Based on our purchasing experience, selling private label products is a good option for small businesses to make money. It has also become a popular business model for sellers on online marketplaces such as eBay, Amazon and so on. However, some importers may find it difficult since they have never tried a private label or don’t know how to find a private label manufacturer. In this article, I will tell you what private labeling is and how to find a right private labeling manufacturer in China step by step.
What Is Private Labeling?
Private label is a product sourcing model where the manufacturer makes the product you want and sells it under your own brand name.
For example, you have been buying sunglasses without any brand name wholesale on eBay from a supplier in China. The glasses are very ordinary and there are many different vendors selling the exact same product at similar prices and low profit margins. But if you can find a private labeling manufacturer who can customized the glasses under your own brand name and case, then you have an exclusive brand and can sell them online at a higher price.
Private labeling has become a popular way for online sellers to add value to their products and increase profits, as well as allowing them to differentiate their products from their online counterparts.
Advantages & Disadvantages of Private Labeling
Before starting, sellers should also be aware of the pros and cons of private labeling.
Offer More Profit Margin
Private label products typically have higher profit margins than generic products. You can sell your product at a higher price, even though it costs more to find a manufacturer to make your own brand product. Also, as the seller, you can determine your pricing strategy and control how to save production costs, which helps create a healthy profit margin. For example, you can make 50%-80% profit by selling your own brand electric razor, while you can make less than 10% profit selling the famous brand Philips electric razor.
Control Over the Product
If you sell private label products, you have the power to make decisions about the product, such as product design, packaging, branding or labelling. You can also have better control over the whole production process and the quality of the product. But when you sell a product made by someone else or a product in stock, you can’t change a lot of products to fit your needs.
Establish Your Own Brand
Creating a private label means you have your own brand. If your buyers like your product, they will purposely seek out your brand in the future, rather than choosing any of the cheapest generic products. Brands are about identity, trust and customer loyalty, and are more conducive to developing your own customer base.
Easier to Sell
One of the main advantages of a private label product is that it makes your product stand out from its peers on sites like Amazon, and you can better market your product to consumers and give them more reasons to choose your product. It also removes the temptation of competitive pricing because your product is different from anyone else.
Take Longer Sourcing Time
You will need to take longer shipping and lead time if you want to import your own-label products from Chinese manufacturers. Sometimes it takes 4-6 months to receive. In general, successfully developing a private label product requires careful planning and patience.
Customizing your own products will cost more money than buying ready-made products, because you need to pay some other fees such as mold fees and so on. But in the long run, although the cost is high, the profit margin is bigger.
Over Dependant On Manufacturers
Because manufacturers are responsible for making your product, the quality and lead time of your product largely depend on them. That’s why it’s important to work with a reputable and reliable manufacturer.
How to Find A Reliable Private Labeling Manufacturer?
You can take the following steps to find a right labeling manufacturer in China.
Find Potential Manufacturers
There are several ways for you to find private labeling manufacturers.
There are many online platforms for you to choose from, for example:
- Global Source
Forum is also a good place for you to search for private labeling manufacturers such as:
If you feel it’s too much trouble to go to the manufacturer yourself, you can always go to a third-party sourcing agency to help you. There are many professional purchasing agencies in China like:
- Sourcing Warrior
There are many trade shows in different places at different times of the year. You can follow the notice on the Chinese website, but due to the impact of COVID-19, many exhibitions are currently online.
List Your Potential Manufacturers
Whichever way you choose to find a manufacturer, you first need to list at least 10 alternative manufacturers that you think are capable of producing the product you want according to their production capability, pricing, main market and so on.
Further Screen the Listed Manufacturers
At this time, you need to contact the listed manufacturers to further select suitable manufacturers according to the following questions.
What’s the Minimum Order Quantity (MOQ)?
Due to different size of different manufacturers, the MOQ will be different. You need to choose your acceptable MOQ according to the current situation. If the manufacturer’s minimum order quantity is much higher than you expected, then you can walk away from further cooperation.
Do you support product customization?
The goal of finding a private label manufacturer is to be able to produce a unique product according to your requirements . You can list the changes and then ask the manufacturer if they can make the relevant modifications as you require.
What’s the pricing and payment method?
Price and payment method are also important aspects. If the price is too high then it can affect your profit. At present, the general payment method is 30% deposit, 70% of the balance payment before shipping. If the payment method demanded by the manufacturer is too risky, then they can give up working with it.
How long is the production time?
The time it takes varies depending on the capacity of the manufacturer . For example, some manufacturers may take several months to produce your product. If your product is seasonal, timing is extremely important, so you need to know in advance how long it will take to make sure you don’t miss the best selling period.
Asking for Samples
You should have 2-3 suitable private labeling manufacturers left. Ask the remaining suppliers to provide samples, and select the right supplier according to the sample quality. But remember to sign clear contracts by defining quality based on the specifications of the samples.
Verify Your supplier
It is recommended that you should select a third-party agent like SionInspection to do a background check on the manufacturer before working with your preferred manufacturer. So as not to be deceived by some very fraudulent companies in disguise, and suffer huge losses.
Then you need to sign a clear contract with the manufacturer and wait for the manufacturer to start producing your private labeling product. Make sure you conduct quality inspection before shipment.
When producing your own private labeling product, you also need to pay attention to the following issues.
Remember to protect your intellectual property. You can register your trademark or patent in advance of production to prevent manufacturers from leaking or producing your product. You can refer to this article for more information about how to protect IP: https://sinoinspection.com/import-from-china-tutorial-05-how-to-protect-your-intellectual-property/
Product Regulations & Compliance
It is important to know the product regulations and compliance with your target markets. Otherwise, you could face fines or not be able to sell your product in your target market. If you want to know more about this topic, please refer to this article: https://sinoinspection.com/import-from-china-tutorial-02-product-regulation-compliance/
If you’re interested in developing your own private labeling product, please feel free to contact us for further discussion.