Avoid Competing On Price By Offering Private Brands

This is the first part of a four-part article about private branding.

Competition comes from everywhere. Nontraditional jan/san distributors begin selling daily use products. Big-box stores and online retailers enter the market and commoditize the national brands.

It all forces traditional jan/san distributors to compete strictly on price, engage in a race to the bottom and watch margins erode in the process.

This is precisely why manufacturers such as Midlab Inc. in Athens, Tennessee, and Athea Laboratories in Milwaukee have made private branding an increasingly large part of their business.

“Ninety percent of what we produce is private labeled, and it’s been strong like that for a long time,” says John Patton, sales and marketing manager for Athea. “We really push our customers to private label.”

And with good reason. From strengthening their own brand names to protecting themselves from the competition, distributors are finding numerous benefits to selling private brands.

“It’s easy to shop national brands on price,” says Patton. “You can’t do this as easily with smaller private brands. It keeps customers coming back to the distributor and makes the prospect of switching more difficult, because it’s hard to ensure you are comparing apples to apples with private brands.”

That’s especially the case as many manufacturers are cautious to remain out of public view during the private branding process in order to ensure that the private brand truly belongs to the distributor. Additionally, manufacturers are often willing to customize the color or scent of a product to fit a distributor’s needs.

The result is typically increased profit.

“Our distributors typically report back to us that they’re seeing 10 to 15 percent higher margins than they’re seeing on the national brands,” says Midlab President Matt Schenk.