Image of Amazon's Private Label Brands

Image of Amazon's Private Label Brands

Writing by Yiping Hao, August 1st, 2018

What is private label?

Private label products are those manufactured or provided by a contract manufacturer and sold under another company brand – most commonly, a retail brand. Instead of buying other companies’ brand names and paying higher cost due to associated brand and advertising fees, retailers will only need to pay a contract manufacturer for producing and delivering to the store. This, results in a lower cost private label (store brand) alternative to the higher cost national brands.

Private Label Trends 2018 and Beyond  

When retailers decide to launch a new private label product or brand, the right product mix can mean Amazon's Store Brand Batteries everything to the success of the product line. A few key trends are poised to help private label growth and development in 2018 and the years ahead. For example, a kids’ specific private label clothing line is considered a lucrative new addition to the retail space. After all, kids continue to grow and need to buy new clothes faster than adults, so parents often look for deals and low cost alternatives to brand names. Another example are, phone accessories- brand names can also be quite expensive, but AmazonBasics, which is a private label brand of Amazon, has a line of excellent electronic accessories that are high-quality but lower than the national brands. AmazonBasics is successful because it utilizes its perfect platform to understand what the competitors are doing, and how they perform.

 Make it Unique – Total Sourcing Management

Since private label brands have become popular, they have to compete in an overcrowded retail market. Colorful Shirt Making a defensive strategy to gain a competitive advantage in a crowded space is really necessary. For example, Trader Joe’s, is a savvy retailer, who takes pride in keeping their store brand products unique. The organization is passionate about releasing new and unique products that customers can’t find in any other competitive retail stores. They are able to accomplish this by utilizing their PLM software technology and sourcing management tools to manage suppliers from some of the most unfamiliar lands in the world and they benefit from low cost country retail sourcing.


Premium Private Label

In recent years, and a trend that we see continuing, more U.S. retailers started creating premium, quality private label products. Premium private labels are quite different from national brand equivalent private labels and also offer greater profitability opportunities for themselves and manufacturers alike. In 2015, Whole Foods announced a new innovation to help consumers meet healthier, natural and organic foods, named 365 By Whole Food Market. The idea of the 365 Whole Foods Market was to use a modern and consistent design with the newest technology for choosing the right products, giving customers higher quality, more transparency, and greater value. As right now, there are 10 365-Whole Foods Markets in the U.S, and another 14 planned for the near future.

In Conclusion

Private Label Products usually have lower prices than the big brand names. Manufactures have to compete with each other to earn the retailer’s business, giving way to a favorable retail sourcing negotiation process for the retailers, resulting in, increased profitability. From the consumer’s perspective, private label products are a lower cost alternative and are starting to meet or beat consumer quality expectations vs. the majority of the brand name market. However, as retailers figure out how to scale their private label operations they must look for innovative ways to manage an increased amount of suppliers (sourcing management software), increase speed-to-market (retail supply chain management software), and manage samples, quality and production all the way through delivery (end-to-end product lifecycle). In the end, retailers and brands only provide options to consumers, but choosing what products or brands to purchase are still decided by the consumer and that is why, one of the biggest needs, is for a solution to help bring new product innovations to market, ahead of the competition and ahead of consumer expectations.

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Writing by Yiping Hao, August 1st, 2018


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