2021-10-19 | DPA

Why you need to focus on the back-end processes revolving around your products

Lästid: 5 minuter
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  • Why you need to focus on the back-end processes revolving around your products

Competition among companies is not only fierce today - we now experience what some have denominated as "hypercompetition". This means that the prominent players can no longer be the dominating force for a suspended period of time. Competitive advantage derives from disrupting an industry instead of the old structure where companies define an industry, reduce competition, and avoid competition. And what better way to disrupt an industry than through private label products? 

Private labels - what are they?

Let's start at the beginning; what are private labels? These are products that a retail company sells under its brand. The products can either be manufactured by a third party or by the company itself. Several companies do this successfully, but there are some more prominent than others. IKEA and H&M are two famous examples.

So what are the upsides of focusing on private labels? 

There are several upsides, but most of them have one thing in common; control. Control over pricing, components and materials, and timing. All of these factors create an especially preferable environment for disrupting an industry. Being given more freedom, control and flexibility are all critical factors for a company to provide a competitive edge in its offering. 

To summarize the benefits:

  • Greater freedom and flexibility regarding pricing 
  • Larger margins 
  • Apply pressure on named brands
  • Lower costs when steering clear of the producers marketing costs
  • Greater control in general (components, production, environmental aspects)

Customers' perception of private label

An in-depth study conducted in the US highlighted a few numbers about customers' perception of private label brands:

  • 60% agree that the value of private label products are better than name brands 
  • 46% can't tell the difference between private and named brands in advertisement 
  • 48% actively search for and prefer private label brands
  • 39% believes private label brands offer more unique products 

So what is the story these numbers are telling us? Right off the bat, we can see that private label acceptance rate is high, perhaps higher than most would anticipate. This should provide companies with a prominent warning flag; focus on private labels or risk being left stranded by the competition. 

One common mistake

In a competitive landscape, most companies tend to put their efforts into customer care, making it easy and streamlined for its customer. The challenges arise when the internal ways of working get overlooked. External and customer-facing processes have all been digitized and streamlined. Meanwhile, employees have outdated systems and tools at their disposal. This situation results in various challenges:

  • Employee satisfaction drops, and maintaining skilled employees may become an issue
  • Unnecessary costs from inadequate processes and tools 
  • Systems dictating ways of working instead of the other way around 
  • Losing flexibility and agile ways of working that in turn might result in revenue and retention loss

I'm not suggesting that customer-driven processes should be forgotten or left out, simply that operational excellence shouldn't be either. 

First step 

One area that is often overlooked is article change requests. The hottest thing on the market today might be obsolete tomorrow due to different trends and demand overall. Therefore, companies have to be reactive from time to time, and they have to fast. Dynamic and flexible ways of working are today a must to stay competitive. 

We often advise our customers to start where they can see results fast and with a process that is genuinely hurting them at the moment. That way, they can build momentum on what has been achieved and reap the low-hanging fruits. 

Article change request is such a process that also includes private labels to a large extent. It's also an area where many companies suffer today — the perfect example of killing two birds in one stone. 

If you're interested to learn more about how you can achieve significant advantages by implementing new ways of working in article change requests, please consider registering for our webinar!


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