Advantages and Disadvantages of Private Label

Advantages of Private Label:

  • Goodwill building 

In private labels, brand makes goodwill, which is also an asset! Goodwill helps us in more recurring sales, and in launching new products! 

  • Flap able Asset 

We can sell our asset with good profit margins at any time, but in dropshipping and wholesale it’s not possible to this extent! 

  • Owner is the king 

No restrictions can be applied on the brand owner by others!

  • No profit sharing 

You don’t have to cut off Supplier margin again and again! As the brands do it in bulk, so profit margins are not divided as much, as they are divided in other models

  • Up-gradation in existing products 

We can upgrade or update the items based on our customer needs, we can update our products with trends and market demand! 

  • Customer needs can be entertained

We can change the product based on the customer's needs, we don’t need to rely on anyone who will make changes to products!  

  • High Profit margins, if you know how to do it

Private labels are much more technical as compared to others, so If you know how to do it in the right way, you can save much money and make good profit margins because of your good skills! 

  • Customer Confidence 

Customers always prefer the products with brands as compared to 0 label or no label products! Customers have more confidence in branded products! 

DisAdvantages of Private Label:

  • Technical and difficult to start and manage

To do a private label business, Seller must be technical! For example a seller has to register a brand for a private label including trademark and business registration! Sellers must be technical for sourcing as negotiation and shipping terms matter too much in sourcing of the product! Seller must be good at marketing and listing to launch the product! 

  • High amount of Investment required  with 0 guarantee

As it has too many costs to start this business, including legal and product issues! While all of this investment doesn't guarantee a 0$ business! 

  • Difficult to close the business

Private labels are difficult to close because we have many sides working on that including human resources and others! Too much investment is spent on products, which is also difficult to liquify! 

  • MOQ issues (inventory risks)

In private labels, we have minimum thresholds to order the product to get our logo, trademark on it! Which can be 1000, 2000 or 50,000 or enough! All of the products are at risk in this model!

  • High cost to launch the product

Private label need branding, legal and product costs with technical issues, which makes it difficult to launch as compared to others!

  • High marketing and launching cost 

As you are the owner of the brand, marketing the products is your responsibility, when you will start the marketing with 0, it will require much costs for each campaign to spread your brand awareness!

  • Sourcing and manufacturing issues 

Sourcing the products for best prices, when we have a number of competitors is necessary! Because we have to compete with our competitors in product quality, price and after sales services! Products are manufactured in china, which makes it difficult to get the best prices and quality of the product! You need to be technical if you want to source the products for your brand! 

  • Shipping Issues 

When the products are manufactured from China, we need to ship them to Different warehouses, if the seller is not technical it may cause issues for the seller! 

  • Patent and copyright issues 

You need to deal with legal issues as the owner has registered the brand and deal with business laws inside his country! 

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