The term “private label” refers to goods produced by one manufacturer and sold to another company for distribution or sale under their own brand. One of the more commonly-known private label industries is in the food and grocery market. Everyone knows about “store brand” or the generic brands sold at a discount compared to nationally-known, heavily-advertised brands. Often times, the product is the same quality and could even be made by the same manufacturer as the name brands, just packaged with a different label.

The same holds true in the apparel world. Yet, many consumers and manufacturers alike do not understand the game in apparel terms and shy away from this lucrative printing opportunity. I’ll share some coaching tips so you not only understand the game but you can also come out a winner. The game-winning play is simple: read the fine print.

Printing for retail is defi - nitely a game of volumes. Sample orders for department stores can range from a few thousand pieces up to 60,000-plus units. (All images courtesy the author)

Why private label?

Almost every major department store has its own line of private-labeled garments. Dillard’s has Daniel Cremieux, and Roundtree and Yorke, Macy’s sells its Alfani and INC. and, perhaps one of the best-known private label lines, JC Penney’s Arizona Jean Co. is another example. These department stores design their own brands for sale exclusively in their stores. Some have multiple private label lines designed to hit multiple price points. Dillard’s Daniel Cremieux, for example, is geared as lower-priced competitor against Polo, Calvin Klein and Nautica, while their Roundtree and Yorke is an opening price point designed to be even less expensive.

Private-labeled lines provide the ability for the stores to control the entire process, including design, delivery and price point. The two biggest advantages for the stores are higher margins and customer loyalty. The advantage for the apparel decorator is that the stores are looking for partners to print and embroider these lines.

Contrary to that common sales adage that says customers can choose two out of high quality, low price and fast service, in competing for private label manufacturing business, print practitioners must provide all three. The quality must rival (or beat) name brands the stores are seeking to compete against. In apparel terms, this means the hand of the fabric, the weight, the quality of the imprint and more must be as good as the competing lines.

It’s important to know your customers’ lines and be ready to speak to your company’s strengths. Domestic manufacturers have an advantage over offshore manufacturers and decorators in an area called speed-to-market. Where overseas orders can take up to six months to deliver, a domestic manufacturer might be able to turn the order in just weeks. However, manufacturing in the United States is obviously more costly than manufacturing overseas, so the margins for this type of work are thinner. Luckily, the high-volume orders for retail lines can offset the lower margins… but only if you plan accordingly and avoid costly mistakes.

Returns and chargebacks

It’s easy to salivate over the large volume of printing that comes from working with big name department stores. Sample orders can range from a few thousand pieces up to 60,000-plus units. Full production runs can easily be in the multiple hundreds of thousands of prints. With volumes like that, how can you lose, right!? Wrong!

Higher volumes actually mean low margins, high expectations and little room for error. Retailers are notorious for an infamous term known as chargebacks. These are the “I gotcha” moments in apparel manufacturing. Some retailers use chargebacks a way to police vendors and make sure quality, timelines and their overall rules are being followed. Some stores, however, are known for using chargebacks a way to increase their margins. What exactly is a chargeback? They vary from store to store but it’s basically the fine print in a vendor packet that provides a way for the store to charge the decorator for any errors in the manufacturing process.

Parameters with chargebacks often start with meeting delivery times. It’s not uncommon for a retailer to place a purchase order with a delivery date months in advance. It’s also not uncommon, especially for domestic partners, to receive large orders due within weeks or less. Managing these timelines is critical, as it can be one of the more costly chargebacks.

Most retailers have a seven-day delivery window. If you miss their date, they might charge you back 10 percent for up to seven days late, 20 percent for two weeks late, 30 percent for three weeks late, etc. It quickly becomes cost-prohibitive to deliver the order but, then again, it’s also cost-prohibitive to have thousands of shirts manufactured with a company’s private label and nowhere else to sell them. Packaging is another common and costly mistake. What seems like an easy step in the manufacturing process can often lead to the biggest losses. While most shops typically have a clear understanding of their production limits, many do not understand the demands of packing for retail completely until they have a few opportunities to take on this scope of work. Each retailer has specific requirements for label placement, hang tag placement, size of folds and how the garments are bagged and boxed.

Packaging orders is a huge part of partnering in this scope. Each retailer has specifi c requirements for label and hang tag placement, size of folds and how garments are bagged and boxed. Any errors in this arena are subject to fi nes and what could be worse… lost time in repackaging an order.

A “small” error, such as putting the size strip in the wrong location, can give many retailers a reason to send them back or simply charge you for the error. I have firsthand knowledge of a company that took back an order in the hundreds of thousands of shirts because the shirts were not folded to the right size. They were forced to unpack, refold and reship the entire order. Talk about working for free!

Retailers are just as specific about how orders are boxed and shipped. Most vendor agreements have specifics on what size shipping labels to use, where to place them and how to palletize boxes. A mislabeled box could be grounds for up to $100 chargeback per box.

To be fair, not all retailers are out to get you. You can imagine a store’s distribution facility that receives thousands of shipments daily that then must repackage and re-distribute orders nationwide or even worldwide in a matter of days. If the shipments are not received perfectly, they cannot reship them efficiently either.

Compliance issues, closing advice Finally, make sure to understand all the compliance issues the retailer requires. There is a strong industry push on pthalate-free inks—know if any given order is subject to this requirement and make sure to be in compliance. While not every order is tested, nobody wants to be on the end of an order that tests and fails. In some cases, expect the store to require the use of a third-party auditor to test your fabric. Auditors often test the fabric and then perform a second test of the completed goods. Everything is tested, from color fastness to how much the shirt torques in the wash. Make sure you follow their guidelines and meet their audit requirements.

The biggest piece of advice I can offer is to know your company’s abilities. Do not get wide-eyed by the thought of large volumes if you aren’t prepared to meet the demands. Private label work can be great business and a regular staple in production, but it can also become a costly mistake that makes it easy to lose money. Do what you do, and do it well. And don’t forget—always read the fine print.