Private Label vs Resell unknown brand
I have been researching opening a tea businesses. Yes I know its saturated market. However I plan am looking to keep my startup costs low as I will be selling through my online website as well as working on getting some B2B accounts such has getting some local spa’s to order from me.
Now my question is in the ideal world I want to create my own brand name tea and see myself eventually buying in bulk and packing myself. However to start I plan to use a company that would drop ship for me. However when I look at companies that offer to private label in addition to drop ship it seems to require a $500+ investment in the initial packaging/inventory.
However I want to use most/all my budget on advertising and marketing. So am wondering if I should just resell another companies brand tea. My concern is that a person would come to my site and order and then get the tea love it of course and then google the name on the actual tea bag/tin and just by from them. Making it difficult to retain the customer. My goal is to teat the market first and grow enough sales to eventually be able to make the investment in buying in bulk wholesale and buying packaging to make my own brand. However making my own brand right from the get go seems like a big investment that would leave me limited funds to do the kind of advertising I want to do.
So how important is it to sell your own brand vs another persons brand especially if their brand you are selling is an unknown brand?
Reselling another brand’s tea is a sure way to give your customers to that company. Going into the tea business is not easy. I think anyone can expect to lose money in the first two to three years. It would take quite a while to build up customers.
Is establishing a brand and marketing a company really an either-or situation? If you want to use “most/all” of your budget on advertising and marketing, you might want to think long and hard about what it is exactly that you’re marketing here.
Scott at Yunnan Sourcing helped WhatCha with a puerh of their own. I would think having someone with knowledge to help you sort out a tea line for yourself may be the big step. Someone that knows the market and goes there to get the tea of their choice. I know YS goes, Crimson Lotus, Mandala and White2tea (Paul) is there now. That would be the biggest hurdle tp get started. If you get good stuff to start with that is a lot of the base you are looking for. It is a slow tedious thing to build a business and there are no get rich quick schemes in tea.
Most important , always have an ear for your customers. One bad mark can do a lot of bad in the end.
While still a guess, I believe that in the future as origin of the teas become more important, we’ll eventually have a lot of tea stores reselling the same brands.
Think of the wine world. You don’t care much about the brand of the distributor, or the retailer, only about who made the wine.
If you have a premium tea, saying where it comes from is a plus. I’d rather buy from an established tea farm than from an unknown tea company.
I think you could always start with drop shipping different brands first, and when you’ve the cash flow you add your own private label.
Thank you all for your replies. Shezza you do have a good point, I understand Establishing a brand and marketing a company is no an eaither/or situation.
Sam Lin that was the approach I was thinking of doing as it would also enable me to learn what types of tea, flavors will sell best in my region without buying so munch inventorythati might take me a long time to sell. I am not looking for a get rich scheme however I know it will take me time to learn what types of tea flavors will sell best in my region and I dont want to be sitting on piles of inventory that May not sell quick enough.
I alsp to a degree agree with Ricardo as I believe tea will become like wine and soda, ect where you can walk into a bar and a cup of tea from many different brands much like you can go to a bat and try a local craft brew or a name brand brew some bars even produce their own small batches.
So I guess my next question is how does one find a good drop ship company is it best to deal with tea farms directly. My thought is if I deal with a tea farm directly quality will be high but shipping costs here to the USA will be too high. Yet if I deal with a 3rd party company the margins may be too low and quality might not be that high? Has anyone ever generated a directory of dropship tea providers? In the US?
Why do you want to start a tea business? Are you passionate about tea? Do you just think it is the sort of thing that might succeed? There are lots of businesses that survive without passion, but tea doesn’t seem to be one of them. Personally, I don’t think that tea will become like wine as mentioned above – I actually think it’s going to downswing quite a bit and there will be a lot less companies and brands in the North American market in the next 5-10 years. Even if it doesn’t, I see grocery stores/cafes/mega-corporations being the places to obtain this variety of tea, not spas or resellers. If you had a unique brand that was very successful, perhaps that would pay off and you could sell your tea to other resellers. If you’re a reseller in the first place, I suspect you’d simple get cut out at some point.
If you do have a love for tea, or a particular kind of tea or region, start there. If you really believe in something, you’re going to have a better time selling it than if you just don’t care. Good marketing will be crucial and I think you’re right with that. I just think you’ll market yourself and your tea better if you love it. I also don’t think a $500+ investment in initial inventory is very much at all. Most of us have more than $500 in our cupboards, but I’m guessing Steepsterites aren’t your target market.
That’s another question – who are you targeting? You mentioned selling to spas and your online site. Are you thinking of “wellness” teas or high end loose leaf? Pyramid bags? Flavoured teas? “Pure” tea? What do you currently sell on your site? How are you going to drive traffic there? There are countless online sellers of tea, what would make you different? I think you really need to figure out what you want to sell, who you want to sell it to, and how you’re going to get it to them. My thought as a consumer though is always – what is the point in buying from you, when I can get it from the source or someone else, likely for less? I also suspect none of the vendors here are going to share their sources with you. It just doesn’t make sense to help out the competition. You never know though. Good luck, you’ve got a lot of questions to answer before you start ordering KGs of tea.
I don’t personally see grocery stores becoming places to obtain real tea. They will I expect continue to sell what they sell here, cheap tea bags like Lipton and Tetley. Sometimes they will sell a higher end tea bag but still not loose tea. If I want loose tea from a supermarket I have to skip the chain stores and travel to my local Asian supermarket which is a bit of a hike.
Lots of grocery stores sell loose tea. Both in Bulk sections (which are a bit more rare) and loose leaf options packaged alongside the tea bags. Even the Target around me has a few loose leaf options now.
Not in my area. They used to have a few loose leaf selections, but now they are all gone. In fact, many of the common bagged teas they used to carry are gone as well. Its almost all k-cups now.
Random so that is a good sign that loose leaf teas do not sell well in your area. Shelf space in a big box supermarket is expensive and they watch what sells closely to always keep only the skus that they can turn over quick in stock. So your region people buy k-cups or tea bags more commonly so stores are stocking more of those types. In my area I see large selections of tea bags from a ton of brands and a good amount of k-cups. However loose leaf teas where never really something I found even when going into places like Whole Foods, Trader Joes, Fairway, etc.
I think its more of a sign of the popularity of the k-cups. They’ve almost completely taken over the coffee/tea aisle.
Keurig sales have been slowing lately. Maybe declining sales will clear out some room for quality tea in your neck of the woods.
http://www.cnbc.com/2015/08/05/keurig-drops-20-will-cut-workforce-amid-declining-sales.html
http://www.npr.org/sections/thesalt/2016/02/06/465803034/after-introducing-changes-keurig-sales-continue-to-fall
I live in a rural area, and the surrounding grocery stores offer tea from bags to pyramids, loose leaf of popular brands, and also K-Cups/T-discs. Keurig and Tassimo usage seems to be on the decline, especially with the outcry about environmental sustainability. I have heard of a K-Cup recycling program which may change things, but I suspect that single serve will also not remain the dominant option for long. Bad for the pocketbook and the planet all at once.
In non-metropolitan areas, the findings can be hit or miss. I know there are things that I can’t get at Superstore which I want – but I never think to let them know what they are. How are they ever going to know that I want fish sauce if I don’t tell them? I dunno, but they likely assumed at some point that rural people weren’t interested, so don’t stock it. It’s not always that things hit the shelves and sell well (or don’t).
Someone just shared this link with me – http://www.sciencealert.com/a-german-city-just-became-the-first-in-the-world-to-ban-single-use-coffee-pods
Hamburg, Germany has apparently banned K-Cups from government buildings. Interesting.
Thank you for the reply. To answer your question yes I am very passionate about tea, furthering my knowledge for personal pleasure as well as trying new flavors.
In terms of who I am targeting I plan to create a company similar to teaforte which will sell to consumers via the website however much more time and effort will be growing sales to high end spa’s, Bed and breakfasts, boutique wedding halls, etc. I plan to go to local farmers markets more for the benefit of being seen and to enable people to taste samples more then to generate revenue. I know people do not typically associate high end products at a farmers market. However I live in a region which I have seen some very high end and rare produce/food products at such venues. I plan to sell mostly flavored blends as well as some traditional teas in pyramid tea bags. I do not believe loose leaf will be a big seller in my region which is why I plan to use tea bags and specifically Pyramid type tea bags as they also are perceived as giving a more “high end” look to the product. Also no Steepster members are not my target since most members I would think would by directly from the source and or be blending their own herbs to experiment with.
Anyway I am confident I can drive traffic to a brand as its also what I do for a living working with major beauty and nutritional supplement brands. My main hurdle I am trying to get over is the question of do I burn through $$ buying bulk products and hope I am buying the right flavors/blends that would sell in my region. Or should I maybe find a source I want to buy from and maybe go out and try to pre-sell which would cover the initial inventory purchase and also help me learn what would sell best in my region.
Do I just dropship some other brand and not care what name they will see on the label because the initial sales I get will all be about the learning experience. Learning what buyers want and what quantities people will typically buy in.
If I go down that path how do I know the vendor I want to use is a good source? Aside from ordering a few teas from them and trying them but that wont mean they are reliable and also offer a good markdown?
I would remember that the average tea drinker who buys supermarket teas is used to black teas and ones that don’t have a lot in the way of strong flavors. Only people who buy quality loose leaf are used to any sort of strong flavor in their tea.
Passion about tea is a good thing. That is what makes the sellers on here successful. Passion and drive do well in the business world.
That’s awesome, and it sounds like you’ve got much more figured out than I assumed from your previous posts. I think passion can take a business a long way, especially when paired with experience. Seeing above that you want to be comparable to someone like Tea Forte, I suggest doing your own blends. It’s more work and expense but would allow you to stand out rather than ‘blend in’ (muahaha). If I’m understanding you right, you’ll need packaging supplies either way though, and I presume that the machinery to prepare the pyramid bags is not cheap. Unless you meant you’re willing to sell other brands under their own label, which would be the most affordable option – but I’d think less likely to succeed. That always brings me back to my question – why buy from you when I could go to Tea Forte or Harneys or whoever you’re sourcing from and just get it myself? If you mean more like Metropolitan Tea where you buy bulk and then relabel, there is a gamut of opinions. If you were to do something like that, I’d think you’d need a high end tea producer in the first place, given the clientele you wish to get in with. If tea stays big as you hope, people will only become more selective. I’ve no idea who you’d get in touch with, or how, in that case. A tea business mentor would likely be best if you can find one. I still suspect vendors aren’t going to want to ‘give up’ their sources though.
I’ve experienced a weird circumstance, in that people understand and appreciate coffee ‘snobbery’ but often forget to pay that same attention to tea. It’d be great if you could get B&Bs, wedding sites, spas, etc to serve better tea. It just seems like it’s an area that lots of people have tried to get into with little mainstream success. Doesn’t mean you shouldn’t try.
I also personally dislike wellness teas but given some of the places you’re talking about targeting, that may be an idea for you. I imagine a spa would source a ‘wellness’ tea more than anything else, as they could then make claims about all the good it does for you.
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