The Biggest Problem With Private Labeling In 2018

Daniel Audunsson

The Biggest Problem With Private Labeling In 2018

Evolve or die.

Let me explain...

A lot has changed during the last 6+ years I’ve been sourcing and selling my own private label products online.

The only constant is that nothing is static. Things are always evolving.

And if you don’t evolve yourself and your business then sooner rather than later your private label brand will face the inevitable; extinction.

Other brands and business owners are going to learn, adapt, evolve and get better. And if you settle on fine and remain static, it’s only a matter of time until they catch up and “eat your food”.

You can’t just release a couple of products and then when they’re doing well, leave them be and hope that things remain as they are or improve without evolving into a stronger business.

This is simply reality and I’m not here to sugarcoat things. I want to help you by bringing your awareness to what actually matters and to how you must evolve - RIGHT NOW - to survive.

The good news is that when you do evolve according to what I’m about to explain to you here, you will not only survive but thrive in bigger and better ways than before.

Yes, there is more competition now than when I got started 6 years ago. But there is also a lot more opportunity!

No matter if you’re selling your products via Amazon, Shopify, another online platform or offline; generally speaking things are getting bigger and better with more up for grabs.

Before I tell you exactly what “traits” the current private label environment favors and how you must evolve right now to survive and thrive as a brand - let me explain what is currently the biggest problem with private labeling.

The biggest problem brand owners face right now is not being competitive on price.
That’s right.

I know it sounds too simple to be true, but let me ask you this; do you have competition that seems to be able to sell the same products you do but at absurdly low prices?

And if you’ve been selling for a while, are you finding it increasingly difficult to sell at a good profit?

If this hasn’t happened to you yet, it will.


Because the strongest survive. And ultimately the most efficient species survive. Therefore, if you are not able to become a stronger, more efficient business, another brand that is “fitter” than yours will start “eating your food” (in other words, stealing your customers).

A fundamental fact in business is that cash is king. The businesses with the best cash flows are the ones who win. They are able to outspend the competition on marketing, outprice them with their products, provide better support, and simply put; outperform their competitors in every way.

I can almost guarantee that the biggest thing limiting your growth right now is not a lack of marketing strategies, advertising “hacks”, automation, processes, delegation, and so forth.

The biggest thing that’s limiting your growth right now is not having more CASH.

If you had 1.3 to 2x more PROFIT in your business, you would grow way faster. And this would compound into WAY bigger growth over months and years. Unless you have access to funding and large lines of credits, your profit margin alone will determine not only if your brand survives but also whether you scale it to 7 and 8-figures - or not.

So as you can see the most important trait a brand can have is excellent profit margins.

If your profit margins are better than 95% of your competition, you are going to succeed easily.

Which is why for example, you see trading companies from China selling products on Amazon with poor product listings and still crush the more sophisticated competition in terms of sales and profit.

So imagine having the same low costs and thus profit margins behind your products and also knowing how to do good marketing.

You're very likely to have great success and generate a lot of profit with that product.

And the good news is that you can absolutely do this!

It all comes down to the level at which you’re handling your sourcing, procurement, shipping, customs and other things that affect your Cost Of Good Sold (COGS).

You’ll never have an edge over 95% of your competition if you treat your business like an amateur and run this all through Alibaba or an independent sourcing agent, have your supplier handle your shipping, and so forth.

This used to be fine but it simply isn’t anymore. Things have changed and it’s time to evolve.

Today and in the near future it’s going to be near impossible to remain competitive, have great profit margins and a cash healthy business with private labeling this way.

Besides, why would you leave 30% more profit (or even more) on the table?

I realize though that the main reason brands do not evolve to improve their COGS is a lack of access, understanding and resources.

This is why over the past few years I have spent a tremendous amount of time, energy and money to build out my own world-class sourcing, procurement and shipping team & network.

I even moved myself and my family full-time to Hong Kong to be close to my sourcing & logistics team and what’s happening on the ground. It’s simply the most important factor of all that determines private label success right now and the biggest “trait” that you either have or you don’t - and if you don’t your business will eventually die.

Because I realize having access and the ability to get the best products at the best prices is simply out of reach for most private label entrepreneurs, I decided to dedicate a part of my team to serve others. To help you evolve.

So, if you're interested in predictably increasing your profits by 30% or more on your next order then definitely reach out and request a free higher profits strategy session with us today.