In this post I provide an overview of private labeling, otherwise known as white labeling, and also provide some examples of how you can source products like this and sell them.
What is Private Labeling All About?
Simply put this is where you buy a product from a manufacturer/supplier (sometimes a trading company if dealing in China, but more on that later) and they allow you to take the product and stick your own label on it and market it as your very own brand.
Just so you all know I’ve been doing this for the past 12 months myself and having considerable success doing so. In more recent months I’ve been also getting into it via Amazon FBA too, which is a great market place to do this in.
Why I Like Private Labeling
The main reason I like this form of marketing is because it allows you to have your very own product/brand to sell, and this opens up lots of opportunities.
You can start simple and sell on Amazon or via your own online shop, and if it goes well you will find that other people will want to sell YOUR brand, such as affiliates or retailers also, I have had both. When you have your own product to promote there are many marketing avenues that open up.
How to Source Products
There are a number of ways to source products that you can private/white label. If you live in the USA the easiest way is to simply do some Google searches for a particular product you’re looking for with the words “private label” or “wholesale” etc… added on. You can do this in other countries also, but you’ll find the USA has the most by a long shot.
You can also source products from overseas, such as China, and the easiest way to do this and something I’ve been doing for years now is using Alibaba.com. If you take this path here’s a tip I’ve learned from doing this, try and contact companies that are manufacturers of products and not just trading companies in China, as you’ll get the best price that way. However keep in mind by doing this they do expect you to purchase a decent amount to make it worth their time in starting production of your product.
Here’s another tip I’ve learned, the hard way, if you source from overseas I recommend going for light and small products that will be cheap to air freight out of China, as sea freight is a lot slower, so best to test things fast with air freight and then move to sea shipping later.
How to Get Branding Done
Once you have a product that you can market as your very own brand, you need to get some art work done for your brand, logo and package design etc… This is not hard to do, just ask the supplier for the dimensions of the packaging and head over to an outsourcing site like www.elance.com and get a design made.
A lot private label suppliers will be set up to print your design onto the product and packaging for you, so all you have to do is send them the artwork. The Chinese nearly always are set up to do this, but they might have a minimum order of 1000 to do it.
Promoting Your Product
Once you’re set up and ready to sell, there are a number of ways you can market your product. Amazon is a popular way, but for now I will not go into detail about this as friends of mine have a course that teaches this and they are bringing it out again in about 6 weeks, so I’ll tell you more about Amazon selling then and how I will can help (stay tuned…its very exciting what I have planned)….
You can also just set up a simple ecommerce store, using something like BigCommerce.com, which makes life super easy for getting a professional store online, and then set up an Adwords and Bing Ads accounts and send paid traffic to your store.
I saw a site doing exactly this formula not long ago, I could tell this store was importing a particular sports good from China, sticking their own label on it, they used BigCommerce, turned on Adwords, and off they went!
The advantages you have when importing like this is, you have larger profit margins so you can afford to spend more on clicks in Adwords than a typical Ecommerce store that is sourcing locally.
Working Out Profit Margin
One simple thing that I notice confuses people when I talk to them about this stuff is calculating profit margin. Profit margin is a percentage, it is not a figure. So when someone asks what the profit margin is, you don’t say $6, but instead would say 23% or whatever it is.
Here’s a simple example:
TOTAL COST – $5
SELL PRICE – $15
PROFIT PER SALE – $10
PROFIT MARGIN = PROFIT PER SALE/SELL PRICE (10/15) = 66%
66% is a pretty high margin to work with, most product based businesses aim for 10-30%. If you’re importing though you really should be able to hit the higher end of that.
Anyway folks, I hope this blog post inspired some ideas, and as I mentioned earlier I’ll be blogging more about this stuff from now on as I’m right into it, and there is a great course on Amazon private labeling coming out next month which I will be discussing more about too. So if this is something you think might interest you then follow along with my journey.
Related articles
Dear Matt,
Ed Dale is about to introduce a whole new way of marketing, using some specific software that utilises Apple Newsfeed – magazine platform to take advantage of the success enjoyed by those employing magazine Apps to sell their products – wonder if you know how this is done and if your presently investigating this model?
Ed Dale is a fellow Australian, perhaps you know him?
Regards
Laurence Chilcott
Hi Mat
You make some good points on this topic. Getting the time to get your own product produced can be a major stumbling block to one’s success. I have taken 6 months to build my own products at times, would love to have access to a product that works that I have contact to a market for.
Looking forward to the private labelling course soon.
Greg
Matt
Do you do your own fulfillment with your commerce site since you are private labeling?(that was why I liked FBA so Im not spending time packaging and shipping.
I would be interested in how to pick markets for ecommerce for private label vs the typical criteria people use for dropshipping. I actually looked at your same exact sector you have commerce store last year but there are very established blands in usa market and was worried about food/perishables.
Hi Matt, I have seen clearly since one year ago that ecommerce is the way to go for those who want to build a real business/asset online, so thanks for sharing this post.
I was wondering how a supplier located in China could deliver, you say hair extensions, when one of my clients just wanted to buy one or two items thru my ecommerce store. I’ve noticed these China suppliers ask you for at least 50 or 100 items per order. Do you think is possible to make a deal with a supplier where they accept 1 item minimum order?. If possible, I guess the cost per item would be too high. What is your experience with those kind of products/suppliers?. Thanks.
This is What I have done for years, I travel the world doing this….
1) Google trade shows in your location or industry shows through put the world.
2) Do not narrow yourself to one industry. Focus on a number of industries. Typically, it is free to walk the show. Have some business cards. Generic ones are fine. Some shows won’t let you in without one.
3) Walk the show and ask them how do they distribute their product to the end user. Some will private label, some will not. It is ok, some industries are so out dated you can advertise their product and they will drop ship it for you. If it is a heavily technical sale, you may have issues representing the line. Be open and honest, tell them your looking for new items to sell to your existing customers or you are looking to explore new industries. They can tell if you know the field, so just be honest. Asking for help is some times all you need. They may be stuck with no ideas and may be open. ALWAYS talk to the top sales manager. A lot of times they will not be at the show. Get his name and contact him after. Do not waste your time with any low level salesmen.
4. If they do not drop ship. Look for a logistic warehousing company that does daily shipment. They will charge you a sq foot monthly few and a packaging charge of a few dollars to ship the product.
5. Google the logistic warehousing company and make sure sure they are good. They can destroy your business, if they do not ship the right product or delay shipping…. So important. I lost a lot of money last year with a large company that specializes in doing this. Large does not mean they are good!
In full disclosure, I found warehouse logistics so bad, I started http://www.VerticalSkyline.com. The concept of logistic warehousing rocks. uou csn grow with minimal fixed costs and tie it to variable costs. My only problem was I could not find anyone that could fulfill the orders correctly. (Matt, no intentions of spamming, if you want to remove this part, no problem).
Also, FYI— I evaluated Amazon fulfillment costs and it is way to expensive. They will make more $ them you in the sale in most cases. If you want to sell within the USA, we know how to do it correctly, only because I spent close to $100k getting screwed over the past two years by large logistic warehousing companies! They stoled product, high jacked inventory after being getting institutional money for expansion, etc…etc..
Suhas Dighe Reply:
August 8th, 2013 at 12:35 am
Hi DmdJoe,
clicking on vericalskyline.com is taking me to foodgradeglycol.com. Google feels this could be an attacker trying to take you to a fake site.
Or it could be a server misconfiguration.
PLR has been around for a long time and it’s unlikely it will go away. The idea of importing small products is appealing but I find it difficult to bring myself to believing in the integrity of some merchants or manufactures especially as I’m on the other side of the world.
I’ve had a lot of dealings with Asians having spent a lot of time in places like Thailand, Cambodia, and China and while they’re for the most part honest in their dealings with people who are making them money, they seldom miss a chance to exploit you even if it’s in a nice way if they can.
But I guess that can be said for all nations and I’m certainly not indicating discriminate emotions….just caution .
Hello, Matt!
I’m starting to dropship, after getting over the wall for three years, trying to make a decision. For now I’m directing sales to the public in Brazil, and the profit margin is high, somewhere around 200% on products from China. Even got a shop with SaleHoo, but I’m studying what to sell.
The tip on the label of my own brand, is excellent! I hope to use it soon!
And, I am very curious as to products Amazon. I look forward for new on Amazon!
Thanks for sharing!
I like the whole idea of eCommerce stores, branding or private labeling your own products, but I would definitely be concerned with initial expenditure as to amount of product we have to buy to start an account, and secondly putting trust in someone elses hands as to delivery, wharehousing, packaging, billing, I would find very stressful and time consuming as to attention to details, record keeping as to sales and delivery, customer relationships and the like. This is stuff we need more information on but I think there terrific possibilities here and definitely worth looking into.
Thank you for this post and I look forward to more of this as I am eager to learn this kind of marketing. Paul
Just a word of warning when dealing with overseas companies – I was “scammed” using a company through alibaba. I never received the order and alibaba was unable to resolve the issue. 5k lost. I’d suggest using a local supplier to start, even though the margins will be smaller. Get a few sales under your belt first to ensure you’ve got a viable product… And then deal with china/overseas. If you re really serious about it, take a trip and deal with these companies in person. That 5k lost would of easily paid for a trip to china to visit a few manufacturers…
Hi Matt,
Really enjoy your information and the help and honesty you give us in an internet world of blah blah blah.
That being said, I have to say their are many, many pitfalls to beware of with a business such as you are talking of here. There is so much more to successfully doing this than meets the eye! I think the real money with this is/will be made by selling the idea to others looking to start an internet business such as through webinar’s rather than actually doing PLR products. It is Not an easy business, but it can be done.
WOW! I freakin did not know about this one!
This is really interesting. Cause frankly I was really
thinking that amazon just pays to little.So
this would be awesome!
Hi Matt,
Again you have come up with a blog post that is perfectly in line with my planning.
I am looking at the Chinese products, but I have found that they look for large quantities, and if it is a new venture you really need to just place a small order to test the supplier out.
I have also found that they are prepared to negotiate, so you can even ask for a sample of the product first, before you commit to a larger order.
Thanks Matt
Hi Matt,
Thank you for the great info.
I have a US company which makes great private label products for the niche I’m in.
The price range is anywhere from $15 – $100 per product.
My question is how to best market the product.
Here’s what I’m thinking:
1. ebay – relatively cheap to start but getting high rankings is difficult.
2. Amazon – don’t have much experience with. I wonder if signing up with FBA will increase rankings on Amazon.
2. PPC – I’m not sure the cost-per-click price warrants this approach especially if the average conversion rate is 2% ( I think I read that somewhere).
How would you go about marketing your product if you were a novice like me?