Private label and contract manufacturing are two common ways to create your new brand. Both options allow you to sell your product under your own brand.
Today’s post details each mode, so you can choose the one that suits your project better.
What is private label?
Private label, also known as private brand. Some people define it as the buyer modifying the existing products made by the manufacturer and selling under the buyer’s own brand. Others believe that the meaning of private label also includes new product development.
This post defines the private label as the latter one. Either you make a new product from scratch or make adjustments to already-proven products on the market, you are doing private labeling business. And you will control everything about the product, including the specs, packaging, brand, etc.
Private-label products can be seen everywhere. For example, you can see many similar products sold on Amazon with different logos and brands.
What is contract manufacturing?
Contract manufacturing refers to the buyer researching and developing products on his own and outsourcing them to the manufacturer for production. In this case, factories only focus on producing according to the requirements.
Many familiar brands actually use contract manufacturing mode. For example, well-known brands such as Apple and Hewlett-Packard entrust Foxconn, and other large electronics manufacturers to produce their electronic products.
It seems like there are no big differences between contract manufacturing and private labeling. But in fact, they have different requirements for MOQ and other aspects, with their own advantages and disadvantages. Keep reading.
Private label vs CM: pros and cons
MOQ
In most cases, the MOQ of contract manufacturing products is higher. Generally, large companies outsource the products or components to contract manufacturers. While the MOQ of private-label products is very flexible. If you just slightly adjust the appearance of wooden toys, 300 or 400 pieces can also be ordered. This is very friendly to small and medium-sized businesses, such as many e-commerce sellers.
Early-stage investment
Contract manufacturing products involve a lot of early-stage research, development, and production investment (e.g. staff, equipment, technology, etc.), which need higher start-up costs. In addition, for a new product, it’s uncertain whether it sells well on the market, so it also has a greater risk.
If you choose to modify an existing product and then print your own logo for sale, you only need to invest a small amount of money.
Product life cycle
If you want to sell a brand-new product, it requires preparing a prototype or design file and adjusting the product many times before mass production. It is a long time. But if you only want to slightly adjust existing products and then label your own brand, you can sell them on the market in a shorter time.
Product uniqueness
Contract manufacturing is the process of creating a new product. It is a good way to distinguish your brand from others. Your product is unique. If you choose a private-label product, you can find out that there are many similar products on the market with different brands.
In general, both private labeling and contract manufacturing are effective business modes. The buyers should compare the pros and cons of these two modes and choose a suitable one according to their own demands.
If you want to save more costs and resources and enter the market quickly, selling private-label products is a better way. You just need to focus on promotion. After you gain a good profit from it, you can consider developing new products to attract more customers.
Customize your products with JingSourcing
With rich sourcing experience and manufacturer databases, JingSourcing can help you find a reliable manufacturer faster and get a more competitive price than you find on your own.
JingSourcing can provide a one-stop service. We are good at the following aspects.
Modifying existing products or developing new products is permitted.
If you want to make simple improvements to the existing products on the market (e.g. changing the size, color, etc.), and then print your own brand, we can help you do it. What’s more, if you want to develop a new product, whether you have a detailed product spec sheet or only a simple pencil sketch, we can help you do it too.
Suppose your product customization is complex with a low MOQ like 200 pieces, the factory will reject you. For example, there are many parts for your customized products. The factory can’t handle them all by itself and needs to find other factories to produce these parts. He will feel that your small order takes time and effort and can’t get profits.
However, we have more than 10 years of experience in sourcing and customization and rich supplier resources. We can filter and integrate these suppliers very efficiently, and make a feasible customization solution for you.
We can provide you with a low MOQ.
Many factories have high MOQ for product customization. If your order cannot meet their MOQ requirements, you will be rejected. But we can help you do that. Because we have long-term cooperative suppliers and have a close relationship with them, they are willing to produce for us even if the order quantity is small.
We can build the prototype for your customization project from your standpoint.
We can also build the prototype (the first sample) based on your product ideas. For clothing, wooden toys, and other handmade products, we select samples from many suppliers and send them to you together. You can compare multiple samples at the same time. It is more efficient and cost-saving.
For custom products involving metal parts, we will communicate with you first, and you can see a 3D printed prototype to understand the actual appearance and performance of the product, rather than directly invest a large amount of money to develop a new mold.
In addition, we will make a cost breakdown of your product development, including the cost of the prototype, molding, testing, bulk order, packaging, and shipping. You can clearly see each investment in this process. We can also help you maximize cost savings from your standpoint.
For example, we have a customer who wants to customize a baby bottle. If he wants the factory to produce it, it will be very costly because many parts need molds. We analyze the bottle carefully and find that these parts can be bought directly from the market. We just need to assemble them together, which greatly reduces mold costs.
