Private Label for Profits!
The private-label business strategy has proven to be a challenging one for many distributors. Some barriers to success, like significant cash investment for an initial stock order, or not enough marketing support and resources, have kept too many distributors from launching a private label program that brings a positive return on investment.
Rodney Sandoz is the owner of Long Beach Fastener Supply. In 2008, as the market was slowing into recession, his sales began to drop and his inventory level began to climb. As a result, his cash flow was suffering and he was having issues financing his operation. His customers were feeling the squeeze from the market and were taking measures to consolidate vendors in an effort to increase efficiency and profitability. His customers loved doing business with him but they needed him to offer more product lines to remain a more viable vendor. So, Rodney was faced with a challenge; he needed to add more products to his offering but he didn’t have the cash flow to finance it and he needed to find a solution quickly. He began researching options for new product lines, scouring product catalogs, talking to sales reps, inquiring at buying group shows, and talking with friendly competitors. He finally found the solution with Midland Metal’s Private Label Shipping program.
He discovered that he could add a full line of fittings, valves, clamps, & accessories, over 13,000 items, without having to invest one dollar in inventory. Rodney used the custom branded catalog to market the product line to his customers. When he received orders from his customers, he entered the orders on midlandindustries.com where he received an additional 5% discount. Then, Midland shipped the orders direct to his customers with no reference to Midland. Private-labeled packages are shipped in generic boxes, and a generic UPS label. The product labels, packing slip, return shipping information, are custom branded with the Long Beach Fastener Supply brand. Rodney would receive timely order acknowledgments, shipment notification with tracking number, and invoices from Midland. He would then bill his customer and collect as he normally would. The result was Rodney serviced his customers with a robust new product offering, the orders were shipped ,and Rodney billed his customer at a very profitable margin. He did all this without having to invest any capital into inventory, marketing, or additional overhead. Long Beach Fastener Supply sales increased incrementally year-over -year through the recession and have continued to achieve double digit growth annually since.
Midland Metal shipped over 15,000 private labeled packages for our customers this year. Midland customers trust us with their customers. We strive to promote your brand and help build your business by being the silent partner in the background working to promote your company and provide the technology, sales, & marketing tools you need to succeed in tomorrow’s marketplace. We don’t put our name on anything, so you can put your name on everything – helping you build your brand and assist you in marketing these products to your customers. Drive up your profits — not your inventory costs.
I’m always interested in your feedback. You can e-mail me at Billy@midlandindustries.com or call me at 1-800-821-5725