Creating a private label product is one of the fastest, most effective ways to create your own brand right out of the gate. Privately labeled products, although created by a third-party manufacturer, carry your brand name. And, because you have control about the product’s specifications (the degree of this control, of course, varies depending on the manufacturer you choose to work with), you can actually create a unique product for your brand — even if dozens of other brands are using the same manufacturer.

Like anything, choosing to private label a product (or all of your products) for your store comes with its own set of benefits and drawbacks. Before you make the final decision to sign (or tear up) your private label contract, be sure you understand the ins and outs of private labeling.

Private Label Benefits

1. Production + Pricing Control. Rather than trying to find and source the perfect product from an already existing brand, private labeling allows you to control the final product, choosing everything from how it looks to how it works. And, because you’re taking the reins in terms of production, private labeling also allows you to have more control over the pricing of your products, ensuring that you’re making the most profit from the best products.
2. Nimble Marketing. Brands that choose to use private labeling have the advantage of being able to move quickly. That means that, when a new trend or niche concept takes off, private label brands are able to adapt with ease and speed. This is one of the biggest reasons why smart marketers (especially in the online space) love using private label products.
3. Better Branding. Choosing to private label allows you to have complete control over the branding of your products, creating cohesion across product lines and allowing your vision for your company to take physical form.

Private Label Drawbacks

1. Loyalty + Perception. There are hundreds of examples of private label brands done right. But, there are thousands (and counting) of examples that are done wrong. Because of this, some consumers are wary to give their money (and trust) to a private label brand.
2. Investment Mistakes. When you purchase branded merchandise that doesn’t sell, you have the advantage of something that is called “return authorization”, which typically means you can get some, if not all, of your money back. Private labeled products don’t have that promise, which means that if you invest in a product that doesn’t sell, you could be sitting on dead inventory for years.
3. Minimum Orders. Almost all manufacturers require a minimum order for privately labeled products, which can be a huge barrier to entry (as well as a financial gamble), especially if you’re a new business or if you’re testing a new product.

Although there was a time when privately labeled products always sold for less than their well-known branded counterparts, that’s shifting as more and more strategic brands are choosing to embrace the power of the private label. In fact, some of the most popular products within a niche are private labels — and they’ve got the highest price tag, too. If you manage to make your private label product or brand take off, then you’re primed for success because the only place your customers can get your product is you.