How Private-label Goods Spur Online Retail

There are 9.1 million online retailers globally and 2.5 million in the U.S., according to Etailinsights. The competition is fierce and getting fiercer. Private-label products are an affordable way to set your company apart — to fill gaps, increase average order values, and establish your brand.

Private-label goods are made (and usually packaged) by third parties and branded to your business, typically in one of three ways:

• A prominent manufacturing brand puts your business name on identical, similar, or downgraded versions of its own products. Examples are store-brand cereal and diapers, typically made and packaged by major firms.

• A manufacturer builds a custom product for your brand. This is usually the costliest route and could require patents.

• A manufacturer mass produces something many businesses can privately label, with or without customization. Amazon lists thousands of products that vary only by brand name.

Amazon has thousands of identical products offered under different brands.

Add-ons and upsells. Plenty of products call for accessories or components. A company selling dinnerware may recommend cleaning with a Swedish sponge. Offering a private-labeled sponge saves shoppers’ time while generating additional revenue.

Think about items frequently purchased together on other sites. Consider private labeling whenever a prominent brand name doesn’t matter much. For example, consumers are more apt to care more about the brand of smartphone chargers than protective cases.

Freebies that seal the deal. Most unassembled furniture includes an Allen wrench. Coffee makers often have a starter pack of filters. Accessories retailers often sell as inexpensive add-ons are potential freebies to close sales. A hardware store could give away a pair of branded safety goggles with the purchase of every power tool. An appliance store could include ceramic stovetop cleaner with each purchase.

Simple freebies reduce frustration. Customers can use them immediately instead of having to order separately. This alone can convert shoppers into loyal customers.

Diamond Art Club, which sells painting kits, packs its boxes with essential branded accessories, such as Washi tape, pen grips, and tweezers. These non-pricey extras provide convenience and help justify the company’s higher prices.

A simple tool they’d otherwise have to buy can capture the sale. Source: Diamond Art Club.

Finding the best products. There are likely hundreds of potential private-label items for your brand. Finding the best ones takes research. Start with customer feedback and reviews, where you’ll likely find discussions about relevant accessories. Then look at competitors’ gaps and customer feedback. Dive deep on Amazon, where Q&As, reviews, and purchase data inform the add-ons folks buy immediately or soon after.

Customer surveys can also help. But what folks say and do are often different. So test the private-label waters slowly with low volumes.

Success in today’s retail landscape requires satisfying more consumer needs than your competitors. Private labeling the little things can be the short- and long-term solution.