Private label packaging refers to an item made by a third party and sold under a retailer’s brand name. Private label market share has already reached almost 25% of unit sales in the U.S., expanding even faster than national brands. It’s a highly lucrative venture for retailers. Target started its first private label — Archer Farms — in 1995 and now holds 48 private brands, 10 of which are worth more than a billion dollars.
Given that 96% of American consumers buy private label products, you might consider leveraging private label packaging design to boost your business. Let’s dive into the benefits your brand can discover through private label packaging.
It’s more profitable to make your own product than it is to buy brand-name products and sell them in-store. For example, grocers’ margins on name-brand packaged foods are only 1% of their sales price. Private label packaged foods boast margins between 25% and 30%.
Similarly, Costco has seen tremendous success with its private label wine. The industry standard for alcohol markups is between 25% and 45%. However, Costco’s Kirkland brands have 10% to 14% markups. Reducing the price encouraged Costco’s customers to buy more wine. This strategy resulted in $270 million in annual global wine sales — 15% of its overall sales.
With private label products, the retailer has more control over the product. Third-party manufacturers work under the retailer’s guidance, giving the retailer complete control over product ingredients and quality. The retailer also has control over product cost and profitable pricing. Perhaps most importantly, the retailer controls the branding, meaning they can direct the product’s positioning. The retailer can quickly adapt to changes in the market or new consumer demands.
Offering private label products is a great way to create market exclusivity. Unlike national brands carried by numerous retailers or distributors, private label products are exclusive to one retailer. It’s a great way to build brand loyalty to your retail store.
Purposeful private label packaging design is crucial. Effective packaging gets the consumer’s attention, creates brand recognition, aids in building brand loyalty, protects the product from damage during transit, and informs the customer of what they’re purchasing. With so much on the line, you’ll want to ensure your packaging pops. Custom packaging is a great way to ensure your customers are engaging with and enjoying your brand.
The private label packaging design process begins with a vision of how best to display your product. Using that vision, you tailor the size, shape, material, and imagery to fit your chosen concept. Having predetermined branding guidelines and a sustainability plan can streamline this process.
As you design and revise your package, you’ll need to consider where it will sell. Will your product be exclusively in retail stores? Will it also be in an online store? You’ll need to consider the practical consideration, position, retail and e-commerce regulations, and consumer shopping behaviors as you go through the private label packaging design process.
While tempting, an overly ambitious design can stifle your overall budget. Keeping your end goals in mind, including budgets, can keep your project running on track, on time and on budget.
After considering these factors, it’s time to partner with an experienced private label packaging company. The company can guide you with design process expertise and mockup capabilities. It’s also best to partner with a company that has worked with major retailers and knows their specific requirements.
Read this custom packaging resource to dive deeper into the private label packaging design process.
At Dusobox, we manage the full private label process from design and printing to distribution. We have decades of experience in the private label industry and can make your products pop on the shelf or online.
We invest in the most innovative printing technology and equipment and we have a G7 Master Colorspace Facility certification. As the highest and most stringent level of G7 compliance, the G7 Master Colorspace Facility certification validates that we maintain tight tolerances throughout the whole color space. Our printing systems can repeatedly and consistently reproduce your exact brand colors. We offer customized, speed-to-market displays, packaging, and signs for domestic and international distribution. We also offer a sustainable substrate that can replace non-recyclable, synthetic plastics.
When you’re ready to start your private label packaging design journey, we’d love to help you through the process. Contact us today for more information.