You may wonder why big names like Amazon and Birchbox would even bother with private label products. After all, aren’t they already successful?
Of course, margins are better for selling your own products, but that isn’t the main reason Birchbox made their own line. Understand that Birchbox is not just in the beauty sample distribution business. First and foremost, Birchbox is a marketing company and it collects market data.
Case in point:
“From the beginning, data has been an essential part of Birchbox’s growth and strategy …we use it to make important company decisions, and use it to guide us towards creating the best possible new products for our customers,” explained Deena Bahri, VP of Marketing at Birchbox. Birchbox has used big data when launching a new service or product offering, and for Birchbox Man they used both behavioral and survey data. Their surveys and behavioral data, Birchbox has continued to improve their product offerings and deliver what the customer wants and stay relevant.” – How Birchbox Uses Data to Find Online Success [Case Study]
Says Bahri, “Sometimes the scary thing about a monthly subscription is that every month we have a chance to delight people — and every month a chance to disappoint them.”
“Big data tips the brand’s scorecard in favor of the delight bucket. Customers complete detailed profiles so Birchbox can meet individual needs, but the company analyzes the data to see if customers are, indeed, behaving as anticipated. “We’re a very quantitative marketing team — we measure everything we do,” Bahra explains. This includes targeting emails, messages, and offers based on both preferences and past behavior. Got curly hair? You’ll get messages and product selections that match you. If you’re someone who’s gifted products in the past, you’ll continue to see campaigns to bring out your inner giver.” – Birchbox shows how it continues to reinvent its brand at GrowthBeat Summit
Based on data and knowing their customer, Birchbox identified niches where opportunities existed for their own products to fill a need.
“While it absolutely makes financial sense, launching our own beauty brands isn’t necessary for our bottom line (though of course the margins are favorable),” she explains. “Product development grew out of our desire and ability to use our data to serve our customer even better! We created something for her that didn’t exist elsewhere, that we knew was relevant to her lifestyle and beauty needs…. She also noted that LOC and Arrow have helped Birchbox shed its image as just a subscription box service; the in-house brands help to identify Birchbox as a regular beauty retailer as well.” – Why Amazon, Birchbox, and The Outnet Launched Their Own Labels
Private label isn’t just about profit (although that is an incentive), it’s also about your own company brand.
While Zady isn’t making huge profits off its private label, the line serves as great branding for the company. “If you say private label, sometimes that means some department stores will have a private label as kind of a knock off of the other brands that they carry,” Bédat notes. “We see the Zady label as our line. It’s our collection. It’s the foundation for everything else.” – Why Amazon, Birchbox, and The Outnet Launched Their Own Labels
Let 3B International help you launch your private label products. We can make fragrances, skin care, and more. Fill out the Contact Form or call to get started.