Understanding Private Label and White Label terms can confuse a new seller. So, In this Blog, EJET will tell you what is the main difference between Private Label vs White Label.
But, the question is “Why is there a need to explain the difference between Private Label or White Label”. See, these labeling methods are becoming a new way to create your own brand. Statistica stated in a report that, in 2021, there were 17.7% private label brands in the US. The private and white-label business model has enabled people to start their own brands without facing any difficulty. There are a lot of advantages of going toward such business models.
However, Since they both have kind of similar names, that confuses people. So, keep reading this blog till the end because we are going to explain both Private Label and White Label in detail.
Chapter 1: Private Label vs White Label- The distinctions in Terms?
At first, both of these terms look familiar because the word “Label” comes at the end of both models. People often confuse these terms and go blindly into the business without understanding the difference between the two. Yes, Private Label and White Label are both types of brands that you solely own. However, the way of doing business in both models is very different. And, if you don’t understand that difference, you can face issues that can lead to major problems.
Let’s try to understand these both terms with the help of an example.
Suppose, there are two suppliers- Dave and John. Dave is selling products using the Private Label model. Whereas, John has opted White label platform. However, Dave is only selling products to one retailer/brand. As for John, he is a wide customer base and is selling products to multiple retailers and brands. Why is that?
See, a Private label is a brand in which the product is sold to one single retailer or brand. That means you can only find that product in one store or online website. Private label products are exclusive and limited. They are priced according to their uniqueness. White label brands are the ones who are selling the products to multiple stores and retailers. With White Label, the products are priced according to the market niche.
Chapter 2: What are Private Label and Private Label products?
In the above chapter, we explained Private Label vs White label terms. Now, Let’s first dive into Private label and see what it has to offer.
1) What is PL (Private Label)?
Private label or also known as PL is a brand that sells exclusive products. The products are owned by that brand and cannot be copied by another brand. Private label brands, packaging, and logos are solely owned by that brand. One of the Private Label brand examples is Great Value which is owned by Walmart. Similarly, there is a section on Private Selection from Kroger.
Manufacturers of Private Label items can sell their products for private labeling and can also create their own brand. For example, Kraft makes products under the name of Planters Peanuts. But, it also has products for sale under private label names.
The reason Private Label is getting attention is that with this model you can market your products with the help of big retailers. Since the products are exclusive, the customers will know that they can only get that specific item from that retailer only. So, it is a win-win situation for both the retailer and the manufacturer.
2) Benefits of Private Label
If there is a manufacturer that is selling products under a private label, he can save the effort of creating cumbersome branding steps. These branding steps require a lot of dedication, creation, testing, and whatnot. If you are a businessman and have a business to operate, these little tasks can be time-consuming because, in business, time is money. This is not it. Private Label also has other benefits.
a) Increased Profit Margins
One of the first advantages of Private labeling is you can make a lot of profits. See, branding is important for any business if they want to make a wide customer base. For instance, creating product designs and developing marketing strategies come in branding steps. However, if you are a businessman, you can vouch that it is an expensive and lengthy process. Private label brands leverage the reputation of established. Since you are the creator of that brand/product, you only have to focus on improving the product. You will be using a famous retailer’s name to market your own products. Since there are no costs involved related to branding, you get to save more money. Saving more money means more profit margins.
b) More Brand Loyalty
One of the most outstanding advantages of Private Label brands is that the customers stick to them and always come back to buy from PL brands. See, a Private label is all about designing a product from scratch and ensuring that it will help the customer in any possible way. That means the manufacturers focus on the quality of the product. Since, they are offering a good quality product, the customers always like them. And, these customers always come back to buy it again for themselves or recommend someone to buy from you.
c) The Uniqueness
Since you are developing a product and are trying to develop something that hasn’t been made before, you own that product. The designs and the strategy are patented and cannot be copied by any other manufacturer. That makes the product unique and more valuable.
d) Control over pricing
Selling items under the private label will have no effect on the price. And, the best part of that is you get to control the prices. Since no money is being invested in branding, you can save that money. Sellers can decide the price based on their marketing strategy.
3) Private Label Brand Downsides
Private Label also has some downsides. However, the disadvantages depend on the product type and the strategy you are planning. Let’s see what you can face.
a) No Control Over the Quality
Yes, Private Label products are quality products. But, since you are not the manufacturer, you have no control over the quality. Customers will always think that you are the manufacturer. If your manufacturer does something, you are the one who has to take the hit. The customers will register complaints against you and the retailer will ask for explanations from you.
b) Tough Competition
Yes, you are a businessman who owns the product and sells them under your own name. But, remember, there is still competition. There will be sellers who are selling products the same as yours. Their products will have different shapes or colors. But, the main purpose will be the same. Since this is a war between two premium products, the competition will be high.
c) Higher MOQ Limit
You are asking the supplier for a product that hasn’t been made before. Yes, the supplier will arrange the product. However, his MOQ limit will be higher than expected. That is because the supplier will have to arrange a new mold, colors, and designs. He also has to take his operating costs into action. So, to cover the costs, the MOQ will be high.
4) Private Label brands are Managed by…
So, you will be asking who manages the private label brand. Is it you or your supplier? Technically, you are the one who is managing your private label brand. Since you are creating a new product, you have to put in a lot of effort in making selling strategies, branding logos, and more. Moreover, it is your responsibility to see whether the supplier is keeping the quality the same or not. Private label brand products are yours and you are the one who is responsible for them.
5) Examples of Private Label Brand
Let’s talk about some of the best Private label brands that are operating worldwide and have successfully created a name in the market.
a) Kirkland Signature
Kirkland Signature is Costco’s famous private label brand that sells a variety of products such as consumer electronics, pet suppliers, and home goods. The brand offers outstanding quality and its prices are also feasible.
b) Happy Belly
Happy Belly is a pioneer in selling food items such as nuts, smoothies, and granola bars. It is selling packaged products under Amazon’s official name.
c) Buttoned Down
Another one of Amazon’s private label brands is Buttoned Down. Buttoned Down is known for clothing products such as pants, t-shirts, formal shirts, jeans, and more.
If you are looking for products such as towels, bathroom accessories, bedsheets, and pillows, consider going for Pinzon. Pinzon is Amazon’s first private label brand that has made a wide customer base. It offers high-quality home products that are eye-catching and feasible for every home.
Chapter 3: What are White Label and White Label Products?
Like Private label, White label is also another method of doing business. Here is what the White label has to offer to the people.
1) What is WL (White Label)?
White label or also called WL is an e-commerce method where the products are not owned by any brands or sellers. In simple words, White label products are not exclusive. If you are selling a product under your name, there is a chance that another seller is selling the same product in his own name. Yes, the product will contain slight changes like different brand logos, sizes, and packaging. But, the design, aesthetics, and shapes will be the same.
White is one of the most economical methods of doing business because there are not that many costs involved. Since your white-label supplier is already producing the items, he doesn’t have to buy new molds or parts for your design. Just simple logo snapping and you are good to go.
2) Benefits of White Label
a) No Need for complex design procedures
One of the most outstanding advantages of White Labelling is that you don’t need to create a product from scratch. White label suppliers have already designed the core of the products. They will be giving the core design to every customer out there. The only thing that you need to do is ask the supplier to snap your logo and make a few changes.
b) Easy get brand recognition
Yes, with White Label, you can easily get brand recognition. There are two aspects to that. If you are selling a white label product using Fulfillment By Amazon service, you will get your brand recognition because Amazon will help you. Secondly, since you are selling a product that has the same features, your customers would’ve already seen that in other similar products. So, they will obviously know what you are selling.
c) White Label is cost-effective
With a White label, you don’t have to afford the costs of building a product from the start. Moreover, there is no need to put money into marketing and branding. These two factors are the most expensive and since you are not doing that, you are already saving the costs. But, that money in improving the product or expanding the store.
d) Less pressure
One of the best advantages of White labeling is that it takes the pressure off your shoulders. If a customer complains about the quality, your white label supplier will take responsibility. The suppliers will give a refund or compensation in any possible way. Once, you have selected a white label supplier, you can sit back, while the supplier does all the amendments.
3) White Label Brand Downsides
a) No uniqueness
White label products are the ones that every seller is selling. So, that means, there is no brand uniqueness. What you are selling is the same as the seller who is selling in the UK. Your customers just want to use your product because it is readily available. They are attracted to your product because they know that if they are not getting it from you, they can get it from other sellers.
b) The competition
With white label products, you are competing with the sellers who are selling similar products. We are not talking about Private label sellers. Obviously, there is competition with them. We are talking about sellers who have a similar design to your product. If a seller already has a good market base, it will hard for your white label product to compete because there is uniqueness.
4) White Label brands are Managed by…
So, who manages a white label brand? The answer to that question is your suppliers. See, in the white label, you are creating something that is unique. There is no need for a specific selling strategy because other suppliers have already done that for you. You don’t own the core design. Your supplier is the one who is handling everything. From production to shipping the products, your supplier is the one who is handling every crucial process.
5) Examples of White Label Brand
One of the examples of a white label brand is “365 Everyday Value”. You can find these products in Wholesale Foods Market. The products contain the name of the retailer. And, they are less expensive than the other products from bigger brands.
Honestly, giving examples of white-label brands is kind of difficult because every other seller is selling products. And, the best part is most of the time, the products are the same. So, it is difficult to explain. You want to see whether a brand is Private label or a White label, take a look at whether you are getting the same product suggestions from different brands. If that is the case, it means both of the brands are White label. If there are major differences between the two, then they are Private label.
Chapter 4: White Label vs Private Label- Key Differences
From the front, it always seems like White labeling vs Private Labelling is the same thing. However, it is not. They are completely different business models. And, they have their own differences. If a seller is starting a business using one of these models, it is important for him to understand the difference between Private label vs White label. So, here are the key differences between the two.
1) The Audience and Markets
The first difference between private label and white label is the type of market and the audience it contains. See, with a Private label, you are selling a product that is specifically designed for a purpose. Like, that product will put in an impact. You have specifically designed an item for a set for users who really want it. So, in a Private label, your market and audience will be those guys who want something that saves their time and effort.
As for the White label, you will be targeting a market where everyone uses that product. So, technically, you have wider scope in White labeling. You are launching a product that is a daily essential product. So, your customers will be those who buy the same products from different sellers.
2) Uniqueness of Product
Another important difference between the Private label vs White label is the uniqueness of the product. In a Private label, you have to design something that hasn’t been done before. You are taking your time and putting it to create an item that is way better than the one that is already on the market. The designs, branding, and packaging of the product will be rare. Hence, your product will be unique.
White label products are the ones which you can get from anywhere. They don’t have that many major differences. Yes, they do come in different sizes and colors. But, the overall purpose of these products is the same. In simple words, there is no uniqueness.
3) Market Strategy
Private label products are sold in markets where users demand specific things. For instance, there was a demand for water bottles in the US. However, the condition was, that the water should stay cold even after long hours. So, there is a company that launched such water bottles. The company was HydroFlask. So, the bottom line is Private label market strategy is designed according to the audience type and is targeted toward limited customers who want their products to be productive.
Continuing the example of water bottles, white label product’s selling strategy is different. With a white label, you keep a large set of different kinds of customers in mind. These customers don’t want any uniqueness or don’t have their products behave in a specific manner. White label products strategy contains every type of customer and user. However, you still need to create a compelling market strategy because white-label products are standard products on which a label has been applied.
4) Competition in the Market
For companies who are planning to start an online business, it is better that they should go for white labeling. The reason for that is Private label model has more competition. It is not that the white label doesn’t have any competition. It does. In white label, your competitors have already created a name and since you are launching a similar product, you have a chance of survival because customers have already used a product like yours.
Private label companies have a lot of competition and in order to target that competition, you have to launch something that is unique. Not only unique but your selling strategy should also be created in such a way that it attracts customers. With a private label, you are playing with the big sharks. So, expect competition in Private label.
Again, we are repeating this. You launch your own products in Private label. Since you are doing that, you have the liberty to design your own ranking keywords for optimization. Your keywords will be unique, so whenever your customers search for your product, they will reach your product only.
White-label products sit on a very solid foundation. Everyone is using those products and everyone buys one almost every day. SEO optimization of white-label products is hard because there won’t be any unique words that differentiate your product from your competitor. So, whenever a customer searches using specific keywords, he will get a list instead of a single product.
Chapter 5: White Labelling and Private Labelling- Similarities
Obviously, both Private label vs White label contains the term “Label” at the end. So, that means there will be some similarities in both of these business models. Here is the chapter that contains the information related to the similarities.
1) Control of the Marketing Strategy
In both Private label and white label, you have the liberty to control the marketing strategy. A retailer ( You as a seller) can plan out the advertising strategy and complete the marketing process. Sellers can give logos and names to their products in both of the models. And, they can plan to sell the products in any country.
2) No Trademarks
In both business models, there are no specific trademarks. Like, the manufacturers of those products don’t own these products. You are the one who will own the product because it will be your logo at the end. Manufacturers are just providing you with the production service. Your customers won’t know whether you created the product or it was your manufacturer.
3) Third-Party Manufacturers
In both business models, third-party manufacturers are helping tirelessly to meet your product demand. Both business models depend on their manufacturers. You buy the products from these manufacturers and snap your logo on them.
Chapter 6: Private Label vs White Label- Which one is Best for you?
So, what should you do when you are launching an online store? We are going to talk about when should you choose a private label. And, when is the white label best for you?
1) When Should you do Private Label?
So, when should you do private labeling products? If you have a product that is created using the limitations of other products. Or, it is there to improve the life of a customer in any possible way, you should private label that product.
Moreover, if you want to own that design and want to be the only one who is selling that product, then the private label is one for you. With a private label, you will own the rights to that design, and no one can copy that product in exact shape. If someone does, you can take them to the court.
2) When Should you do White Label?
You should do white label if you have financial limitations. For instance, you cannot afford to put in major customizations in the product. Or you cannot create a product from scratch. Moreover, if you cannot put money into advertising or marketing, then you should definitely go for white label.
If you already have a client base, you can easily launch a white-label product because customers know your name. A white label is also good if you are looking to expand your product category. With a white label, you only have to create a marketing strategy because all products are the same and have already made a name in the market.
3) What do Businesses Choose- Private vs White Label?
The answer to that question is entirely subjective because choosing between private label and white label depends on many factors.
For instance, if there is a business that has just started, it will definitely choose a white label because they want to keep its costs at a minimum. They just want the customers to know that they also exist. Since customers are already familiar with such products, it won’t take time to make the name.
Businesses who have planned to launch their own unique product tend to go towards private labels because they have worked day and night to create a perfect product. They want to own the design patents and are looking to expand in the future.
So, it depends on what a business is trying to achieve in the end. There are other factors involved and those factors depend on the type of product and customer base.
Frequently Asked Questions
1) Is White Label the Same as Private Label?
No White label and Private label are two different business models. In White Label, you launch a product that has slight customizations and contains your own logo. You do own the logo designs and packaging, but you don’t own that design.
In a Private label, you completely own a product. From design to selling strategy, from logo to packaging. Everything is included. You sell a product that is unique and puts an impact on the life of the user.
2) What are Private Label Manufacturers?
Private label manufacturers are the ones who create a specific product for you and make sure they don’t create that same product for any other seller. As soon as they have created that product, they will transfer you the design patents and all information related to that product.
3) White Label or Private Label- Which Model is Best?
It all depends on the type of product you are launching.
You do private label when you
- Want to create something new
- Want to manufacture the product by yourself in future
- Money is not the issue
- Want a customer base
You do White Label when you
- Want to save financial costs
- Want to expand your business
- Want to market your product fast
- Are targeting products that are common
4) Should I White Label my Product?
Yes, you should white label your products if you want to save money. That is because, with white labels, the costs of product manufacturing and advertisements are low. If you want a product that does not contain any major design changes, you should definitely white label your product.
White labeling and Private labeling are the two most effective methods if you want to start a business under your own name and brand. However, there is a lot of confusion because at first, both of these business models look the same. But, they are not and we have established that in this blog. Both have their own perks and features. And, both are suited for a specific set of businesses.