S. Korea’s F&B exports reach a record $4.28 billion in 2020, expected to surpass $4.5 billion in 2021
How to Make Your Private Label Profitable According to Rocktomic Labs
Private-label products are driving profitability in many retail sectors, including healthcare products, food and beverages, and cleaning products. Understanding how to start a private-label program and leverage its potential for profit can be challenging, but Atlanta, Georgia-based Rocktomic Labs uses its expertise to show companies the way to take advantage of this unique situation.
Exploring the Potential of Private-Label Products
Private labels provide retail firms with higher profit margins than carrying other companies’ products. Companies selling apparel, like Kohls and JC Penney, have been selling private-label products for many years, and they rely on the profits generated by these lines.
Private-label products may cost retailers much less to manufacture and distribute. Retailers can offer better discounts on these products in an effort to compete more effectively with Amazon and other online sellers.
Building a private-label system also allows companies to include premium labels with even higher profit margins. Positioning these products as a quality alternative to national brands is possible when you follow these strategies.
Here are six tips to consider when creating a private-label program for your business:
1. Identify High-Quality, Low-Cost Manufacturing Partners
In the healthcare supplements sector, companies like Rocktomic Labs offer high-quality manufacturing and distribution channels, whether your company manufactures its own products or outsources the production directly to the lab itself.
2. Improve Relations with Sourcing and R&D
When you manufacture a private-label product, you will need to have good relationships with the manufacturers that will be producing your items. You will also need to have a good relationship with the company that develops and tests your product. As your company grows, you will be able to create a manufacturing system that provides you with the highest possible profit margins without sacrificing quality.
3. Design and Marketing
As a private-label manufacturer, you will have ultimate control over how your products are designed and marketed. Too many private-label products fly under the radar when it comes to being promoted by their retailers, and it is a good idea to push these products as viable alternatives to brand-name equivalents.
For example, many drugstore chains frequently run specials on their private-label supplements and over-the-counter medications that make their prices highly competitive without sacrificing their product margins.
4. Pricing Your Private-Label Product
When you are looking into pricing your private-label product, it is a good idea to do a complete market analysis of all of its brand-name and private-label competitors. You will need to decide whether you want to market your product at a premium and charge slightly more for it, or whether you want to position it as a value or substitute brand.
Comparing the features of your products with the competition can help you decide how to set your prices and determine what value your product has for the consumer.
Online it is even easier to set prices. You will have constant streams of data telling you which products are selling the best, based on web traffic, ratings, web searches, and consumer reviews.
If a product is generating interest but the conversion rate to becoming a paying customer is low, it may be time to lower prices or heavily promote a product. This can be done without sacrificing a profit margin when selling a private-label product.
5. Understanding Shopping Habits
Before you position your private-label product, it is a good idea to make sure that you understand the consumer’s shopping habits. Is there room for a premium alternative to ordinary brands, or is there a better position for a value-priced substitute? You can analyze sales data to discover whether you have a good chance of succeeding with your private-label product.
Customer loyalty programs can be a huge help in understanding the consumer’s shopping patterns. With customer loyalty programs in place, retailers can track exactly what consumers are buying and draw inferences about their shopping priorities. Some consumers are drawn to value pricing and private labels whenever they can find them, while others are more concerned with a perceived higher quality in a premium product.
One of the paradoxes of pricing a private-label product is that if the price is set too far below a national brand, consumers may think that the private-label product is not worth buying. Setting the price closer to that of the national brand may help to position your product as a viable alternative to the national brand, rather than a cut-rate product that will be perceived to have lower quality.
6. Use AI to Help You Set Pricing
With shopping data at your fingertips, you might think that it would be easy to set the right price for your private-label product for optimal profits, but the question of pricing is often more complex. Using algorithmic and AI systems to help you set prices can help you understand the constantly shifting supply and demand curves.
Understanding Private Labels
Companies like Rocktomic Labs have a deep understanding of how to manufacture, price, and promote private-label products. A private label should not be seen as a cut-rate alternative, but rather as a viable substitute for the national brand. When your company focuses on quality, you will be more likely to manufacture a product that compares favorably with national bra
This article does not necessarily reflect the opinions of the edtiors or the management of EconoTimes