Private labeling and white labeling are probably two of the most often misused and confused terms in ecommerce. They both describe products branded by a reseller, but there are subtle differences between the two. Both are great options for retailers like you starting an online business. This guide will go over the differences and advantages between the two.
What is Private Labeling?
A private label product is typically sourced from a manufacturer and then sold under the retailer’s brand for exclusive sale. Because of this, retailers have the ability to make changes to the product to develop their own, unique brand. Private label products are usually less expensive than national brands, and if marketed correctly, they have the potential to bring in a large profit.
What is White Labeling?
A white label product is a generic product that is created by a manufacturer for sale by many retailers. Each retailer is allowed to resell the product under its own name and branding. With white label products, the retailer is able to charge a premium on the product by attaching their existing brand because of their position in the marketplace.
Private Label Vs. White Label
While private labeling and white labeling are very similar, there are subtle differences that distinguish the two.
With white labeling, a generic product is created by a manufacturer for multiple resellers. For example, a white label manufacturer would sell a generic soap to 10 different retailers. Each retailer is able to rebrand the product as their own. With a white labeling business, each retailer is selling the same soap with no modifications. The soaps are simply rebranded and marketed as the retailer’s own product. This is a fast way to get to the market, but your product will be the same as other retailers. Without much to differentiate your product, you will need to work hard to differentiate your brand.
With private labeling, the product is created for exclusive sale by a single reseller. Going along with the soap example, the private label retailer would then have the option to modify it to fit their selling requirements and brand. The modified soap is exclusive to that particular retailer, and comes complete with their logo, name, and brand identity. This will take more time than the white label solution, but it will allow you to create a product that is unique to your niche.
Advantages of Both Business Models
With either ecommerce business model, you won’t have to go through the trials and tribulations of manufacturing a product. Without the investment of product design and creation, you’ll save a ton of time and money. In turn, you can focus on marketing and branding the product to your target audience. You won’t stretch yourself thin and can focus on other areas of expertise to grow your business.
Tips for Finding Manufacturers
Finding a reputable manufacturer for white labeling or private labeling is very important. You need to trust your manufacturer to develop quality products and deliver them promptly to your customer. When searching for a manufacturer, you’ll want to:
- Request a product sample to verify quality
- Verify that it was delivered quickly and in good condition
- Total manufacturing costs and whether there are any hidden fees
- How they handle product defects and damaged goods
There are a few reliable ways to search for a manufacturer on the Internet. Use a search engine, like Google, and type in a variety of keywords like “top manufacturers”, “white label manufacturer or supplier”, or “private label manufacturer or supplier” to find potential manufacturers. Online supplier directories are some of the best sources for finding a manufacturer. Try directories like ThomasNet, Maker’s Row, Alibaba, or Oberlo. Finally, look to websites like Quora and Reddit to find referrals, reviews, and conversations surrounding manufacturers to verify their reputation.
Many online sellers use the private label and white label ecommerce business models for a reason. These types of products are a convenient and affordable way to diversify your brand, without having to invest in the creation of the product.
If you’re looking to develop a brand and marketing strategy, and not the product, white labeling or private labeling may be a great option for you. But before you commit, review the most common private label mistakes rookie sellers make.
Check out this list of trending private label products to get some ideas on what to sell!