Start By Selling Just A Few Private Label Products

Part two of this four-part article looks at how to get started when private labeling.

While some distributors opt to private label a few select items, others launch a full-scale private brand, consisting of multiple product lines.

Springfield Paper Company, Springfield, Missouri, is starting slowly, offering three private label products under the name Panacea: a hand soap, a toilet bowl cleaner and a disinfectant.
 
“We wanted to get a foothold with some of the larger customers we were working with and bidding on,” says Purchasing Manager Tiffany Sarmiento. “We felt that, if we could win some of the bids with our private label, we’d have a better chance of them staying with us, because they’d be comfortable with our private label and they wouldn’t be able to match it up with our competitors.”

Indeed, creating a product with a unique formula that cannot be duplicated is a lure for distributors as well as end users.

“Customers see us as having a specialty item,” says Sarmiento. “They know the private label product has a chemical makeup that they can’t match anywhere else.”

Sarmiento recommends distributors start by private labeling a few of their top sellers to test the waters before branding an entire line.
 
“You have to meet minimum orders to do private labels,” she says, “so we picked items that we could move quickly and didn’t have to keep a large stock of for very long.”

This strategy has worked well for Springfield Paper Company. It makes high margins on its private label items and, according to Sarmiento, will likely expand its offerings to a glass cleaner and a neutral floor cleaner in the future — but it isn’t in a rush to do so.

“It’s better to decide what you’re going to private label next based on what your customers are demanding,” she says. “Wait and see what your key accounts are going to want, and then move into the next item as you go.”

Taking The Plunge

Creating a full private brand takes a considerable amount of time, effort and capital, but the payoff is worth it, say distributors who have made the transition from selling several private label products to branding multiple lines.

Brame Specialty Company began building its brand more aggressively three years ago, extending its private label from a few items to numerous product categories. Holland admits that it’s challenging to create an entire brand and bundle.
 
“It involves more than just creating and choosing the product,” he says. “It involves literature, the website … everything that supports that product. But once it’s built out, it’s easier to sell.”

Nassco Inc., New Berlin, Wisconsin, spent a year and a half evaluating its brand before deciding to relaunch its 30-year-old private label, Galaxy, under the company name.

“Over time, there wasn’t much strategy as far as what products the Galaxy name should be applied to or why, so the look was inconsistent,” says Vice President of Operations Kurt Melzer. “There has to be more intention and thought about what you’re doing and why. You have to decide what it is you want to convey with the look and feel of your brand. Once we established what we wanted our brand to be, it made sense to put it on our products.”

Nassco recently launched about 30 private brand products in its chemical line and is moving into its odor control line. Melzer says the company plans to convert most of its Galaxy products to the Nassco brand and extend its private brand to core items in as many product categories as possible.