Retail Observer

RETAILOBSERVER.COM JANUARY 2019 32 W hen it comes to differentiating your business so that it will stand out in the marketplace, you've got many options. But there's one that you might have overlooked: sourcing your own product for which you've identified a strong consumer demand and matching it with the right value proposition. Yes, it can be difficult, and it can be risky. But there's an upside I believe is worth considering. Every business is different, but I've been down this road, successfully bringing a private-label TV brand to market for the Independent Channel. Here's a lens on how it came together: I. Identifying the Total Addressable Market (TAM) This isn't always an easy first step. But knowing the size of the opportunity will help you decide whether there'll be a good ROI. In the case I referred to, launching a private-label TV brand, I looked for a void in the market for a profit opportunity and a suitable TV line beyond the Big Three (LG, Sony, Samsung). I'd been challenged by several negative quarterly comps while dealing with other brands and needed to identify a new direction. 2. Competitive Landscape Bringing a product to market before you understand the market space in terms of price, features and choice is a recipe for disaster. Truly identifying what your product is worth and the fair price consumers will pay is a must for any private-sourcing business plan. Draw up a matrix and lay out every SKU, then compare your findings with similar products and ask yourself how your product will differentiate itself in terms of consumer savings, features, and other factors that might depend on the product type. Keep in mind that the more you buy, the less your average cost of goods, so a targeted assortment built around higher-velocity SKUs is always a good idea. Aged inventory is a risk you'll need to factor for when sourcing your product–if it doesn't sell, it will vaporize all your positive projections. Another benefit of private-label products is having control over your own house brand. With price sensitivity on every consumer's mind, and with the Internet as competition, having your own derivative means you won't find yourself price- matching down the street or on the Web. This can be a nice differentiator for your business, marketed correctly, and might help you avoid price erosion with built-in profits. 3. Product Lifecycle From the out-of-box experience, to handling defectives and service issues–these are touchpoints you'll need to consider when selling private-label products. You'll need to consider return and service policies and packaging and materials. Take time to walk through the product lifecycle as if you were both customer and business owner. Put yourself in the customer's shoes: 1: Are the product and packaging inviting? 2: What is the out-of-box experience? Will it project a positive image on your business? 3: Will I have questions about the product? Is it likely to be defective or need service? What steps would you take to handle these situations? Answering these questions will help ensure that your customers will have a favorable experience with your business. It will help you keep customers for a lifetime, which is, of course, the end-goal. 4. The Right Partner Sourcing from the right manufacturer or sourcing partner is every bit as important as the other steps. There isn't one simple answer for finding a partner who's a good fit. A key is to look for someone who comes highly recommended and has a successful record of delivering products to market. A worthy partner will be a welcome extension of your business–they'll improve your odds of success, and in the best case they might even become part of a long-lasting, mutually fruitful enterprise. Happy selling! Doug Wrede Consumer Electronic Trends Doug Wrede Director of CE for Nationwide Marketing Group RO PRIVATE-LABEL (REWARD OR RISK?)

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