Feeling confused about the difference between private label and white label? You’re not alone.
There’s a subtle difference between the two business models, and that difference comes with its own pros and cons.
If you’re trying to decide between private label or white label for your business — or you’re simply wondering if they’re the same thing or not — this article will set the record straight.
Inside this article, we will share with you:
- What white label products are
- What private label products are
- What white and private label products have in common
- Where their similarities diverge
- How to choose between them
Without further ado, let’s get started. (It would be wise to take notes as you read.)
What Is White Labeling?
Ever wanted to skip the product creation stage of starting your own business? Well, this is exactly what you get to do with white label goods.
Instead of creating your own goods, you contract with a manufacturer to use their existing products to rebrand as your own. To make it work, the manufacturer simply removes their branding elements and replaces them with yours.
That’s it. All that’s needed to make the generic product yours is custom packaging, branding, and a strategic marketing plan fitted to your business.
So if you have an existing and popular brand, you’re set to simply rebrand the white label products as your own.
Why? Because your brand’s current reputation and marketing efforts will do the majority of the work to sell it.
White label does mean multiple retailers can rebrand and sell the same item as their own. However, there is a distinct advantage to selling white label, as it saves you time on the launch as the product is already ready to go.
Without having to create your own product (and all that’s involved), that time saved has the potential to turn into a higher return on investment.
Take for example, starting your own skincare line. If you choose to use white label cosmetic products, you’re saving yourself time and money on product creation and everything that entails.
Think time and cost of finding suppliers for ingredients, actually creating the product, getting it tested for safety and more. (And those are just a few of the things you’d be saving on.)
With all those headaches taken care of for you, you’re left free to focus on your ing and branding efforts to sell your product.
Types of White Label Goods
Ideally, we’d list actual white label products to showcase how brands can take a single white label product and make it their own. However, it’s good business sense to keep the fact you’re selling a white label product to yourself.
After all, the whole point of white label is to make it look like your brand created the product your consumers are buying.
So instead, here’s a list of known opportunities in the market today for white-label products.
- Packaged Food
- Water Bottles
- Pet Care
It’s worth noting white label also includes software and tech services like marketing agencies.
Essentially, if it can be rebranded and sold as your own commodity, then it’s a white label product.
What Is Private Labeling?
Like white labeling, you contact a manufacturer to supply your product for your brand, and you focus on the marketing and branding efforts.
Unlike white labeling, you’re having the product created to your exact specifications and sold exclusively to you. Meaning no other brand can sell your product.
Private label products are very popular, and the reason for this is twofold.
First, private labels make getting products for their brand more affordable. Contracting a private label manufacturer to mass-produce a unique product for your business is cost-efficient. It also guarantees the quality of the product because it will undergo third-party testing.
Second, it enables brand retailers to customize specific products to differentiate themselves from other brands out there.
Take for instance a retailer interested in selling lotion. In this case, you’d want to work with a private label manufacturer to identify any changes that can be made to the product’s design to set it apart from other lotion products in the market.
The changes you could make could be anything from the size, shape, color of the product to the scent, and formula of the lotion.
So if you decide to go with a private label manufacturer, it’s up to you to provide the product specifications or discuss any customization options you’d like to choose.
Once the details are decided upon, all that’s left is paying the manufacturer to mass produce your product. With that done, the private label manufacturer will create your product to your specifications.
While it’s likely you’d also pay for delivery to your company’s warehouse or storage facility, usually, there’s an option to pay for dropshipping.
Types of Private Label Goods
Euromonitor reported that about 10% of worldwide sales are private label products. To put that into perspective, that’s about $350 billion in sales.
Here is a list of the common private label industries:
- Household items
- Packaged Food
- Pet Care
Did you notice what they all have in common?
First, private labels are generally physical goods. Secondly, these are also products that can be customized to allow for differentiation in the market.
What White and Private Label Products Have in Common
As you can see, white label and private label are very similar and can be easily confused for the other. Thankfully, there are some tell-tale indicators you can identify to help tell the difference.
First though, let’s cover what they have in common. In both private label and white label, they…
- Enable manufacturers to simply focus on creating quality products
- Empower retailers to focus on marketing and branding (selling)
- Give the retailer full control of branding and packaging
- Do not have the trademarks owned by the manufacture
- Necessitate manufacturers to have B2B branding for their business
- Require retailers to use B2C branding to sell their products
Where Those Similarities Diverge
With all that in mind, let’s dive now into what sets white labeling and private labeling apart from each other.
- Physical products / consumable goods
- Heavy customization allowed
- Sold exclusively to the retailer
- Mass production
- Higher investment
- Ready to be sold in the market slower
- Physical products/software solutions and technology
- Little to no customization allowed
- Same product sold in the market to all resellers
- Less production
- Lower investment
- Ready to be sold faster
Like anything, both private label and white label come with their advantages and drawbacks. It’s a matter of figuring out which one is right for you.
Which Business Model Is Better: White Or Private?
Both private label and white label business models empower people to start businesses without worrying about having…
- An FDA approved manufacturing facility,
- A warehouse for storage,
- Hiring workers,
- Quality and safety testing, and…
- All the other headaches that come with product creation.
While both private label and white label come with their pros and cons, there is a way to determine which one is right for you.
First, understand what kind of business you have or want to start. This includes the type of products you will need.
Once you know this, you can determine what model fits your needs best. You will want to consider your brand’s goals and vision, as well as your commitment level.
When to Choose Private Labeling
If you already have your product designed and ready to go, then going with a private label manufacturer may be the right choice for you.
Because if you decide to have a private label product and haven’t done so already, you will need to research your product and market heavily.
When it comes time to discuss customization or even provide the exact specifications for your product with a manufacturer, you will need to have this ready
Not to mention, your product will need to be superior to other products like it in the market. This includes any white label goods offered that are similar to yours.
You may also want to choose a private label product if you…
- Need to cut production costs
- Save on expenses for creating a manufacturing facility
- Want to manufacture your own product in the future
With all this in mind, remember to take your brand’s goals and needs into consideration. Only you can determine if a private label product is right for your business or not.
When to Choose White Labeling
If you’re eager to get started, and that means getting your product created and launched fast, then white label may be the solution for you.
With white label, you don’t have to know everything about your product to be ready to produce and sell. That means you get to skip all that heavy product and market research mentioned above. Instead, all you need is a marketing plan and a platform like an ecommerce store to sell from.
White label may also be the perfect fit for you if you’re…
- Starting a business and want to get in the market fast
- Starting a business and need a lower investment cost
- New to the ecommerce space (selling products online)
- Have no ideas for a new product
- An established brand with no merchandise (e.g. YouTube influencer, blog)
As you may have noticed, white labeling is significantly easier than private labeling.
When you’re outsourcing a white label manufacturer, you’re free to focus on simply marketing and branding.
White Labeling Is Great for Start-Ups
So if you didn’t know the difference between white label and private label before, well, now you know.
White label products are generic goods you can rebrand and sell as your own. However, other retailers can buy the same product and sell it as their own.
Despite this, you have a lower start-up investment, can get your product to market faster, and focus all your efforts on selling it.
Private label products, on the other hand, are mass-produced based on your design. The rights to sell the product are exclusively yours. However, it comes at a higher cost. It’s also slower to get your product ready to sell in the market.
That said, it’s worth mentioning the white label business model is significantly easier. Unlike the
private label business model where you have to design the product yourself, you’re taking something that’s already been created and simply rebranding it to sell.
Ultimately, which business model will serve your needs the best is up to you. Just be sure to keep your brand’s goals and needs in mind, and you’ll know which one is better for your business.