Let’s talk today about the difference between private label products or OEM (Original Equipment Manufacturer).
These are the 2 main types of product manufacturing that people will use when they start their own brand. Private label products are products that are already manufactured and that you are just going to put your label on. The other type of private labeling is when you take that same product and make very small minor changes to it (like change color, or better grip). Because the products are already produced, there is a much lower barrier to entry in terms of unit cost.
The other side is OEM. This is where you actually have a product design and you are going to have it manufactured from scratch, or possibly a private label product that you want to make some serious improvements on and will require some re-engineering, new molds, or new design work. With OEM you typically have a higher up front cost.
Private labeling is typcially safer when just starting out. But at BGS we use a mix. Just starting out – go with Private Labeling… Already established – give OEM a shot, but find a happy mix between the two.
Learn all about it by watching the video above.
let’s talk about the difference real quick between private labeling products and then OAM okay so these are the two main things that are types of you know many prominent product manufacturer that people are going to be using when they start going after building their own brands and things like that so there is a little bit of a distinction that we want to talk about and that is okay so private label products are parts that are already manufactured and that you are just going to put your label on you’re going to put your packaging you may change the colors and like that so you know the easy example is always things like the spatula okay there’s already spatula manufacturers out there and you’re going to create the Tanner tastic spatula alright so I it’s the same spatula to everybody else’s selling but with mine brand on it that’s what the basic type of private private labeling the other type of private labeling is when you take that product and you makes very very small minor changes to it you may change the color or you may add a pusher grip or you may or do something simple and simple like that and that where the main product itself doesn’t change the manufacturing costs don’t really change significantly and it still falls under that same private label line from that manufacturer why do you private label well you private label because that way you can distinct distinguish yourself from the competition better you’re not selling Betty Crocker spatulas you’re selling the Tanner tastic spatula okay you are the only competitor only person who can be selling that Tanner casting spatula so you can build in your own unique selling position or proposition and everything and really build a brand run I’m not actually saying go sell spatulas okay but it’s just an example alright the other thing is is that because the products are already produced by the manufacturer typically private labeling has much lower barrier to entry in terms of unit costs so you’re gonna have a much smaller minimum order quantity your interval will require to order then if you are custom developing a product and having to buy and buying all of it because they’re already producing at so many different times all they have to do is take your batch and slap a different label or put it in different packaging they’re able to you know keep their manufacturing costs low and then pass on some of that savings to you so that’s one of the big things for why private labels is a good idea on the other side of that is om which is original equipment manufacturing okay this is where you actually have a product design and you’re going to have it come a fax from scratch it’s your invention or maybe it’s a product that you want a private labeling that you want to make some serious improvements on and it’s inert requires some re-engineering or new molds or new kinds of design work so in that case it’s no longer a basic private label you’re actually having to do some manufacturing okay whenever you go into a custom or spin-off product like this that requires that you know a lot of work that you usually fall into the OEM category this is great the problems with OEM are that you typically have a higher upfront cost okay because you may have mold charges to for the injection mold you may have seen sea charges you may have Rd or design charges there’s a lot of little things that could hit you but you know maybe not so little charges they could wind up you know hitting you when you start doing this should you do om first private-label honestly we do both I think you should do both what I do say though is because om usually has a larger cost and there’s a little bit higher risk in terms of you don’t know if that product is actually going to sell because it hasn’t been sold before private label is a little bit safer starting out option we do use a mix we probably have 75% of our products our private label that were you over the last couple of years we’ve started increasing the number of OEM products that we have we will never ever have all OM products it’s just not going to happen and the private label ones are sell justice just as well they’re just as high quality everything but when we do find a good whole in the marketplace or a good opportunity no we also have the cash reserves now to go out there and OEM a product so that we can bring something unique or significantly differ to the marketplace to capitalize on that so if you’re just right now go ahead and stick with private label it won’t hurt you at all if you’re already established you’re already private label you already have a significant business going you’re ready to move into om stuff that’s great I tried to find a happy mix between the two you know make your money work for you the best you can all right guys so that’s the difference between private labeling and original equipment manufacturer you