Every diaper manufacturer, regardless of its size or location, sooner or later is faced with the question of whether or not it wants to become a private label supplier. On one hand it presents the great opportunity of added diaper volumes in a very short time without having to invest in marketing or publicity, while on the other it presents the dilemma of having to work for an outsider, making sure your company complies with every one of its requirements, including strict price targets and/or reduced margins.
What I have seen so far is that those that refer to their private label customers as a necessary evil are also perceived by them exactly the same way. I can speak about this topic with personal knowledge, as I have been able to work on both sides of the fence for the last few years. A mutually bad perception is the kind of sick relationship that is just waiting to explode, most times with bad results to both parties. Does it have to be that way?
Let me start by identifying three different kinds of private label customers based on their purchase volumes, and then discuss some typical misconceptions and some proposed solutions for each kind.