22 INDUSTRIAL DISTRIBUTION / July/August 2014 www.inddist.com
Why You Should Private Label. Now.
BY BEAU WALTER, SALES & MARKET-
ING MANAGER, ATHEA LABORATORIES
Aquick look around at many of the national “big box” stores, or at the large e-commerce
distributors in our industry, will tell you
how prevalent private labeled prod-
ucts are today, both in industrial and
retail markets. As competition for the
customer’s dollar increases, companies have figured out how to
leverage their own brands to ensure they capture as much of that
dollar as possible.
To help understand how distributors and manufacturers can
benefit from selling their own branded product, we can turn to
Industrial Distribution’s recent 67th Annual Survey of Distributor
• 53 percent of respondents identified their primary concern as
“Price Competition,” followed by “Distributor Competition” with
33 percent. The distribution landscape has changed dramatically in
the past few years. There are now fewer distributors fighting for
the same business; large e-commerce distributors have entered the
market; and many products once sold only through our traditional
distribution channels can now be found at the big-box hardware
stores. One of the most effective ways
to protect yourself from these disruptions is to sell something that no one
else can: product with your name on it.
Selling your own branded product minimizes opportunity for a customer to
price-shop, and ensures that re-orders
come back to you.
• 64.6 percent of respondents said
“Sales Increased” this past year, but
only 51.5 percent said “Profits In-
creased.” This emphasizes increasing
downward pressure on price and mar-
gins. Once again, selling private-labeled
product allows you to sell something
that no one else has, thereby minimiz-
ing price shopping and protecting your
• When asked which tactic they would consider very important
for growth and business development, 51.9 percent of respondents answered “Advertising/marketing.” If much of advertising
centers around awareness and impressions, then a lot can be said
for increasing the frequency with which your company’s name is
in front of your customers. Each time they reach for cutting fluid,
having your name on the product label reminds them of where
they purchased that product.
The idea of branding is also an important component of any
marketing effort. What does your company stand for? Chances are, it stands in part for quality and dependability. Selling a
high-quality cutting fluid with your name on it – rather than a
budget version – is an opportunity to reinforce those notions of
quality and dependability, and to remind your customers why they
do business with you.
• Additionally, it is not uncommon for manufacturers to sell
direct to end users. In fact, 28 percent of distributor respondents
indicated this was their primary concern. Rather than sell a brand
that is now your competitor, you may be much better off selling
your own brand.
In today’s landscape, when an end-user has so many options
for buying a given product, the need has never been greater for
the distributor to protect themselves and differentiate themselves
from anyone that end-user may purchase from.
Where Do You Start & How
Do You Decide Which Products to Private Label?
There are several approaches that private label manufacturers may recommend:
1. Look to your most popular product
lines. Which product is most-often in
your customer’s hands? That product is
the one that provides you with the highest number of opportunities to make an
2. Look to your products with the
highest volume and lowest margin.
Are there certain product lines in your
portfolio that have become commod-