Developing private branded product lines for a wholesaler has become an increasingly popular practice in the past 10 years. When I started in this industry a very long time ago it was rarely viewed as an option for the small to medium independent janitorial wholesalers, due to high minimums, and a desire to compete in the market with more recognizable national manufacturer’s brands. Private brands were primarily used by distribution purchasing groups, and large national wholesalers.
What has changed to make even small wholesalers develop their own branded product lines?
• due to mergers and acquisitions with manufacturers and changing sales strategies, there are few companies offering exclusive market distribution agreements today, thus competition has increased for those national brands.
• the profit margins for most national brands are significantly less than they were 20 years ago.
• the focus of many private brand manufacturer’s is on providing high performing products versus “bid products”.
• there is a greater need to be differentiate your business from the competition, and offering a different product line under a created brand helps.
• lower order minimums with some key manufacturers in the industry making it possible for smaller wholesalers to create and source their own brands.
Have you considered developing your own brand? …if not, you should!
• significantly better margins, than selling branded products today. I had one customer tell me, this is the #1 reason they are expanding their branding program across all product categories: margins are 2X-3X better than with their national brands, and they remain competitively priced.
• differentiate your business. The need to be different and innovative today is greater than at any time in your business life time. Creating a brand identity is an easy way to sell something your competition does not have. In a 2004 article in Cleaning Management On-line: Having your own brand differentiates your distributorship from the competitors. No one else has the same brand, which helps stave off price wars with competitors over identical products. “If you sell a brand name, there’s always an issue with someone doing it for less money,” Cronyn says. “You go through the pitch and spec in the product and five minutes later, the next person pops in and can do it for a nickel less. You don’t have to compete with that on the private label. You spec that in and the next guy won’t have that exact product.”
• helps build and enhance your business image. Having your own product brand identity gives the impression you are a large and proactive company.
• Control. You control everything from quality to pricing. No contracts. No manufacturer dictating who can sell to and what margin you will make.
What is your company brand image?
My experience is with many jan-san wholesalers today, they truly have no understanding of what their brand image is, but to have success with a product branding program, you should start with your current brand image, and then develop a program, which will enhance or complement your current branding and marketing.
There is a perception in the marketplace by product users both in commercial and retail markets, that private labelled products are “price brands” of low quality. This is not the case today, as some of the largest most respected manufacturers are taking their key brands and making them available for private branding programs with wholesalers. I had a distributor sales rep share with me this week he can sell a private labelled Rubbermaid product for less than the actual Rubbermaid brand and make more margin.
My recommendation is to take the high road. Develop a quality brand image and private branded products, which will enhance the image you have created over many years of being a trustworthy, reputable company to do business with.
We do business with many wholesalers who are only looking for competitively priced products for use on public bids. While this does help them compete in these situations, creating brands only based on price is a dangerous strategy, if the brand becomes identified exclusively with your company. I thus always recommend in any branding strategy to create differentiation between quality levels within product categories. This can be accomplished with different looking labeling, the brand names, and packaging.
Still Interested? How do you choose a manufacturer?
I’d look for a company who will help with creating your brand identity and marketing. My experience is most wholesalers doing less than $25MM in sales do little in-house marketing or occasionally work with outside consultants or services. Thus, working with a manufacturer who has the capability and experience to help you develop that image will only increase your success.
Product packaging and labeling are important in developing quality image and differentiation between other products and other wholesalers. What options can a manufacturer offer you in labeling and packaging is important.
What sales support can and will a manufacturer offer you to help sell your new brand? Many manufacturers only do just that… make the product, and offer no sales support to you to help drive business. If you have a manufacturer willing to help you sell and support your brand to your customers you get a large benefit.
Logistical support is obviously a key factor. What are minimum order requirements, freight costs, lead times, etc. Most private brand manufacturers have lead times of 10 days to even 30 days for some paper private brands. Are the products made in the good ol’ USA? These are all important considerations if your goal is to make private branding products a key part of your warehouse. The fastest way to negatively impact your company image and sales is to not have product available you have invested time in selling and promoting.
Does the manufacturer have unique value-added product offerings? Does the manufacturers specialize in private branding? Does the manufacturer also market their own brands?
Private Branding is growing in our industry. Private Branding can bring more dollars into your business and enhance your company image. Let us know how we can help.
If you want more information on how branding can help your business please reach out to myself and The Bullen Company.
Jack Collins, The Bullen Company