When it comes to selling your own private label products, it’s important to find private label manufacturers that you can trust.
After all, your supply chain will provide a solid foundation for your ecommerce business to grow.
Because the cost of labor is generally much lower in developing countries, you’ll likely be sourcing your private label products from factories in Asia, India or Mexico.
However, you may be able to find good private label manufacturers in the United States and Europe depending on your price point and the potential margins you can command.
Regardless, finding a private label manufacturer is a straightforward process if you know where to look and how to speak the language.
This guide will provide you with a step by step process for…
- Where to find private label manufacturers
- How to establish initial contact
- How to perform basic due diligence
- How to ask the right questions and place your first order
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What Is Private Label?
Private label is a product sourcing model where you place your own brand (or label) on a product that a contract manufacturer produces in bulk.
The private label manufacturer is responsible for using their own materials to fabricate your product including the packaging and labeling with your brand collateral.
For example, we sell cocktail napkins under our own private label brand, Bumblebee Linens, but a manufacturer in China produces and packages our napkins for sale.
Here’s another private label example with the Mother Daughter aprons that we sell online. Our branding and label is sewn into the seam of every apron we sell!
Even big brands like Amazon, Target and Walmart private label their own products for sale to maximize their profit potential.
In fact, Amazon is well known for analyzing their sales data and private labeling the most profitable products sold on their platform.
Below is an example of Amazon private label trash bags that are being sold for 33% less than the leading brand! (BTW, this is so wrong and I hope Amazon eventually gets busted for this).
The Pros And Cons Of Selling Private Label Products
When deciding whether to sell private label products versus traditional wholesaling or dropshipping, you have to understand the pros and cons.
As mentioned earlier, most ecommerce business owners are drawn towards private labeling because of the branding and control but selling private label products requires more work and up front cost.
Below are the major pros and cons between selling private label vs dropshipping and traditional wholesale.
Pro: Private Labeling Offers Much Higher Profit Margins
When you manufacture your own products in bulk, your sourcing costs go way down. Some of the private label products that we sell in our store command 90%+ margins.
If you compare this to traditional wholesaling which caps out around 50% margins or dropshipping which caps out at 30% margins, you’ll soon realize that private labeling offers much more money making potential.
Pro: Private Labeling Allows You To Establish Your Own Brand
If you think about it, every product sold today is just another commodity. The main criteria that drives our purchases is the brand.
My wife buys Apple because she likes their products. I buy Tide laundry detergent because of the brand. We only use Charmin toilet paper in the house.
Are there other versions of these products that we could buy that are just as good? Absolutely! But we are loyal to the brand. As a result, the main and biggest advantage of selling private label is the ability to establish customer loyalty and trust.
Repeat business is everything in ecommerce and selling private label products will allow you to create a lasting business that stands the test of time.
Con: Selling Private Label Costs More To Start
While you can start a dropshipped business for less than $3 or a traditional wholesale business for less than $500, private labeling requires a significantly higher upfront cost.
In fact, the minimum cost to launch a private label product is around $2000-3000. This may sound like a lot of money, but going the private label route gives you the best chance to succeed in the long run.
Con: Private Label Products Take Longer To Source
Because you will likely be importing your private label products from overseas through China wholesale manufacturers, your shipping and lead times will be much longer.
For our linens business, it can sometimes take up to 4 months for us to receive our products from China. In addition, there are sometimes language barriers and miscommunications that cause production to be further delayed.
Overall, succeeding with private label products requires careful planning and patience.
What Are Private Label Manufacturers?
Private label manufacturers are factories that produce generic products intended to be sold under a different brand.
They fabricate all of their products from scratch to your specifications and then sell these products to you at wholesale prices.
You also have the option of creating custom packaging and labeling as well. Once you are ready to place your first bulk order, you can work with your factory on the box design and other design requirements like inserts, artwork etc…
But remember, you have to buy your products in bulk.
In general, every private label manufacturer will have its own MOQ or minimum order quantity and you should expect to buy at least a few hundred units depending on the size and cost of the product you plan on selling.
Domestic Vs Overseas Private Label Manufacturers
In general, you will find the lowest prices with overseas private label manufacturers vs domestic suppliers because the labor costs are significantly less.
For example, a handkerchief manufactured in the US would cost us $4/piece but costs only $.50/piece in China. This is a huge difference!
However, it sometimes makes sense to have your private label products manufactured domestically to avoid the hassle of overseas shipping and communication.
Overall, here are the pros and cons of going domestic versus overseas.
The Pros Of Domestic Manufacturing
- It’s A Strong Selling Point – There’s a lot of anti-Chinese sentiment in the US right now and some customers may be willing to pay a premium for domestically made goods.
- Higher Quality Labor And Manufacturing Standards – Factories in the US (and Europe) must follow stricter government standards when producing your products.
- No Language Barrier – Everyone speaks your language in your home country.
- Accessibility – You can hop on a plane and visit your manufacturer at any time.
- Fast Shipping – You can usually obtain your products within a week if they are in stock.
The Cons Of Domestic Manufacturing
- Higher Prices – Depending on the amount of labor involved, the cost of manufacturing in the US will easily be at least 4X more expensive than China.
- Less Selection – Because there is so little manufacturing done in the US today, it’s generally harder to find factories to produce your products.
The Pros Of Overseas Manufacturing
- Low Prices – You can easily save 4X the cost by going with an overseas factory
- Large Selection – Because most products are made in China today, you’ll have access to a huge library of factory choices.
- Online Directories – Online directories like Alibaba and Global Sources have made it super easy to find private label manufacturers online.
The Cons Of Overseas Manufacturing
- Poor Quality Control – Chinese factories often try to cut corners to meet your price point. As a result, you should pay for an inspection.
- Poor Intellectual Property Protection – Private label manufacturers may take your design and sell it to other businesses.
- Language Barrier – It may be difficult to communicate with your suppliers because English is not their native language.
- Long Lead Times – It can take several months to produce and ship the products to your warehouse. Shipping will also be expensive.
- Customs Duties And Tariffs – All imported products must go through customs which may incur additional costs.
What To Look For In Private Label Manufacturers
Here’s what I personally look for when selecting a private label manufacturer. First off, the manufacturer must be able to produce whatever you want to sell to your EXACT specifications.
As a result, you should focus on private label manufacturers who specialize in what you want to sell.
For example, if you find a factory that produces cell phone cases as well as t-shirts and textiles, that should raise a red flag.
In general, a good factory specializes in a specific type of product and only produces that one type of product.
Aside from being able to produce what you need, a good private manufacturer must also make high quality products. Before placing any bulk order, you must request a sample.
A sample will cost significantly more money than your final mass produced product, but a sample will allow you to gauge the quality and manufacturing capability of your supplier.
Never buy in bulk UNLESS you’ve acquired a golden sample of your product. Then, when you are ready to place your first order, make sure you hire an inspector in China to manage quality as products come off the line.
We use QIMA to inspect all of our shipments at the factory.
It doesn’t make sense to sell a product unless you can make a profit. As a result, you should negotiate with a number of different private label manufacturers to obtain the best price.
As you are looking for private label manufacturers, you should already know your price thresholds and how much you are willing to pay.
For example, if you plan on selling on Amazon, make sure you check the average selling price for your product to ensure that you can achieve at least a 66% profit margin.
Aside from quality and pricing, reliability is probably the most important quality to look for in a private label manufacturer.
If you find that your supplier is not responding to your emails or avoiding your questions entirely, then that’s a sign that your manufacturer is going to be flaky.
Before you place an order, make sure you ask them about delivery times and check their track record of on time shipments with Alibaba (more on this later).
Where To Find Private Label Manufacturers
Back in the day, it was extremely difficult to find private label manufacturers without hopping on a plane and flying to China. But today, it’s easier than ever to search and find manufacturers online.
Below are the easiest ways to find private label manufacturers in both the United States and China.
Jungle Scout Supplier Database
Every single shipment imported by sea is documented on the public record in the United States. And services like Jungle Scout allow you to search the public record to easily discover where companies are sourcing their products from.
For example, if you want to know where Under Armour sources their clothing, simply type it into Jungle Scout, and you’ll instantly know which factories they use.
Below is a video that I created which provides a demo on how to use the Jungle Scout Supplier Database.
If you want to follow along with this tutorial step by step, Click here to sign up for the Jungle Scout Web app and save 30%
Use An Online Directory – Alibaba And Global Sources
Alibaba and GlobalSources are search engines for Chinese suppliers and you can instantly search for thousands of private label manufacturers entirely online.
For example, you can type in what you want to sell in the search bar and Alibaba will return a bunch of suppliers, prices and minimum order quantities.
By clicking a button, you can then send the vendor a message and establish contact.
Once you’ve established contact, you can ask for samples, place orders etc…
If you are worried about purchasing from a Chinese supplier, Alibaba offers a service called trade assurance which acts like an insurance policy so you don’t ever get scammed.
Attend A Trade Show – Canton Fair And Global Sources Expo
One of the best ways to find private label manufacturers in China is by attending a trade show.
Right now, the Canton Fair and the Global Sources Expo are the 2 largest trade shows held in China and Hong Kong respectively and they always take place at the same time so you can hit them both in 1 trip!
The Canton Fair is held in GuangZhou, China twice a year (Usually during the end of May and the beginning of November) and is one of the largest sourcing shows (if not the biggest) in the world.
Meanwhile, the Global Sources Expo is held in Hong Kong just before the Canton Fair and it’s only a few hours away.
Trying to find and communicate with a Chinese manufacturer using Alibaba can be extremely time consuming. Not only do you have to go through and email a bunch of companies but it’s difficult to gauge product quality as well.
In addition, language and cultural barriers make communication challenging over email and text.
But when you attend a trade show, factory owners from all over Asia congregate and you can easily find a private label manufacturer that either carries what you want to sell or can make what you want to sell.
Most suppliers also have physical samples in their booth so you can touch and feel the goods first hand before committing to a purchase.
Use Google Search
Depending on what you want to sell, sometimes a simple Google search can turn up private label manufacturers in your niche. This method generally works well with commodity items like clothing, supplements, electronics, food, cosmetics and fragrances.
The search queries you should use are simple. Simply Google…
- “Your products + private label manufacturer”
- “Your products + white label”
Editor’s Note: Certain manufacturers may synonymously interchange the terms white label and private label.
For example, let’s say I want to sell private label vitamins. A simple search for “private label vitamins” yields the following results.
When it comes to commodity items, you can sometimes find private label manufacturers that are local to where you live.
ThomasNet is a supplier directory that mainly caters to the United States. It’s 100% free and you can search for manufacturers by product and location.
For example, let’s say I want to sell protective laptop cases online. A simple search for “laptop cases” on ThomasNet.com yields the following.
From this page, you can contact the supplier directly through ThomasNet and ask for a quote and pricing for what you want to make. This particular example yielded a manufacturer in New Jersey and you’ll find that most manufacturers are in the US.
Use ReferenceUSA (Now Called Data Axle)
ReferenceUSA was acquired by Data Axle but is still free to access for most libraries, government and academic institutions.
What is ReferenceUSA? The RefernceUSA(or Data Axle) database offers up-to-date data on US based businesses which can be used to…
- Locate any type of company nationwide
- Find business opportunities and suppliers for your ecommerce store
- Find manufacturers to produce your products
The catch is that you can only access their services through your local library or academic institution. But some libraries will allow you to use ReferenceUSA from your computer at home with a library card.
Once you have access, you can conduct a search to find private label manufacturers near where you live in the United States.
To conduct a search, enter what you are looking for in the search bar.
Then, click on “View Results” and you’ll be presented with a list of manufacturers in your area.
Overall, ReferenceUSA is a great way to find contact information for any business in the United States. However, you will have to manually sift through the results to find private label manufacturers.
How To Prescreen Your Private Label Manufacturers
Before you engage with any private label manufacturer, you should first do some due diligence. Alibaba and other supplier directories provide public reviews and ratings for you to look at.
Since buying a private label product for sale can be a significant investment, you should take the time to read both the positive and negative reviews.
For example, this handkerchief supplier passes my initial screen because…
- Alibaba Verified Supplier – Companies can pay Alibaba to verify that they are a legit business in China
- Fast Response Time – This company responds to inquires within 4 hours which is extremely fast.
- 98.6% On Time Delivery Rate – Anything above 95% is great.
- 6 Years In Business with a 4.9 Star Rating – I generally only work with factories older than 5 years.
If you conduct a search for any company on Alibaba, you’ll find other details which may influence your decision.
For example, it’s important to find out whether the manufacturer has ever dealt with customers in your home country. In example above, Juring Rongguang derives 40% of its business in the United States which is a good sign.
Questions To Ask Private Label Manufacturers
Once you’ve done some basic due diligence, it’s time to reach out to your private label manufacturer. Probably the most important question to ask is whether they offer private labeling in the first place:).
While almost every factory in China offers private labeling, some suppliers in the United States do not. Regardless, it’s important to ask this question upfront to save time.
Once you’ve established that you can place your brand on their products, the following questions can be tailored to your specific needs.
- What is your minimum order quantity(MOQ) and pricing? – Private label manufacturers come in all shapes and sizes. Some factories are used to working with large companies like Target or Walmart. Others cater to smaller sellers and it’s important to find this out upfront to avoid wasting time. If the MOQ you are presented is way too high, that means that the manufacturer is likely out of your league.
- Can you make modifications to the product? – The goal of any private label business is to offer unique products and you should sell a better mousetrap than what’s currently available. Make a list of changes and requirements for your products and then ask if the manufacturer can make your required modifications.
- Do you have any customers in your home country? – In general, you never want to work with any private label manufacturer unless they already have customers in your home country. If they are not familiar with your country’s rules and regulations, you could be in for a world of hurt if they use illegal or unauthorized materials during production.
- What is your preferred payment method? – Most business is conducted via wire transfer but you may be more comfortable paying via Paypal. If this is your first time buying, then you may want to use trade assurance which is Alibaba’s escrow service. Not every supplier supports trade assurance so it’s worth asking if they do.
- What are the lead times for manufacturing? – Some factories can take several months to produce your products. For example, one product we sell literally takes 6 months to make because they are handsewn by Chinese artisans in rural China. Make sure you find out how long it will take before your products are shipped.
- What are your shipping methods and incoterms? – I usually ask this question once I’m ready to place my first bulk order but it pays to know whether you’ll need to hire a freight forwarder or not.
In general, you should not try to cram all of the above questions into a single email. Instead, go through the questions above in a logical progression that feels natural.
Here’s an example outreach email that I use.
Hi Alibaba Supplier Name,
My name is Steve and I’m a buyer for Bumblebee Linens and we specialize in selling handkerchiefs. In fact, we are the largest seller of handkerchiefs on the Internet. We are interested in carrying many of the items that you have to offer.
Specifically, I would like to get pricing and availability for the following items
“list the items…provide photos if you have them”
Please send pricing in 500,1000 and 5000 unit quantities. Also, if you could send us your product catalogs, lead times for manufacturing, and MOQ we would greatly appreciate it.
Once you’ve decided which products you want to sell and found a private label manufacturer, it’s time to start selling!
From here, make sure you sign up for my free 6 day mini course on how to start a profitable online store!
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