One of the business models that grows the most is the private labeling or private label. This is about the English term for trademarks. This refers to products specially manufactured for retailers and branded by a private label. The relevant dealer sells as the product manufactured by the manufacturer as his goods under his own flag.
How Private Label Works
Many people dream of selling their own goods with a specially created brand. However, many are wondering how such a thing should be done. After all, who has their own production facility to produce their own articles? And who knows exactly how to make such products? Even if this were possible, materials and machines would cost a lot of money. Therefore, the solution is a private label for anyone who still wants to sell their own goods. However, this business model has been around for a particularly long time. The typical example are the food brands of large supermarket chains, such as good & cheap from Edeka or yes from Rewe. The total turnover of such brands in the food industry is estimated at 40 percent. This shows how big the business model is. In this case, the supermarket chains do not act as producers of these goods.
Production was outsourced to large manufacturers and manufacturers, who created the corresponding item as a product without a brand and offered it for sale to various trading companies. In doing so, the producer brandishes the respective goods as the trading company wants and sells the finished item to the trading company. The company sells the product as its own item to the end user. The trading company legally acts as a producer of the goods on the market. He is also responsible for the article. In this respect, it must comply with all relevant rights and obligations. As a trading company, one is not bound to the actual manufacturer. This means that if A’s cheese becomes too expensive, the supermarket chain would have the opportunity to look for a new manufacturer without putting the brand in jeopardy. The supermarket chains rely on several manufacturers. Thus, an item is not only delivered by one producer, but divided into some. After all, the supermarket brand is on top of it.
Where private label is still common
Private labels are by no means just available in the food industry. The business model can be applied to all imaginable products. It doesn’t matter if it’s about electrical appliances, drugstore articles, consumer products or animal supplies. There are large manufacturers everywhere who create unbranded articles for trading companies, which can then be resold as their own goods.
How private labels can be interesting for everyone
Due to the ever-increasing digitalization and globalization, it is no longer only possible for large companies to create their own private labels. This is how everyone can sell their branded goods these days. Goods in the lower price range, in particular between ten and 40 euros, are suitable for entry, so that you can also become entrepreneurial as an individual with a fairly low start-up capital with a private label.