THE RUNAWAY FREIGHT TRAIN, PRIVATE LABEL BRANDING

By Christie Walker

This year, the former Optical Laboratories Association, now the Lab Division of The Vision Council, put on a Q&A session with optical labs and vendors around the topic of private label branding during Vision Expo West. On the panel were: John Sutherlin, Sutherlin Optical with private label AR; Norm Kester, Quantum, designer of AR coatings; Lloyd Yazbeck, Central Optical with 65 percent private label digital progressive brands; Jeff Szymanski, Toledo Optical, with private label AR, digital progressive lenses, and education; Ron Kroll, Innovations Digital, producer of digital progressive lens designs; and Daniel Crespo, IOT America, creator of digital progressive software designs. Private label branding is a way to distinguish your lab from the lab next door, but even more important, it can also be a way for your customers to distinguish themselves from their competition.

 

WHY PRIVATE LABEL BRAND

There are a number of reasons labs may want to get into private label branding.

“There were two reasons we decided to go the private label route. Number one was to control our own destiny and number two was profitability,” said Szymanski.

Yazbeck agreed. “Profitability was the greatest motivational factor. We buy a two dollar blank, spend six dollars to process it, pay the click fee and sell it for $50. It’s a no-brainer.”

“We saw a need for our customers to have a brand that their competition didn’t have, so that’s why we went into the private label branding,” said Sutherlin.

So how do you get started and how do you price your private label product? Many labs didn’t start with the private brand but started with the nationally branded product first and then added their own brand after learning the ropes.

“We started with a branded product in house before going private label,” said Sutherlin.

“Digital lenses are the most misunderstood product by the ECP. So we used the power of the branded progressive to help educate our customer before we moved onto a private label,” said Szymanski.

Over at Central Optical, Yazbeck took a similar path to move to private label lenses. “We went with a branded digital progressive and learned the ropes on that product before going private label. Now we have our own branded digital lenses and AR.”

When it comes to price, the labs were in agreement. Their private label products were not simply a value product meant to undercut the branded product. Most were put in place at a level where they could compete with the branded product.

“We have completely stayed away from the bottom when it comes to price. We’ve always charged a very high price for our private label products,” said Szymanski. “We keep our products right up there with the top branded products.”

 

WHAT DO YOUR CUSTOMERS THINK

The number one reason to offer private label AR and progressive lenses was the extra profitability of the product. But just because the private label AR or lens makes YOU more money, doesn’t mean it will work out for your customers…or does it. Here’s what labs have found out from selling privately branded products.

“ECPs appreciate the fact that our brand is their brand so they can distinguish themselves from their competition,” said Sutherlin.

With labs selling their own brands, how does that impact the relationship between the optical lab and the lens manufacturers? With the advent of free-form capabilities, labs can become their own lens manufacturer, not unlike lens companies who have purchased labs. The lines between the two are become more and more invisible.

“Our relationship with our branded lens vendors went to hell in a hand basket,” said Yazbeck. “But I have a responsibility to supply our ECPs and opticians with the best product and education. So we did what we had to do.”

“We worked very hard to maintain our relationships with our branded sales reps,” said Szymanski. “We are running at 40 percent AR with 90 percent of that being our private label AR. We never talk our customers out of buying Crizal, but we will bring them the information on our brand and let them make their own decision. We offer a broad portfolio of products. We present the benefits and let the customer decide.”

 

IN GOOD COMPANY

If you are considering going the private label route you will be in good company. Daniel Crespo of IOT America has 70 U.S. and Canadian labs that use his software to create their own digital progressive lenses. Norm Kester of Quantum has 48 labs in the U.S. using his AR coating formulas.

“I don’t know why you wouldn’t do it…private labeling. We’ve seen 200 percent growth over the last two years in putting private label AR into labs,” said Kester.

Crespo is very excited about the possibilities for labs. “There is no reason an independent lab can’t make a product that is just as good as the branded product. We are seeing a changing of the mentality of the lab owner. This should be a golden era for labs. Labs are changing the way we do business.”

Ron Kroll, Innovations Digital is also on board. “Why market someone else. You should be marketing your own name, your own lab. Private labeling is here to stay. Private label branding of digital lenses is the runaway freight train of the industry.”

 

GETTING THE  WORD OUT

While the big brands have huge marketing budgets to push/pull their products through the system, labs aren’t left out in the cold when it comes to marketing their own private labels, although they do need to pick up a majority of the marketing effort.

“Having used IOT, they have done a great job giving us the data to do the marketing. We have a marketing department but without the data, we can’t get the job done,” said Yazbeck.

At Toledo Optical, standing out from the crowd, even the increasing crowd of privately labeled products is important. “We’ve worked hard to make sure our private label has a unique look and feel. We’ve made sure that we don’t look like everyone else. That would defeat the purpose of trying to be unique and different,” said Szymanski.

“The guys who are hugely successful are the ones that have a brilliant marketing campaign,” explained Kester. “We give them the data and the tools but they put it into place. The marketing is really moving the private label AR forward for the labs.”

The people at Sutherlin Optical have a similar take on the marketing end of private labeling. “You can’t take someone else’s marketing material and slap your logo and name on it. You have to be committed to create your own brand, your own identity,” said Sutherlin.

 

CHALLENGES

For the most part, going with a private label product, whether it’s an AR or a digital lens seems like the thing to do. But these lab owners will tell you it’s not without some challenges, the biggest one being managed care.

“The hardest part is getting someone to talk to you at the managed care companies. They really don’t want to let us in,” said Yazbeck.

Getting approval isn’t a single step but a series of steps. For example, Kester stated that his AR formulas have been approved but are not yet on the pull down menu. “Typically we can get approval in 30 days, but it can take anywhere from three to six months before we are placed on the pull down menu,” said Kester.

“Some doctors won’t sell your private label product if it isn’t approved by managed care,” added Dale Parmenteri, Balester Optical.

But even with the obstacles, for most labels who have taken the private label route there is no turning back. As Lloyd Yazbeck said, “It works…it really works.”


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Labtalk May/June 2018