Pros And Cons Of Private Label Products

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

The advantages to private branding are numerous. Patton even says distributor sales reps might find selling private brands easier than selling national brands.

“There will always be folks that want a national brand, but this opens distributors up to end users shopping around and commoditizes that product even more,” he says. “If a sales rep can get through that road block, I think it’s much easier to sell a private label product — you can only get X product from X company. It really allows salespeople to leverage relationships and keep or even gain a customer.”

There are, of course, some distributors for which private branding doesn’t make sense.

“After having conversations with certain distributors, we’ve said to them, ‘Hey, I don’t think what we have to offer you is the right program for you.’ The last thing we want to get into is a relationship with someone where it doesn’t work,” says Schenk.

An example might be a distributor that insists on carrying too many national brands. Some distributors may still carry a couple national brands in addition to a private brand, but when there are too many brands to choose from, there’s not a brand focus, says Schenk.

Minimum orders are often a concern distributors associate with private branding programs. Many manufacturers work to keep minimum order requirements low for each individual product. But the best way to do so is often spreading out order requirements across all of a distributor’s branches or using minimum weight requirements instead, which allow an order to consist of a number of different product types. For these reasons, a small distributor may struggle to make use of private brands, depending the programs offered by its manufacturers.

Still, for many distributors, the only thing they fear more than order minimums is being undercut by a competitor.

“Say somebody’s out there selling the national brand XXX Brand, and there are five distributors in that market place,” says Schenk. “A distributor sales rep goes out and sells a program to this person. … A couple months down the road, maybe they miss a shipment or whatever. Next thing you know somebody else is in the door saying, ‘Hey, I got the same products, and I can do it for 5 percent less. That doesn’t happen under a private brand.”