What Is the Difference Between Private Labels and White Labels?

What Is the Difference Between Private Labels and White Labels?

The terms “private label” and “white label” should sound familiar to anyone who deals with the purchase of products and services. In this article, we’ll discuss what the key differences are between white label and private label, which model is better for your company, and how to apply this knowledge to enhance your business goals. But first, let’s start with the definition of white label vs. private label.

What Is a Private Label?

Private labeling is a practice where a manufacturer or brand sells its product exclusively to one retailer. The retailer can change the product in certain ways, such as by modifying the size or color. The retailers also typically handle all the marketing, publicity, and branding of the product.

What Is a White Label?

White-label products are produced by a manufacturer and sold to multiple retailers. While there might be small variations, such as the product’s color, white-label products are standardized regardless of the retailer. This means that retailers that purchase white-label products don’t influence the item’s production.

For example, if a manufacturer produces a white-label phone charger, it can sell it to multiple retailers. The retailers can subsequently add their own logos, packaging, and marketing material to build a brand for the product.

As white label manufacturers are experts at producing their goods, they can provide quick and affordable order fulfillment to their retail clients. If you want to source inventory without the need for product design and development, white labeling is an excellent option.

Main Differences Between White Label and Private Label

Here are the main differences between private labels and white labels.

The Exclusive Products

The Exclusive Products

Private label manufacturers create products exclusively for one specific retailer, so another retailer cannot have a similar product.

White-label products are not unique and exclusive because the manufacturer offers the same item to different sellers, but not just to you.

Investment and ROI

Investment and ROI

Selling white-label products requires a lot of advertising because sellers will have many competitors. If the seller successfully implements an effective marketing strategy, then it can lead to several times increase in revenue.
Selling private label products requires paying high costs for them, including product research, product development, and marketing, among others. However, since sellers can sell exclusively, the return on investment is also quite high.

Product Customization

Product Customization

For white-label products, all the products are produced before the seller and manufacturer reach an agreement, so the only thing the seller can customize is the packaging.

For private label products, the retailer can customize the item and control the specifications, design, etc. of the product.

Types of Product

Types of Product

Private labels are generally more common in physical products, such as cosmetics, household products, and apparel. Private labeling is also particularly popular in the healthcare industry and in consumables such as food and beverages.

White labels are a widely used business model within the technology sector, especially for things like IT, marketing, and advertising technology. They are distributed to retailers who resell them as their own products.

Price of Products

Price of Products

Private label products typically sell for a higher price than white label products, and with private label, the customer is buying a product that is unique to a particular supplier, which indicates that the product has unique features. In contrast, with a white-label product, the item sells for less than a private label because the product is sold by multiple retailers and is easy for the consumer to buy anywhere.

Marketing and Advertising Efforts

Marketing and Advertising Efforts

Retailers that sell white-label products may need to be more creative with their marketing, branding, and advertising. Because multiple retailers sell the same products, retailers must find ways to get the upper hand in branding style and marketing. Unique advertising and branding techniques can help differentiate resellers’ products from those of their competitors.

Modifications To a Product Line

Modifications To a Product Line

Private labeling allows retailers to make changes to the product, which are usually localized changes in appearance that do not affect the functionality of the product. For example, a retailer purchasing private label cosmetics may request a change in the color or packaging of the cosmetic, but the ingredients of the cosmetic will not change. In contrast, white labels do not allow retailers to make any changes to the product, but they can customize the labeling of the product.

Speed of Entry into the Market

Selling a product through a white label allows you to enter the market quickly because the retailer has already done the legal procedures that you need to go through to sell that product for you. For example, the retailer already has a regulatory license for the product or has passed the legal requirements needed to operate an online store, compared to private label sales of products that are a little slower because you have to register everything about the product yourself.

Which Is Better: White Label or Private Label?

Whether to sell white-label or private-label products depends largely on the product and the company itself. For newcomers to the e-commerce world, white-label products may be a good choice to save time and money – after all, it’s much easier to repackage a product that has already been produced than to create your own from scratch.

But for some sellers, it may be more important to get a reliable and recognized brand. There are pros and cons to both labels, and whichever one you use sellers need to understand and decide what kind of business they have, what kind of products you need, and whether the type of product you choose fits the seller’s brand, resources, business goals and level of commitment.

GET IN TOUCH

Learn More About eCommerce Dropship Fulfillment