Private labels are being introduced by etailers to increase margin and attain profitability. Here are 3 things you should know (from KPMG report).
1. Category focused platforms were early to enter and launch private labels, and currently have 25-40 per cent of sales contribution from such labels, while multi-category platforms have around 5-10 per cent of sales attributed to private labels.
2. Private label growth outperforms overall platform growth across categories
While private labels compete alongside well-established external brands, they are able to gain market share by developing differentiated products on parameters such a price, ease of use, specifications etc.
3. Margin, margin and margin..
Private labels could offer higher margins than external
brands on multi-brand online retail platforms.
These margins can largely be attributed to the absence of
intermediaries, and higher control across the value
chain that reduces value leakages.
Private labels form an important part of the assortment for online grocery retailers by filling product gapsSeshu Kumar, National Head – Buying & Merchandising, BigBasket
and generating customer loyalty for these labels. Retailers who successfully develop a range of well
differentiated quality products will build a loyal base of customers and drive profitable growth through
private labels. However, the platforms should maintain an appropriate mix of private labels and external
brands to be successful.