Retailer Manufacture Architecture

With your own private labels, you secure profitable margins, stand out from other providers and reduce your dependence on the big brands. The stationary trade has been using such own brands successfully for many decades. The first e-commerce providers have also been experimenting with them for several years.

In particular, large online retailers are testing which strategic orientation with private labels promises success. One thing is clear: there is no such thing as a perfect solution . While Zalando is already strategically parting with its own fashion brands, which it launched in 2010 , Amazon is advancing into ever more product segments with new retail brands. The US online retailer now offers more than400 own brands , including in the areas of fashion, furniture, technology, baby products and food, and has recently also entered the B2B market . In today's article, we introduce you to strategy options that will help you launch new retail brands.

Private label: How customer trust is changing in e-commerce

Why deal with private label as an e-commerce provider? Probably the most important reason for the introduction of own brands is the change in values ​​of your customers . Because the long-term loyalty of a customer to favorite brands has been decreasing for decades. The advertising agency Serviceplan even draws a parallel between the change in values ​​towards brands and the loyalty behavior in relationships. The only difference: For some years now, the loyalty behavior in society has been growing again, but brand loyalty is continuing to decline . Instead of traditional brand trust, other factors are becoming increasingly important in e-commerce:

"Brands were the trust barometer of the past, today they are replaced by algorithms and product evaluations", says Klaus Forsthofer from Marktplatz1 .

From retailer to manufacturer: customer loyalty with private labels

Customer trust is also fundamentally important in e-commerce. However, your customers increasingly trust other factors.

One's pain is another's joy: while established brands have to cope with dwindling brand loyalty, the change in values ​​is a great opportunity for new own brands . With a strategic positioning of your retail brands, you too can benefit.

With strategic brand architecture to successful retail brands

When building retail brands, it is crucial to first think about the specific brand architecture. How visible should your own company be in relation to its own brands? How would you like to position the brands in terms of price in the competition?

The reference to the company by name defines the orientation of the trademark

The first factor in strategic branding is how close you want the new private label to your company. Your company is most visible when the new brand is also marketed as a corporate brand under the company name . In the example from the retail sector, this is the REWE own brand . With an aligned brand like REWE Feine Welt , the name of the company is still clearly recognizable. The endorsed brand concept, on the other hand, uses a clearly recognizable branding that is perceived as an independent brand. The branding of the company is only added as a support. One example is the endorsed brand Balea from the drugstore dm. According to a brand image study by the FOM University from 2013, the perception of Balea by consumers is positive and hardly differs from the recognition of well-known manufacturer brands . Strong trademarks that are directly related to your company can therefore also have a direct impact on your company . In contrast to the other brand architecture variants, independent brands are not recognizable as own brands at first glance. For example, the well-known, REWE- owned discounter brand yes! .

From retailer to manufacturer: brand architecture with private labels

These variants are available for adapting private labels to your company. Source: Batten & Co .

In which price segment do you classify the new trade mark?

Once you have determined how you will position your new private label in relation to your own company, the next strategic decision is to place it in the market . Depending on the competitive situation, decide which price range is particularly lucrative. Different pricing strategies are recommended with regard to the selected price segment for your private label.

# A2 : Would you like to position your new brand in the entry-level price range ? Then it makes sense to offer the same value (for example the same quality) as the manufacturer's brand A1 at a lower price.

# B2 : Would you like to target the medium price segment? Deliver greater value (e.g. more quality) at a cheaper price than the competition B1.

# C2: In the high-price segment , a trademark should be positioned in such a way that it promises more value than the manufacturer's brand C1 at the same price.

From retailer to manufacturer: Price positioning with private labels

With these options you offer a more attractive price-added-value ratio than the manufacturer. Source: Batten & Co.

The example of REWE makes it clear how the price positioning and the branding variant are mutually dependent . In the company's positioning as a quality retailer , REWE ensures that the company name is only located in the vicinity of the product brands from the medium price segment. Obviously, the strategic direction is that strong private labels in the middle and upper price range directly support the REWE corporate brand, while private labels like ja! do not endanger the quality image in the low-price segment by emphasizing the distance to the corporate brand.

Amazon is doing a similar thing with its private labels. Some express a clear closeness to the company , such as the popular “private label” AmazonBasics . The Aligned Brand currently generates 85 percent of sales with own brands and directly supports the perception of the internet company. Other brands, however, are more distant from the parent company . The fashion brand find. For example, it receives the label “by Amazon” as an endorsed brand, while the hygiene products brand Presto , as an independent brand, shows no direct reference to the group.

How to properly implement the strategic direction of the private label

To find the optimal price for your new private label, you need a comprehensive market overview . However, the example of Amazon with over 400 own brands shows that in e-commerce it is almost impossible to achieve this overview by hand: New providers are constantly entering the online market in a wide variety of industries. In addition, more and more e-commerce providers are making their price adjustments dynamically. The market intelligence software blackbee Insights prepares this huge amount of data clearly for you and supports you with the most up-to-date data in the search for the ideal price for your product.

Our market analysis experts will be happy to advise you without obligation about the tailor-made solutions from blackbee Insights . We are looking forward to your message!