Private labeling and white labeling can be very lucrative ecommerce strategies — but first, you have to learn how to tell them apart!
Often used interchangeably (though not correctly), private label products and white label products both refer to rebranding premade products for one’s own brand. You can sell virtually anything as your own to coincide with whatever branding and marketing strategies you have lined up.
Considering how well the best private label products of 2021 are selling, now’s a good time to learn how to employ a private labeling and/or white labeling strategy to your brand. This beginner’s guide explains the basics below.
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. Retailers can then make changes to the product — such as color or size — to develop their own, unique brand identity and fit their specific niche. 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 product that’s created by a manufacturer for sale by many retailers. Each retailer is allowed to resell the generic white label product under its own name and branding. With white label manufacturing, 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 similar, subtle differences distinguish the two.
With white labeling, a generic white label 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 free to rebrand the soap as their own, but they’re all essentially selling the same soap without modifications. This is why the convenient-store-brand products sometimes look identical, even if they’re from two different convenience stores.
White labeling is a fast way to get to the market, but your products will be more-or-less indistinguishable from those of other retailers. With nothing but the label differentiating your products, you’ll need to shift your focus to differentiating your brand.
With private labeling, however, the product is created for exclusive sale by a single reseller. In the soap example, the private label retailer would have the option to modify it to fit their selling requirements and brand. The modified soap is exclusive to that particular retailer, and sometimes can even be customized with the retailer’s logo or branding colors, unlike generic white label products.
Private labeling involves a little more effort than the white label solution, but you can use them specifically to tap into trending products, like the best selling niches of 2021.
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 in product design and creation, you’ll save both time and money. In turn, you can focus on marketing and branding the product to your target audience without stretching yourself too thin.
Because there’s less effort, private labeling and white labeling are ideal for sellers who want to experiment with new products or on new sales platforms. It also makes an attractive model for sellers looking to start an ecommerce business on the side.
Tips for Finding Manufacturers
We’ve already discussed the best product sourcing methods for white label and private label products, so if you want more advanced tips, you can find them there.
To get you started, though, your main concern will be finding a manufacturer who’s reliable.
You need to trust your manufacturer to develop quality products. 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
- Review how they handle product defects and damaged goods
Online directories are a good place to find manufacturers, and they sometimes vet who’s included so you can ensure a certain level of quality. In particular, you can start with these:
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 works well. But first, review the most common private label mistakes rookie sellers make so you can avoid them.
Check out this list of trending private label products to get some ideas on what to sell!
Editor’s Note: This blog post was originally published February 2018 and was updated in March 2021 to reflect more accurate and relevant information.