Launching a new supplement brand involves making many tough decisions. The crucial one is deciding between two paths – choosing to go with a private label formula or developing a custom formula. Each approach comes with different challenges and benefits. The following guide focuses on differences, including the advantages of both paths. The idea is to provide you with all the details necessary to help you make the most informed decision for your brand!
Defining Each Approach
Before continuing, let’s cover the basics and learn more about the available options. Here’s an overview of private label and custom formulation approaches.
Private Label
You purchase an already created and approved formula when you choose a private label supplement. With this concept, you put your branding and packaging on the product and sell it however you want to. There will be other brands out there with the same exact product, just in their own packaging and under their brand name.
Going with a private label supplement means that you’ll have lower development costs and lead times, typically. The formula is already ready for production, meaning that it will take less time for it to reach the market. But while you can add your brand name, logo, and colors, other customization options are quite limited.
Custom Formulation
A custom formulation includes coming up with a proprietary ingredient blend that will be unique for your product. This approach usually requires investing in research and development, which also means significantly more time until you reach the market, as well as more capital required up front.
The main benefit is that you have much more control over the ingredients and the final product. Due to the fact that everything is customized, the manufacturer will typically give a longer lead time. A higher price tag is usually another characteristic of this approach, but you rely on offering users a unique product with specific advantages.
Key Factors to Consider
There’s no one-size-fits-all pick because both manufacturing options can be a smart market approach. It all depends on your brand and marketing strategies. Here are some factors to consider when trying to choose the right type of formula:
- Budget and resources. Custom formulations require investing in researching the right proprietary blend. You also need to source the ingredients as they may not be normally on hand for the manufacturer, so the upfront investment is higher. Private label supplements require a lower initial financial commitment because the blends are already pre-approved, and ingredients are likely on hand already.
- Branding and differentiation. Other brands might have already launched the same private label formula that you are considering. Since you are selling the same supplement, it may be tricky to differentiate. On the other hand, a custom proprietary blend is unique for your brand and may tap into a market that is untapped at this point. Apart from addressing specific customer requirements, it helps you set the product apart from others.
- Time to market. Depending on different factors, it can take only weeks to launch some private label products. Things are different with custom formulations because you need to come up with the formula, execute testing, procure the ingredients, and set everything up for production. The estimated timeline for custom formulations is usually much longer than for stock formulas.
- Quality and control. You have restricted control over ingredient sourcing and compound selection with private label formulas. However, you can pick a reliable manufacturer to ensure optimal quality. Custom formulations give you far more control, which can help you achieve the desired quality level.
- Scalability. Manufacturers already know they have the capacity to produce private label formulas. The chances are they have significant experience with those products and their ingredients, so there won’t be any surprises when increasing production volume. With custom formulation, expansion might require developing a suitable strategy, ensuring that everything goes smoothly.
Pros and Cons in Detail
Private Label
Private label products can deliver the following advantages:
- Lower barrier to entry. For every brand, the cost and required capital are very crucial. The fact that the initial investment is lower can be a determining factor in going down this path.
- Quick product launch. Pre-made stock formulas ensure you aren’t wasting any time. You can reach the market in as little as weeks or a couple of months, depending on the manufacturer and the formula in question.
- Reduced risk. The product has a proven formula, meaning that there’s already a certain demand for that blend.
- Ready-made compliance and testing. These are pre-approved blends that have already passed the necessary testing and comply with relevant regulations.
As for the downsides, the most obvious one is limited customization. You can’t adjust the formula to be different from the others. That means you could suffer due to market saturation, and it will be hard to attract customers to your particular brand since it is exactly the same as the other options out there. To compete with those brands, you may need to lower the price of your product, which compromises your profit, or invest a lot into marketing, and that is also a significant expense.
Custom Formulation
Here’s what to expect if you choose to go the custom route of a proprietary blend for your brand:
- Unique product offering. It’s the crucial distinction because no other product will feature the same formula as yours. If you identified a demand for that kind of supplement when analyzing the market, this should significantly contribute to market positioning.
- Enhanced brand identity. The exclusivity will ensure that users easily connect the product to your brand. You’ll be the only one offering that type of supplement, making it easier for consumers to remember your brand or be able to recognize it.
- Total control over ingredients and quality. Choosing to go custom means that you play a crucial role in deciding which compounds or ingredients to choose and potentially also where and how to source them. Apart from focusing on market innovations, this should help guarantee the expected quality level.
It’s clear that the custom formulation path will cost more than going with a private label stock formula. You also have to consider the longer development cycle, which can be important from financial and other perspectives.
Real-World Scenarios & Examples (Hypothetical)
Let’s discuss a few potential real-world scenarios that companies could face when deciding between private label and custom formulation. It might help you decide on the best approach for your brand.
Scenario 1: Start-Up Brand with a Limited Budget
Your brand is new to the market, and your company might not have any previous experience in the supplement industry. There’s an idea about launching a dietary supplement product, but your budget is tight, too. You’d also like to enter the market quickly and start earning money as soon as possible.
All these factors indicate that you’ll likely be a better fit for the private label path. You will be able to hit the market sooner, get a lower price on your project, and have the option to choose from an already tested and approved formula.
Scenario 2: A Reputable Brand Wanting to Expand the Product Line
Your brand is already well known and selling in stores and online, let’s say because you have fantastic skincare supplements. You have a team that is capable of researching the perfect formula for your next launch, and you have a consumer base who is ready to purchase said new formula. It’s now likely time to create a custom proprietary formula that will be the only one of its kind on the market.
Given that you aren’t just starting in the industry, it’s safe to assume you have some funds to invest in the new product. A custom formula can target a more specific corner of a market and help your brand expand its authority in the skincare space. You can work with R&D specialists to fine-tune the formula since the priority is to produce a top-quality product and not enter the market quickly. Despite the higher price tag and longer lead time, the product that is produced will be crucial to your brand’s next step.
Making the Final Decision
The guide covered the key factors to consider, but here’s the checklist that might help in deciding between custom formulation and private labeling:
- Budget capacity and timeline. It’s best to know how much you can invest in the project, as well as when you want it to enter the market.
- Brand differentiation requirements. Would you prefer to invest in marketing, or is there a need for a unique formula to stand out among the competition?
- Market research results. Analyzing the competition and purchasing trends is crucial when deciding on your product strategy.
- What are your plans for the brand? That includes short-term and long-term expectations. Would you like to develop as a brand focused on superb quality, or are you looking for opportunities to profit quickly?
Make sure to consult a potential manufacturing partner before deciding. They will tell you about different terms depending on the approach, and they could share their experience regarding different projects. Manufacturers can provide important insights into timelines, costs, production capabilities, and relevant regulatory compliance.
Conclusion
Private label stock formulas are more affordable and are a faster way to enter the market. You use pre-approved formulas that the manufacturer routinely produces in large batches. However, you will face competition because other brands might offer the same exact product.
Custom formulations require more time to develop, and it’s necessary to invest in research. Getting all the necessary licenses and testing the product will take time, too. Manufacturers will then have to optimize the production process to suit your brand’s specific needs. All this increases the time to market and the initial investment. However, it ensures exclusivity and justifies a higher price tag. Ultimately, each approach has its benefits and challenges, so make sure to make an informed decision that aligns with your objectives and expectations.
Manufacture Both Stock and Custom Formulas With SMP Nutra
SMP Nutra is your partner for all things stock or custom formula supplement manufacturing. Our world-class team has worked on projects of all kinds and is ready to help you with yours now.
You can browse our 800+ stock private label formulas or work with an account representative on a custom formula you have in mind.
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