Use this strategy to release your branded products on time despite supply chain disruptions
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From empty shelves to delayed deliveries, experts predict — according to a February New York Times article — that the supply chain chaos isn’t likely to end any time soon. Businesses around the world are feeling the resulting pressure, with Statista reporting that nine out of 10 retail businesses have suffered a negative supply-side economic impact. Forced to wait months for scarce supplies, brands (including retailers) face shortages and delayed product launches that hurt business and allow others to come in and steal market share. Marlet.
While supply chain uncertainty can keep us waiting months or years for personalized products, moving to a private label strategy can offer more control, efficiency and profits.
Loosen the chains
You may not think you know a private label, but it’s more common than you think. The term, as defined by BigCommerce, refers to a technique in which a retailer has a product “…manufactured by a third party but sold under its own brand.” The retailer controls everything about the product or products. That includes specs… how it’s packaged, and everything else.
Retailers offer a wide range of private label products – from socks and sauces to skincare – displaying them alongside higher-end products, but at lower costs and with higher profit margins. In supermarkets, where private labels represent 15% of sales, you can even offer both generic and premium “private label” products, and always at better prices than nationally recognized brands. By outsourcing to third-party manufacturers, retailers produce their own high-demand products without having to invest in facilities, designers, quality assurance, or a specialized supply chain.
Related: Creating value through private labeling in retail and e-commerce
Enter our current supply chain issues.
A brand of food supplements came to see us to develop a new item: a shampoo. This company needed to offer its customers an alternative to existing products loaded with sulfates and parabens, while having a high pH for additional efficiency. They had big ideas, including a sexy bottle and specific ingredients. I estimated three months to build the custom mold (considering the difficulty of getting a mold builder) and four months for shipping, but one of their ingredients I informed them was not available until May 2023.
They were doing a ton of business in supplements and had hundreds of thousands of customers waiting for this shampoo. They were convinced it was going to be a success, and the longer they waited, the more their market share went to competitors.
So I made a suggestion: adopt a private label strategy. We have modified a private label stock formula by adding ingredients that we could obtain, and bottled in a stock bottle decorated with nice labeling to match the brand. Within a month, the company launched their private label shampoo, and it turned out to be as big a hit as they had anticipated.
Related: 5 myths and facts about private label products
Why Private Label Benefits Outweigh Personalized Strategies
In custom product development, some customers waited six to eight months to get a first sample because the supply chain blocked an ingredient. Eight months just for a sample, and that didn’t include the approval process or any revisions we might need to make. By the time we placed an order, it could take another eight months – so a year and a half just to get to market. Maybe the Estée Lauders or Johnson & Johnson of the world can get away with it, but not the smaller emerging brands.
At the first sign of supply chain issues, our company chose to source. By ensuring that we always have over a million dollars in raw materials and over a million dollars in packaging in stock, a customer can come to us with a product idea and we can suggest a similar formulation to a private label with custom available “hero” ingredients and have the product on the market in four to six weeks.
This is perfect for a brand or retailer that is willing to go with ready-to-use ingredients and packaging and – instead of being forced to meet a 25,000 unit minimum – can order a few thousand units. If the product is successful and they sell those first 2,000 pieces, they can get more in a month. If he strikes again and again, this would be the time to order custom packaging while they continue to sell. When that packaging arrives, they can label it “New and Improved!” Meanwhile, they can fund growth through sales until custom packaging arrives, and they get another cash injection from the new, improved version.
With this private label strategy, you will know if the product strategy and the marketing strategy are correct before spend the entire budget on huge minimums for custom products and packaging.
Of course, you need a marketing strategy to successfully launch, otherwise you risk losing money, but losing a little is much better than wasting an entire year’s budget on one product or marketing strategy. which didn’t work. Not only will there be far less wasted time and money, but even a failed private label strategy picks up data faster, so you can adjust as needed and then relaunch. Waiting a year and a half to re-evaluate leaves the door open for someone else to introduce the same product and take over your market, when you could have launched 10 private label products in the same amount of time, with at least one bound to hit and win.
Related: When should you switch to private labelling?
Small but fierce competition offers a lesson
Big companies can afford to go slow on custom products, but why would they when a private branding strategy is faster, more efficient and more cost-effective, and gets them ahead of supply chain issues? supply ? Small companies are already finding success by doing, stealing more market share from big names, who could learn from their independent competitors. Their only options then become to either buy these small companies and eliminate the competition, or save several millions of dollars by learning and implementing this strategy themselves.
I used to do a lot of business with a big company that placed an order around May or June for the following March. Consumers loved the products but often complained that they were sold out. If a product was a success, it would have had to nine months to get another 200,000 because everything always had to be customized, but with the right private label supplier, large companies can manage 25,000 units with one or two custom ingredients added to an in-stock product/packaging formula to get embed in their signature line. Especially when introducing a new product, it is the new way of doing things.
In the past, large companies could enjoy some prestige for their strong brand alone, but with supply chain issues upending old paradigms and technology opening the door to new ones, small companies are emerging stronger. To independent businesses that are finding success with a private label strategy, my advice is to keep going – get your products to market quickly and improve them down the line. For the big boys still stuck in customization, it’s time to start paying attention.