Posted on : 2024-01-21 20:12:38
Article : Good morning Management solution for the TASK 277- One of the main drawbacks of private labelling is the dependence on third-party manufacturers.
The pandemic further accelerated consumers’ willingness to embrace private labels. When many consumer-packaged goods (CPG) brands disappeared from store shelves due to panic buying and pantry hoarding, shoppers were forced to turn to private label goods. Almost one-fifth of consumers rely more on private-label products than before the pandemic, and 52% said they expect to continue purchasing private-label brands once the pandemic subsides. This change in consumer behaviour is a direct reaction to the economic effects of the Covid-19 pandemic.
Private labelling is different from traditional businesses, where you set up production facilities and manage business operations yourself. Instead, you focus entirely on selling. The products are manufactured, packaged, and delivered by the supplier or manufacturer. Your job is then to find the right customers for your product and sell. It’s a lucrative business model, and several big names worldwide operate on it. Kirkland Signature by Costco is one example that operates on a private label model. The brand is huge and sells several products in different categories, such as clothing, grocery, health, beauty, and even baby products.
Despite numerous benefits, private labelling also has its drawbacks. These include the risk of inconsistent products and the challenge of building a brand from scratch. One of the main drawbacks of private labelling is the dependence on third-party manufacturers. If the manufacturer runs into problems, such as production delays or quality issues, it can directly impact the private-label seller. This can lead to stock shortages, customer dissatisfaction, and potential damage to the brand’s reputation.
Private labelling doesn’t just offer relief from the hassles of production. There are some solid benefits that this business model offers, which make it worth pursuing. It is to find the right manufacturer and get products that are different from what’s sold in the markets currently. With private labelling lots of customization options are available and every aspect of needed product can be made on demand. Pricing of the product totally depends on seller. To fetch decent profits one can choose to brand products. With private labelling, your business depends on the manufacturer. That’s why it’s important to hunt for reliable and reputable manufacturers rather than the cheapest ones in the market.
Here below let us discuss on two products which are worth for private label selling.
Gaming chairs- There is a significant demand for gaming chairs, as evidenced by the fact that the keyword receives over a million searches per month. With millions of gaming enthusiasts around the world on the hunt for good-quality chairs, it presents a lucrative opportunity for businesses to tap into.
While it is possible to get a gaming-chair made for as low as $11 per piece, prices can vary significantly depending on the quality of the product and its features. By sourcing out a manufacturer that can offer high-quality gaming chairs with desirable features at an affordable cost, private labels can attract and retain customers while maximizing their profits by selling at 80 to 150 USD.
Yoga mats- Yoga mats are a promising private-label item due to the growing demand for health and wellness products, with approximately 299,000 global monthly searches indicating significant consumer interest. These mats are inexpensive to manufacture, with production costs as low as $2, and offer ample opportunities for customization through materials, design, and features.
As yoga continues to gain popularity as a means of promoting physical and mental well-being, private-label yoga mats have the potential to generate substantial profits. US, UK, India are potential markets.
End point-A private label refers to a product manufactured by one company and sold under another company’s brand name. Retailers often use their private-label lines to offer exclusive products, expand their catalogues, and undercut competitor pricing. Private-label products can be similar to items that already exist on store shelves, but the exact manufacturing formula of the product must differ. For example, if a private-label business sells a box of chocolate chip cookies, the precise recipe won’t be found under any other label. The same applies to private-label brands selling electronics, jewellery, clothing, pet foods.
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