All posts for the month August, 2019

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Private Label Deals for Your Invention

Private Label Deals are a “win-win” approach for inventors

By Don Debelak

{Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49. Go to and enter inventions Don Debelak to purchase. From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}

When the time comes for inventors to sell new products, they frequently head down the same, predictable path: targeting small markets and getting small footholds. Eventually, expanding their sales network becomes a top priority-and that calls for selling to big retailers. Small businesses face some marked disadvantages here: they only have one product, and they aren’t big enough to guarantee delivery.

Private Label Solves the Marketing Problem

How can inventors get around this problem? By private-labeling their products. In this arrangement, inventors market their products under another company’s name. Inventors benefit because their products are supported by the marketing power of an established company. Private-label partners benefit because the relationship broadens their product line, which enhances their competitiveness.

Size Small

Marilyn Searcy, 46, was wallpapering her home when she got the inspiration for It’s a Keeper, an attachment that fastens to the top of a ladder and holds either a 2- or 5-gallon bucket. It’s a Keeper lets users keep their tools at arm’s length while working. “It’s a great product for anyone who’s ever had to go up and down a ladder to get the right tool for the job at hand,” says Searcy, whose company, Searcy Enterprises, is based in Fremont, California.

Searcy says she had big goals when she started selling her product, but was stymied by her inability to secure larger accounts. “I could never get into the larger retailers,” she explains. “I was too small a supplier, without any advertising. Another problem I had was that, at first, my product didn’t fit every type of ladder.”

Searcy tried to expand her distribution by changing the product. “I improved the product so one model could adjust to fit any ladder in the market. This way a retailer would not have to worry if It’s a Keeper would fit the ladders it was buying,” says Searcy. But, she explains, the retailers still wouldn’t buy. In an effort to penetrate large retail chains once and for all, Searcy decided last year to pursue a private-label arrangement with a major ladder supplier that sold to Wal-Mart, Kmart and Home Depot.

When entrepreneurs sell their innovations on a private-label basis, those products sell for less than wholesale. But even at the lower price, Searcy will benefit: The agreement will eliminate her marketing and sales costs for that product, and the increased volume will have allowed her to cut manufacturing costs.

Private Label Deals

Private-label agreements work for all types of inventors. But to succeed, you must find a company with a product line complementary to yours. Keep in mind that you don’t want a private-label agreement with a company that already sells a competing product. Another consideration: Does that company sell to your target market? You should evaluate your potential partner by both size and breadth. Searcy wanted to partner with a company that had a strong presence in major discount and building-supply stores because they presented the largest potential volume for her product.

Searcy got her first lead while attending a how-to fair hosted by popular West Coast hardware retailer Orchard Supply Hardware. Her lead came when she met Hal Wrigley, president of Applied Concepts, located in Warrendale Pennsylvania, who private-labels a line of rubber grips to Sears. Searcy showed Wrigley her product, and got the name of the president of the ladder company that she’s now negotiating with.

As Searcy found out, trade shows are an entrepreneur’s best bet for meeting the right contacts. The best way to get started is by asking a company rep the following:

Do you know of any companies that sell products on a private-label basis?
Do you have any key contacts at those companies?
What do you think of my product, and do you think it could sell?
Can I use your name as a referral when I call to introduce myself

If you can, try to talk to a someone at one of the companies private-labeling products, rather than going through a middlemen. If the person at the company likes your idea, ask if they’ll set up a meeting with decision-making executives at the company.

Private-labeling typically constitutes a “win-win” proposition for both parties. The big drawback for the inventor is that he or she must take a lower margin. That’s usually offset in two ways: first, because they won’t have sales and marketing expenses, and second, because manufacturing costs typically drop by at least 10 percent once production quantities increase. Private-labeling just might be your ticket to success if you don’t have the resources to get your product on the shelves of major chains. Instead of getting discouraged if your sales are low, seek out a private-label partner with the resources to shoot your sales to the next level and beyond.

Locals Only?

Today, Searcy has found a better solution: She’s since hooked up with a U.S. manufacturing partner who delivers quality products every time. While inventors can often reduce costs by using overseas production, the risk isn’t always worth it. Lower pricing means you have to place larger orders, and poor-quality products in bulk can be difficult to return. Here are some steps inventors can take to minimize problems:

Contact your local Small Business Development Center (SBDC) for help. You can find a list of SBDCs on the SBA Web site. Click on the box for “Outside Resources,” then click the SBDC box and it will take you to a list of offices throughout the United States. The page can link to an SBDC office you select. You can also check out the government section in the White Pages for the SBA office nearest you-it will be able to give you the phone number for your local SBDC.
Make a list. Ask the SBDC for a list of resources or other contacts in your area that can help. You’ll want a local contact, as you may require assistance a few times before finalizing a deal.
Hit the Web. If you don’t have an SBDC close by, you can also search these Web sites: and
Get the names of at least three U.S. customers from potential manufacturers. Call those references to ensure those companies are satisfied with that supplier.
Demand first-article inspection rights from manufacturers. First-article inspection rights let you approve the first production run off the manufacturing line. Only after you give the go-ahead can the manufacturer continue production.

Spell It Out

A private-label agreement will spell out pricing and exclusivity terms. In addition to setting the original price, terms may include the following:

Price-increase provisions: The private-label customer may want to protect itself against large price increases, something Searcy included in her agreement.
Price-protection provisions: These were also included in Searcy’s agreement, and concern the retail customers’ price for the private-label product in relation to what people would pay if they bought the product directly from the inventor. A clause might state that the private-label product will always cost a minimum of 25 percent less than the inventor’s wholesale price, or that no private-label customer can have a lower price.

Exclusivity is another key issue in private-label agreements. Some potential exclusivity provisions are:

Exclusivity by territory, in which the inventor agrees not to private-label his or her product to another company;
Exclusivity by market segment, meaning the entrepreneur might grant exclusivity for a particular market. For instance, a manufacturer of a protective glove holder (worn on the belts of police, fire and paramedics) might have an exclusive agreement for the paramedic market with one manufacturer, while reserving the right to strike new private-label agreements for police and fire departments. Searcy’s agreement included this provision as well;
Exclusivity from other private-label agreements, where exclusivity may apply just to other private-label agreements, allowing the entrepreneur to continue selling the product under its own brand name.
Exclusivity from the manufacturer selling under its own brand name, meaning the inventor agrees not to sell the product except through that one private-label agreement. The manufacturer also has to produce subsequent products at the same (or higher) quality level as the first product run.

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Inventors Need Obvious Benefits

{Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49. Go to and enter Inventions Don Debelak to purchase. From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}

Benefits should be recognized by end users and distributors in two to five seconds.  How do you know you have an obvious benefit?  When you can give it to someone and they immediately recognize the benefit without you telling them anything.  The more you have to explain your idea, the less obvious the benefit is.

Why is an obvious benefit important?  Unless you can afford a big advertising and marketing campaign, your product will need to sell on a shelf without anyone offering a big sales presentation.  The product needs to sell itself.

The degree of obviousness the benefit has is a subjective question, so I’ve listed six success stories where the product sold itself.  Compare the power of your benefit to the power of the benefits listed below. You may even want to get samples of the following products and have people evaluate how obvious your product’s benefit is compared to theirs.

Spanx, Body Shaping Undergarments 

Sara Blakely did amateur comedy is her spare time and one night before going on stage, she put on some cream colored pants, but everything she put on under them showed lines.  She had already decided to wear open toed shoes, so she couldn’t wear panty hose either.  Out of options, Blakely cut off the feet of her panty hose and went on stage.  The legs kept on rolling up on her, but she realized that she was onto a great idea – footless panty hose.  Seven years later Spanx was on its way to becoming $150 million business.  Her product line had greatly expanded beyond footless panty hose to a whole line of body shaping undergarments, not girdles, but enough to firm so that many users claim they loose two inches when wearing them.  Spanx comes in a variety of shapes, that run from the bra line to the thigh, and the smooth out the look over all undergarments as well as shaping up the body so it looks its very best in almost any outfit.

Blakely actually had a very difficult time convincing manufacturers (who were all men) that women would want her product.  After hearing no many times, she finally met one manufacturer who initially told her no, but after showing the product to his daughters, he called Blakely back and told her although he personally thought the idea was strange, his daughters thought it was the greatest idea they had ever seen.

Panty lines are a problem that most, if not all, women have faced.  Also, many women are always searching for ways to look their best.  When presented with a product that can cover up panty lines, even with open toed shoes, and at the same time shape up their bodies, women instantly understand the benefit.  It is this instant recognition of the benefit, along with edgy and effective marketing and packaging, which has turned Spanx into the huge success it is today.

Lashpro, Curl Those Eyelashes

Staying on the theme of high fashion, our second inventor, Stephanie Kellar pick a product area, eyelash curlers, where products had not changed much since the original eyelash curler was introduced in the 1920s.  These eyelash curlers could pinch women’s faces and were cumbersome and awkward to use.  A second problem was that the eyelash curler was small and could easily over curl the eyelashes.  Keller reinvented the product, moving the curler away from the face and adding a much larger curling surface to minimize the risk of over curling the eyelashes.  Kellar introduced the product, which retails for about $20.00 and quickly sold to 50 high end stores like Henri Bendel and Nordstrom.

Kellar’s success came very quickly because people saw the benefit immediately, which existed primarily because the current products didn’t work well.  When your product solves a problem that people know they have, they are quick to see the benefit.

Electotrack, Plugs Every 8 feet

Holiday outdoor lights require lots of extension cords, but do they need to?  Kevin O’Rourke, an electrical contractor didn’t think so, instead all you need is one cord with plugs every eight feet or so and then one electrical cord can do the work of 20.  Then in a flash O’Rourke licensed his idea just months after he had his patents in place and a full working prototype.   The Electrotrack sells for $69.95 in stores like Ace Hardware, Lowe’s Target and has been featured several times on QVC.

Once again, the benefit is strong because the need is strong, the other products just do not work well and people recognized a solution immediately.

Mountain Boards – Snow Boards with Wheels

Jason Lee and Patrick McConnell didn’t get their benefit from solving a problem; their benefit from giving users exactly what they wanted: extreme danger. Adding big wheels onto a snowboard, and then calling it a Mountain Board, with the mobility to go down the mountain at unheard of speeds was just what your everyday crazy snowboarder was looking for in the tamer summer months.  They launched the product after the year’s snow melted away had over a million dollars of sales before the year was over.

Lee and McConnell knew what daredevils wanted, because they were daredevils themselves.  They went for a fast and furious product that their target customers immediately related to.  The main benefit is that the Mountain Board gives daredevils more opportunity to live out their creed all year round, namely, that we could live or die, but we’ll have fun in the meantime.

The Clean Shower – a Household Name

Robert Black was a retired chemist who lived in Florida, where the water is bad and leaves a crusty film on the shower wall.  Black didn’t mind, but his wife did, and she was after him all the time to come up with a solution that would keep the shower clean.  Black worked for a few years and then had a solution, a simple spray that could be used after a shower that kept the shower walls perfectly clean.  Black took the product out on his own and was selling over $100 million per year before he was bought out by Proctor and Gamble.

Black learned that what counts for an obvious benefit is not so much the product itself, but rather how end users perceive the problem that the product is going to solve.  If the product addresses a problem that is known and important to users, you will have a product that will communicate a strong benefit to end users.

The Java Jacket – One of My Favorite Stories

When Jay Sorenson bought coffee in convenient stores and coffee shops it was always too hot to hold in a single disposable cup.  He noticed that many people used two cups so that they handle the coffee without burning their hands.  Sorenson then came up with the original idea for the little piece of corrugated cardboard that fits over a coffee cup and keeps your hand cool.  The benefit is obvious to the end users, but Sorenson didn’t need to sell the product to end users, but to convenient stores and coffee shops.  Furthermore, his customers (convenient stores and coffee shops) didn’t sell the product to end users – they gave the product away for free.  How could Sorenson convince his potential customers to buy from him?  He had to find the benefit that made sense for his potential customers.  His Java Jacket was only half the cost of an empty coffee cup, so his customers could cut their costs from a double cup down to a Java Jacket and single cup.  That benefit is obvious, easy to understand and important.  Shortly after introducing the product Sorenson was selling over $16 million per year.

Don’t always assume the benefit is just for the end user.  Benefits to the distribution channel can be just as important, and just as powerful.  Better packaging, better terms, easier to handle product lines are all important benefits to the distribution channel and companies spend as much time looking for advantages in the distribution channel as they do looking for advantages for end users.

CD and DVD repairs

Have you ever had a CD or DVD skip or play a very distorted sound or picture.  Well that can be easily repaired because rarely is the electronic signal distorted, instead the optical layer is damaged.  Repair the optical layer and that $15 to $20 CD or DVD is as good as new.  Daniel Henry knew that and he put together the very first optical repair kit called Wipe Out and he was ready to roll.  But at first sales were a huge dud.  A great benefit and people wouldn’t buy. Why – they didn’t know CDs and DVDs could be repaired. They thought it was a hoax.  Once again pointing out it the obvious benefit is not because of the product, but because of the end users perceptions either of your product or their problem.

Henry bounced back by running a major publicity program to editors of key magazines, sending out free samples and telling editors to try and repair their damaged CDs and DVDs. They tried the product, it worked and the praised the product widely in print –leading to big sales of Wipe Out.  With endorsements on the package consumers started to believe and the product was a big hit.

How to Proceed

When you start to evaluate whether or not your product has a truly obvious benefit, don’t concentrate on the product, concentrate on the problem or situation the product addresses.  Ask people if they experience the problem you are addressing, and see how they describe. Eric Teng, who created the Garlic Twist, a new and easier way to mince garlic, started out by asking people if they ever used a garlic press, the old fashion way to mince garlic, and if they did how they felt it worked and what they thought could be done to improve the product.  When one person after another complained about the press, Teng knew he had a winner, and his product’s sales of over $600,000 a year demonstrate that the Garlic Twists benefit is indeed truly obvious.

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