A private label is a brand manufactured by another brand.
Private labelling is a way of selling products that are manufactured or formulated by a supplier which you will later label and market under your brand.
So this means that the products you sell are manufactured by a third party but sold under your brand name.
You will work with a private label manufacturer or a supplier and sell these products under your brand name, without ever mentioning the manufacturer.
You have total control over the products and you are free to make any changes you see fit.
This way, you oversee that your customers get quality, fairly priced products and that your marketing efforts are not flawed.
Ever heard of ”Great Value”, the world’s largest private label brand owned by Walmart?
Clothes are the most popular private label brand products available.
Other popular private label products include electronics and electronic accessories, cosmetics, furniture, home decor, travel accessories, photography equipment, small storage products and gardening tools and accessories.
How Much Money Can You Make From a Private Label Brand?
You can name hundreds of thousands of dollars a month, just by selling private label brands.
Typically, private labelling takes more investment but that just means that you get a high return on investment in the future.
Private labelling has made millionaires today.
On average, you can make a whopping Ksh. 100,000 a month from your private label brand.
Starting a private label brand is easy because the private industry label keeps growing.
The key to a successful private label brand is having a reliable manufacturer/supplier.
Is Private Labeling Profitable?
Private labelling is a valuable business that has very high-profit margins.
You can make up 3 to 5 times, if not more, as annual profit from your private label brand.
An average household can spend nearly hundreds of cash and more, on private label brands.
If you are thinking about finally starting your private label brand, then it’s time for you to take the plunge and get good profits.
It is not that hard and the main focus will be about getting the right wholesale partner and selling the right product to the right people.
Reasons to Start a Private Label Brand
When you start a private label brand as a retailer, you will manage everything right from packaging to marketing and display, all while stimulating brand recognition amongst customers.
Here are some of the major reasons why starting your own private label brand is the best idea you are looking for.
- High profit margin. Private labels have very high profits on investment because it serves a wide customer base, as so many people today want to promote small businesses.
- Good customer service. You will be serving customers better through your private labels. It is easier to interact with your clients, know what they want and produce what is going to meet their needs.
- Limited risk. You will not suffer the risk of production since your manufacturers or supplier will be taking care of that. Risk of loss and damage may or may not happen.
- You sell more. You are at a higher chance to sell more products because you can get these products fast without having to produce them yourself.
Best Products for a Private Label Brand
A private label product is a product that is manufactured by someone else, but it has your brand name.
As you start your private label brand, it is important to know that there are some products that will sell and give you the returns that you want.
You want to be extremely cautious when choosing the products to sell because you do not want to waste time on something that will not bring you money.
There are some products that are in high demand and private label products widely range from electronics to food items to cosmetics.
Here are some categories of products you can choose for your private label brand.
- Food supplements and detox products.
- Phone accessories
- Workout equipment
- Notebooks and stationary
- Travel accessories
- Home decor
- Hair products
- Party games
- Essential oils
- Water bottles
- Smart backpacks
- Rain Ponchos
- Hiking boots for women
- Maternity dresses
- Jeans shorts
- Yoga pants for women
How to Start and Successfully Run a Private Label Brand in Kenya
Starting a private label brand is as easy as it gets.
There are some things that you need to get in check before you decide to build your e-commerce store or sell your private label brands online.
I will take you through an easy step by step guide on how to start a private label brand that will guarantee you a good foundation and success.
Create a business plan
Before you start any business, you have to have a plan. This will give you a layout of what your goals are and what you can do to achieve them.
Define your objectives and formulate a strategy to get things to work.
Pick a product niche
Choose what product you want to have your brand name.
Do thorough research on these product niches so that you do not end up with something that is not going to bring money into your business.
I have listed the best product niches you can choose from earlier in the article.
Create a brand look
Next, you want to create a look for your brand.
Get in touch with a graphic designer who is going to take care of your logo needs for your brand.
If you are going to create a website, then you will have to get in touch with a web developer to help you out.
Know your target market
Conduct market analysis and check out the customer demographic.
Who is more likely to buy your product and how will you get it to them? Doing this will help your marketing strategies as well.
Analyse the market for competitors
Identify and learn from your competitors.
See what they have been doing and gain some information from them.
You can identify problems and address them so that you gain a competitive advantage over them.
Find a private label manufacturer
A private label manufacturer will get you the samples that you will be needing for your business.
These manufacturers or suppliers ensure that you get your products as requested and on time.
If you have incompetent manufacturers, your business will flop and your brand will have a bad reputation.
Build a strong brand
Build a brand that your customers are eager to buy and tell people about.
A strong private label brand pays attention to the customers’ feedback, for instance, what are customers saying about your delivery of products?
What do customers complain or compliment you about your products or services?
Branding is about consistency. So, if from day one you start by paying attention to customers’ requests, that’s what you have to do in a decade.
The more you appease customers, the more money you make in and within your private label brand.
Sell your product
Lastly, you are now ready to sell your products under your private label brand.
You will be building your customer base and even getting more customers when they like your product.
Do thorough product research
Do not be careless about what you want to sell because it will cost you dearly.
It is good to have faith in the products you want to sell but also, know something about them so you’re not playing Russian roulette with four bullets and one blank.
You’ll get shot in the face! Sell profitable products.
Understanding market trends of your own product
Knowing how your product sells at particular seasons will be good for you because you will be channelling the right amount of marketing efforts towards your business and making the most out of that period.
What Skills Do I Need to Run a Private Label Brand?
Starting a private label brand is one thing, but it takes skill to keep things going in this business.
Here are some things you need to master for your private label brand to kick off at a pace.
- Research and analytical skills. You have to do a thorough market research and do an analysis on the products you want to trade in. Understand what your market wants and do a profit margin analysis to know if a particular product is worth the investment or not.
- Customer service. You need to know how you are going to handle your customers and how you will deliver the best services to them. Customers are the lifeblood of your business. Without them, you will not exist.
- Sales and marketing. Thorough sales and marketing skills are needed to promote your brand. Oftentimes you will find yourself influencing people to use your brand and if you cannot hire someone, you will have to do it yourself.
- Communication skills. Learn to listen and provide the correct information to your customers so that you may work through any problems or complaints that are arising from their end about your brand.
How Much Does It Cost to Start a Private Label Brand?
I’ll be honest. You will need a little bit more in terms of initial startup to launch your private label brand.
This, however, does not mean that you have to go heavy in debt to meet these expenses.
On average, it will cost you around Ksh.100,000 to Ksh. 150,000 at a minimum, to get things running.
However, it is important that you consider some of the expenses you will incur during this process so that you can work with what you have.
- Manufacturing costs. As a private label brand, you will be paying for the production, which includes materials, labor, shipping and manufacturing costs. You will also have to pay for any customisation that needs to be done on the product, for example logos.
- Marketing costs. If you are building your website, you will have to pay a website builder and for the domain name as well.
- Branding costs. You will need to hire a graphic designer who is going to handle your logo and packaging design according to your specifications.
There might also be changes and unexpected charges that you will face when you start your business so you need to also put that in your budget.
How Do I Price Private Label Products?
You now want to know how you should charge your private labels and by how much.
The first thing you want to do is to consider your overall expenses including the manufacturing costs, shipping costs as well as marketing expenses.
Then you sell your product at a markup cost of 2 ½ times so that you can name profit.
You can also check with your competitors and see what prices you can offer your customers.
Make sure your customers are willing and ready to buy from you by the price you have set up.
Where to Sell Private Label Products
Now, you have already launched your private label brand and you are thinking about where you want to sell your products.
I usually advise my friends in this business or any other, to sell where they know their target audience is.
I know that could be pretty much anywhere. That’s why we do market research and analysis as we launch the business.
Here are a few sites to sell your private labels
- Amazon. Amazon is known for Pinzon and AmazonBasics.
How Do I Promote a Private Label Brand
You’ve already started your private label brand and you now want to get your first clients. If you don’t know how to net them, try this:
Examine the prospective customers that you have and prepare survey questions for them. This will allow you to generate new leads.
Ask for referrals
Have a referral program, whereby if a customer is happy with your brand, they can recommend someone else to seek and obtain your products.
Use social media
Use the connections you have built online to showcase your private labels. Go to Facebook or Instagram and have your business advertisements set up so that people will contact you.
Have a business card with good branding, business details and contact information so that your customers can reach out to you when they want to.
Create a website
Your website should have your private labels and you should optimise it so that it appears on top of the lists when someone searches for it on Google.
Offer quality products to people and build your brand through that. It is easier to get more customers this way. When people can acknowledge how great your private labels are, they will most definitely tell people who you are and how they can get in touch with you. Ask for referrals and testimonials to get more clients.
Go online and showcase your private labels.
Take time to optimise your website for SEO and also build content.
Your website will create a first impression on your customers and this will determine if they seek your products or not.
Leverage the connections you have on social media and use that to showcase your private labels on Facebook and Instagram, share relevant content and create promotions and advertisements to create more sales and leads.
Run an email sequence on your customers and offer solutions and tips to take care of their pain points.
You can offer free resources or provide educational content if you want to build trust and authority with them on your brand.
This will also encourage sales conversions.
Business Listings and Directories
Make your private labelling business available on sites such as Google so that people can come online and search for your services easily.
Create a business profile, showcase your products and ask for customer reviews if you want to make it to these directories.
Connect with industry experts participate in local and community events and meet new people. You will get more clients and leads in this
What are the Advantages of Private Labels?
These are some of the benefits you will gain from starting your private label brand.
If you are a retailer, you can control your product determinants like pricing size, packaging, design, production and distribution.
You will have the liberty to develop and execute innovative ideas that will increase the market share above national brands.
You will be earning a large profit margin from your private label brand since you will not be going through any middlemen in your private labels.
You will be exercising full authority over the pricing of your products and your profit margin will be about 20% to 50% of the selling price.
The product mix done by various retailers in the industry is usually quite similar. In such a case, as a private label, you will be able to give a unique offering and this gives you a competitive edge over other competitors in the industry.
Creating customer loyalty
Private labels intensify customer loyalty. It will be your job to develop an image and draw attention to your private labels by placing desirable private labels alongside exclusive brands.
Creation of new categories
Your private labels should be category fillers that can cater to buyers across different price points.
Private labels fill the gap in the market in product offerings. This gap may be due to the non-availability of any specific product or category. Through your private labels, give quick offerings to customers on what they are already missing and you will make more profit this way.
What are the Disadvantages of a Private Label Brand?
Some of the problems and challenges you will face when starting your private label brand include.
- Increased dependability due to outsourcing contract manufacturing. You may lose control because you are not in charge of what your manufacturers are going to put in your products.
- Competition from well positioned international brands. The competition is going to be stiff if you are in a niche that already has renowned brands. You may or may not survive this competition. But it is worth a try.
- Lack of retail rack space for holding other brands on board. You may not be able to support other brands in your retail store.
- As private labels are sold at a relatively lower price, they tend to be perceived as being of low quality. Therefore, you risk serving as many customers as you’d wish.
Legal Requirements for a Private Label Brand
Here is what you need to start a private label brand.
- Business license. This gives you the permission to start your business after the local authority has confirmed that your business is in compliance with the law.
- Tax certificate. You must get a tax certificate to state that you pay your taxes as due.
- Sales permit. A sales permit gives you the permissions to sell your products online or in your retail store. If you have a retail store, you may need to get yourself an occupancy permit.
How to Choose a Private Label Brand Name
A brand name is like a trading name, and this is the name under which your business operates.
This name will identify the commercial product or service that you are offering and may or may not be registered as a trademark.
When choosing a brand name, keep in mind the following.
It is memorable
Your hand name should be something that your customers can easily remember. That way, when they want to buy something, you are the first person that clicks in their mind.
Matches your business
Your brand name should match the product niche you are using to avoid any confusion or misinformation.
It is brandable
Your brand name should be able to go on logos on different items that you’re selling.
Your business will have a more professional outlook and this is good because it makes it credible and acceptable to many customers. They will know that they can trust you and this builds brand loyalty.
Good image for your business
A brand name creates an attractive appearance for your business and influences more people to interact with your brand.
Your customers can find you
Your customers can remember where they got their products easily through your brand name.
Helps you stand out from your competitors
If you have a good brand name, you will be gaining a competitive advantage over your competitors.
Resources Related to Starting a Private Label Brand in Kenya
How to Start a Dropshipping Store With Shopify Step by Step in Kenya
What’s White Label and Best White Label Products to Sell in Kenya
Private Label Products to Sell From Home in Kenya
FAQs on How to Start a Profitable Private Brand in Kenya
1. How much does it cost to start a private label brand?
The startup costs for a private label may be from 100k/150k or more.
The costs go towards ordering samples, website design, payment processing, packaging and order fulfilment.
2. Is private label profitable?
Yes, private label is profitable because you get control over products unlike drop shipping, better profit margins, exclusivity and freedom to build your brand.
3. How do you create a successful private label business?
Find the products
Check what the competition does
Locate/find a supplier
Offer amazing customer support
Build a brand
4. Can I buy a known/branded/trademarked product and sell it under my own brand?
Yes, you can buy a known product and sell it under your brand as long as you ask for permission.
The process to get approved for reselling say, MickeyMouse or Disney products may be lengthy.
A private label brand has advantages like high-profit margin, limited startup risks, you can sell more and interact more with your customers.
You need to conduct market research before starting a private label brand.
Know what customers want then provide it to them.
You can conduct market research on social media platforms like Facebook where most Kenyans hang out or on YouTube.
Ask potential customers want they struggle to find or buy within their areas.
Then source for a manufacturer/supplier that’s reliable.
Are you a private label entrepreneur?
What are your experiences as a private label business owner?