The skinny: Private label may not mean what you think it does. Buying private label means that you buy stock products from other companies who will sew your label into the product. Usually you can get certain options and colors but you don’t provide anything but a purchase order and payment. You can’t specify fit changes or expect much in the way of customization.
If you say you are a private label, this means that you manufacture stock items for other companies, using your patterns and sew other companies’ labels into it.
A question posed from another non-apparel specific list:
We are seeking active wear apparel for [redacted] sports made from [redacted] fabrics. We are looking to private label and need a variety but minimums to create the lines. Can anyone provide assistance or any leads.
The meaning of private label has become diluted or rather expanded. Thinking a bit, I think I’ve narrowed it down according to who is signing the check for the order. There are three kinds of private label.
- Corporations and Organizations
- Retailers -internal product development
- Retailers: external product development
Lastly, I’ll explain why one needn’t be a major player to provide private label goods. There’s no reason a DE can’t get in on it too. Even small stores like the idea. If you’ve been delivering consistently -and they’ve been paying consistently- this can work out well for both of you.
Corporations and Organizations
This first type of private label is the most transparent and common to the average person. There’s tons of companies that sell jackets, polos and slacks, often called corporate attire. They have large catalogs from which customers -usually a corporation or organization- select from in stock colors and fabrications. These would be “blanks”. The customer has the option of having the catalog also embroider or screen print their logos or company name. These catalog firms also sell to embroiderers and screen printers who sell the blanks in the course of helping usually smaller customers (like amateur sports teams) with customized shirts. While catalogs always stress customization, it’s not really. For the most part, they are reproducing items they already make in colors and fabrications to suit. Not that that is a bad thing.
Now, if an individual or entity wants a truly custom product of their own creation, then they are a manufacturer themselves and need to go through the rigors such that you all do. Few are served by going to a catalog house such as that described above unless it is a huge corporation like UPS or McDonald’s who want uniforms. Such products are similar to items these catalogs already produce.
Retail: Internal product development
Many retail stores have private label programs that they use to merchandise amongst the products they buy from manufacturers to increase their margins. In affect, the retailer is the designer and manufacturer. There are varying relationships and stores of any size will do this (many boutiques create styles for their stores to mix with what they buy). Like you, whether they produce the items under their own auspices or hire it all out, they are the manufacturer. Some retailers have pattern makers and sample sewers on staff, while others hire that out. The retailer will have a private label division that handles all of the production management. Zara is an example of private label with internal product development. However, they differ in that they don’t sell other brands in their stores. Another example of a vertically integrated store is the Gap.
Lastly, it is rare that a retailer will be exclusively internally or externally based with their private label sourcing; it’s usually a combination. Just as you are unable to produce the entire gamut of sewn product items spanning categories as children’s, outerwear, swim suits, shoes, maternity etc, neither have stores the resources to produce all of these product categories in house.
Retail: external product development
In this case, the retailer will contract with a company that they already buy from for an exclusive deal on certain styles. Typically, they like a given body style but it’s not typically a blank (of which millions are made); it’s more seasonal. When previewing a line for purchase, the store may ask for additional styles in custom colors or fabrications just for them. This can be a good deal for both parties; the store may possibly get the goods at a lower price and the manufacturer has a guaranteed sale. Still, margins aren’t the only reason a store may want private label; it’s a matter of exclusivity. The store thinks the style will be a strong seller and merely wants a color or fabrication that no one else will have.
Usually a store doesn’t get as much of a price break as you’d think because the manufacturer incurs a few costs above and beyond the costs incurred with their usual line creation. These costs amount to administrative sample management, sourcing goods for the store’s exclusive use, sample creation and shipping samples for approval. If costs are lower, it’s usually because the store wanted a less expensive fabric or simplified sewing and design process. Also, costs may be less because a private label deal is a house account sale. A manufacturer’s sales rep won’t be collecting a commission on a house account.
In nearly all cases, the store’s label will go in the garment but this isn’t always true. Rather, if a designer is a big name, they may design a line specifically for a retail store. Several designers have done that for Target. Again, there are varying relationships. The designer may be under contract and the store arranges for production or the designer’s company can also produce the line too.
Private label and you
There is no reason why a DE couldn’t offer private label to customers who request it -assuming you’d be the one to also manufacture it -unless you just don’t want the hassle. There are some parameters though.
- Get the money first: If you’re buying goods exclusive to the store’s request, they must agree to specific quantities and a down payment (at least 50%) is in order. If the order isn’t sufficient to cover purchasing minimums, well, you can’t do it. I would also recommend collecting at delivery like you would for any other customer.
- Custom design for a store: This is where it can get tricky. Who owns the design? Who owns the pattern? Technically, if you charge them for the pattern, they own it. So, you may not want to charge them for it if you think you’ll want to re use it once the period of exclusivity ends. Exclusivity is another thing, determiine a set time period. It goes without saying that it’d be very naughty of you to reuse the pattern for yourself or another store before that period expires.
- Price: Again, they may not be entitled to the price break they imagine. If they’ve selected lower cost goods than you normally use, then fine. You should lop off a bit for it being a house account. If a sales rep got you the deal, you have to give them something otherwise they won’t get you any more. I wouldn’t know what the rate of commission would be but owing to the particular nature of the arrangement, it’s not likely that the rep will service those particular styles the way they do others. The potential of private label accounts is something you should discuss with a rep when you interview or hire one.