How Inflation Affects Private Labeling

 

 

Have you run into any challenges with private labeling as a result of the supply chain crisis and/or inflation? 

Huizenga: The three biggest challenges we’ve experienced with our manufacturing partners in that regard are the ability to listen; to create vision with us; and to help build the brand for us. 

Brahms: We had manufacturing partners that weren't honest with us about what was going on during the supply chain issues. I can handle the truth because I have options then, right? But I couldn't handle it when they'd say, "We're going to make it. We're going to make it. We're going to put it in production.” They didn't tell us about raw materials or shortages. Then they stopped private labeling for most customers altogether. They were over-promising and under-delivering just so you wouldn't go somewhere else. Meanwhile, here's a pandemic where I have people that rely on the company, just like every company does, and you've got to take care of them. Just tell me the truth. Let me make good decisions based on good information. 

Moody: The supply chain crisis has been challenging for us in planning our purchasing of many kinds of products, whether private labeled or not. Products that used to arrive at our warehouse three weeks from when they were ordered are now sometimes six to eight weeks away. Lucky for us, we only private-label products that are produced in the USA. I hope the supply chain crisis puts China in the backseat and reminds everyone to support their own country first. 

What qualities do you look for in a manufacturer when considering a private labeling partnership? 

Moody: We look for manufacturers who are experts in their product category and who we can trust to build a long-term relationship with. Many of our factory partners have been helping us for 27 years. We are grateful to them for helping us to be profitable while serving our customers and team. 

Brahms: Look for a partner that is forthright and honest, and able to turn over your order fairly quickly.  You also want someone that will give you alternatives if there's a product they're out of. The right partner will communicate and help you. 

What’s the biggest advantage a distributor gains by private labeling a product? 

Huizenga: Building the company brand/name recognition is one of the major advantages. It also provides an alternate line to offer customers, which can help bolster customer loyalty. 

Moody: For a distributor, the biggest advantage that private labeling offers is the ability to market a product that is available to your customer only from you. You get to carry the product exclusively. Your competitors might carry a similar product and you’ll still need to have a reasonably competitive price, but you did the work of showing or offering your product and your private label helps to protect your work. 

What makes private-labeled jan/san products attractive to end customers? 

Brahms: If you have demonstrated your private labeled product properly — if you do the right amount of customer service and show up — they will realize that they have a product that's special. The truth is, if you look for the best product in its class and private label it, you'll always come out on top. But you've got to get the best of the best — customers aren't stupid. Find a strong product that has a unique demonstration attached to it. A picture's worth a thousand words. 

Moody: I think that many times private-labeled products cost less to a jan/san end user customer and are more easily adopted into operations. This easier adoption is only if the distributor offers training tools and has a well-trained customer service and sales team. Many times, I’ll peruse the websites of a few large distributors and see over 20 floor finish options and more than 40 toilet tissue options. It makes me wonder how they train their team to recommend the right product as an expert to their customers. We prefer to offer a “better” and “best” option to strengthen our purchasing power/efficiencies — and to pass that greater value to our customers and have fewer backorders. 

Huizenga: Product performance dictates customer acceptance, want and desire to purchase. 

Does marketing of private-labeled products differ from marketing name brand items? 

Moody: When it comes to cleaning chemicals and odor control products, we only market our own private-labeled products. Over the years, we have taken things further by having products custom formulated to our specs and desired goals. In 2012, Solutex became an EPA Safer Detergents Stewardship Initiative (SDSI) Champion by removing APE’s or NPE’s (slower biodegrading surfactants) and replacing them with plant-based alcohol surfactants known as LAE’s. We audited over 200 of our own products to reach the standard. We rarely market national brands to our customers, but we do accommodate them with their requested product whenever possible. We stock a couple dozen household national brand products that customers can add to their order, but don’t actively try to grow these products. 

Brahms: We don't really look to market name brand items. What we try and do is market ours by demonstrating the superiority of using a better product than a national brand name. Also, national brand name products aren’t that inexpensive anymore — everything's gone up in cost. That makes this a great time to get into private label. You can make up whatever price you want, but because the raw materials, transportation and supply chain costs have gone up, there's not a big difference anymore. 

Have any products experienced a private-labeling boom over the past two years? 

Brahms: I was very fortunate to have manufacturers who weren’t from the big companies that were able to private label certain products for me during the pandemic — for instance, sanitizer. A lot of people bought alcohol sanitizer, depending on where you got it from and if you could get it. But I got it from someone who was able to private label for me very quickly. Same with when I was short on disinfectant because the delivery times were much longer. 

Moody: We did experience a boom during the pandemic and the need to private label our own hand sanitizer product. Many of the well-known brands were so backlogged and we had to get creative to help our customers and community with products. The pandemic proved to us to not rely on many of the national brands that couldn’t even deliver pre-pandemic quantities. National brands can do a lot of good for distributors and can help them in building their business. There are a lot of great national brand companies out there that build great relationships, but then there are also some that forget who helped to build their brand. We just chose to build our own brand. 

A graduate from the University of Wisconsin-Madison, James DeGraff joined Trade Press Media Group in 2019 as an associate editor. He creates and oversees content for Sanitary Maintenance, Facility Cleaning Decisions and Contracting Profits magazines, as well as CleanLink.com. 

 

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Private Label Experts Talk Benefits, Supply Chain Challenges