It is especially in the retail supermarkets that you come across products offered in the private label brand - but also in the automotive aftermarket, this trend has gained ground. At Triscan, we have for more than 10 years successfully delivered a selection of product groups in private labels to several customers.
Our customers' motivation for offering one or more product groups in a private label brand is not necessarily entirely the same. The decision is strategic and usually stems from one or more of the following desires to:
• Be able to offer an alternative to the often more expensive premium brands
• Reduce the number of brands marketed and thereby saving resources
• Build your own brand and thereby stand out from the competition
• Improve earnings
• Become more independent of suppliers
Semi private label brand: your brand on the packaging and our brand on the product
Full private label brand: your brand on the packaging and your brand on the product
"However, from our point of view, wholesalers should think very carefully before embarking on a private label strategy. What seems easy often turns out to be more complicated and time-consuming than expected," says CCO Morten K. Vammen and continues: "It is important to make sure that the necessary internal competences and resources are available. This applies to the product department, the purchasing department, and the marketing department. In addition, there are also the legal aspects of, for example, trademark registration."
It is also a good idea to have a clear prioritisation of the product groups and a realistic time perspective. In terms of prioritisation, revenue potential, inventory turnover rate and complexity are the most important parameters. Where is the most money to be made on high-demand products - and which product groups do not require a myriad of suppliers and packaging sizes?
Private label sourcing in the automotive aftermarket differs significantly from retail in the number of product variants, which has an impact on volume and predictability. There are e.g., relatively few varieties of toilet paper, volume is high, and demand is constant. Unfortunately, this is rarely the case for most automotive spare part product groups. Therefore, parameters such as minimum order quantities (MOQ) and lead time become very important, unless storage capacity, inventory turnover rate and cash flow are given no importance.
With the above in mind - and our experience as a private label brand supplier - we would like to add some comments on the five wishes initially mentioned, which are worth considering for any wholesaler who either intends to implement a private label brand strategy or for wholesalers, who want to expand their private label programme.
To be able to offer an alternative to the often more expensive premium brands
The more price sensitive a market is and the higher the average age of the fleet - the greater the demand for an alternative - and the more important it is to consider the possibility of a private label brand.
To reduce the number of brands marketed and save resources
Resource savings through reducing the number of brands marketed can also be done in other ways than with private label brands. By choosing a provider that offers full coverage programmes, you can also save a lot of administrative resources.
To build your own brand and thereby stand out
The more product groups a private label brand covers, the more vulnerable it becomes to its image. Quality problems in one product group typically have a highly contagious effect on the entire brand. This risk, as well as the time and effort associated with quality assurance and the marketing required to stand out, is often underestimated.
To improve earnings
Earnings improvements are often calculated using a simplified model that only includes purchase price, inventory management, shipping costs and selling price. The actual administrative resource consumption of dealing with many and changing suppliers, the magnitude of lost sales as a consequence of long lead time, the purely financial costs of high MOQ, inventory levels and slow inventory turnover rates are rarely included.
To become more independent of suppliers
With less supplier dependency usually comes increased administrative resource consumption and more superficial supplier relationships and personal relationships. Isn’t it more profitable to find the right partners with whom you can develop?
At Triscan, we have extensive experience and insight into the conditions under which wholesalers operate. We have a wide range of product groups, where we are fully covered in terms of the European fleet and which are suitable to be marketed both as a private label brand or under the Triscan brand. We are known for helping, supporting, and adapting to our customers' business and building long-term relationships for mutual satisfaction. If you're considering developing a private label brand - or expanding your existing private label brand product programme - we are happy to enter into a dialogue on how to best achieve your goals.
If you want to market your products under a private label brand, it is important to make sure that the necessary internal competencies and resources are present.
Contact: Morten K. Vammen, CCO on +45 2987 6678 or mkv@triscan.dk