ecommerce businesses | $29.95 | |
 | Individuals on a budget looking for a low-cost solution | $0 | |
 | Those growing a custom online store with content marketing | $0 | |
See our guide to the best ecommerce website builders for more details.
You don’t need to have your own brick-and-mortar store to sell your private-label products that way. In fact, you can offer your private-label products on a wholesale basis to retail stores that serve your target market. Create a separate wholesale pricing strategy and build a dedicated—but password-protected—section on your site for these buyers. You may also consider visiting local shops to make in-person connections and promote your products to wholesale buyers.
Many third-party marketplaces allow for private-label product sales. This is a great avenue for new brands in particular, because it puts you in front of a ready-to-buy audience who already trusts the platform. Some marketplaces to consider selling your private-label products include Amazon, Etsy, and Walmart Marketplace.
Read more marketing tips in our guides:
Frequently Asked Questions (FAQs) About Private-label Products
Figuring out how to private-label products can be a tricky process for new and even seasoned product sellers.
To private label something means to take a product that another company manufactures and add your company’s logo or branding to the product for sale. Essentially, you are creating your own product line or label and outsourcing the manufacturing.
Grocery stores typically have store brands that are private label. For example, Trader Joe’s often sells Italian food products under the brand Trader Giotto’s. Target has many private-label brands, including Archer Farms, which the company uses to sell grocery items. Amazon has Amazon Essentials, and Costco has Kirkland.
Expect to spend at least $1,000–$1,500 to start a private-label brand. A huge chunk of the cost will be ordering samples and setting up business logistics—online store, payment processing, and order fulfillment. You will spend more if you plan to set up a brick-and-mortar store because overhead expenses will be higher.
Yes, you can. You can private label nearly anything from food to cosmetics; there are no restrictions when it comes to private labeling products.
Private-label products are typically ordered from a manufacturer or wholesaler that creates the product and brands it for the retailer to resell under its own brand.
The two are often used interchangeably, even within the retail industry. Private-label products are goods that are made exclusively for that retailer. White-label products are standard goods that have custom labeling.
Bottom Line
With private labels seeing increased growth and popularity, there is the threat of market oversaturation, especially with the emergence of near-identical products from Chinese factories. However, small businesses can still stand out from the competition by selling private-label brands that are produced locally and are of high quality. Consumer preferences have changed; they prioritize value and support local businesses more. The challenge for retailers is to find the sweet spot between value, loyalty, and profit.
Building a cohesive brand with strong marketing tactics also helps private-label brands stand out from the competition. Private-label products are still effective for small businesses to provide unique goods at a competitive price point. Anyone can sell private-label products by doing initial product research, requesting quotes and samples, placing orders, and creating sales channels.
