The history of white label products begins with, interestingly enough, the history of Rock n’ Roll. The name “white label” refers to the promotional vinyl records given to radios and DJs before an album’s official release — these records had only a white label because the final details and artwork were not yet finished. Radio stations could essentially write whatever they wanted on the blank labels…
That remains the principle of this type of product today: no matter who manufacturers it, you’re free to attribute it to whatever brand you want, particularly your own. Today, white label products — and their sister, private label products — go hand-and-hand with ecommerce as a viable and fruitful business model for acquiring goods.
Here, we’ll explain everything you need to know about product sourcing for them, starting with the difference between white labels and private labels.
What Are White Labels and Private Labels?
White label products and private label products are both goods manufactured independently and then sold to vendors who can then sell them under their own brand. For example, a factory overseas makes toothbrushes, then Rite Aid buys them in bulk and sells them as “Rite Aid-brand” toothbrushes.
What’s the difference between “white label” and “private label”? White label products are not exclusive — the same toothbrushes are sold to Rite Aid and Walgreens, but sold under different brands. Private label products are exclusive, and the seller can also make some alterations in the design. Rite Aid is the only brand to sell that particular toothbrush design, and has their logo imprinted into the plastic handle.
(These are just fictitious examples — we don’t know where Rite Aid or Walgreen acquires their toothbrushes.)
The key to white label and private label business models is marketing. What can you do to sell the product better than your competitors? With private labeling, you can add a unique feature to give yourself a competitive edge, even just a new color. But with white labeling, it’s a lot harder; you and your competitors are selling identical products, and your only advantage is your business sense.
What’s your edge? Are you selling your products cheaper than competitors? Are you the only store that offers overnight delivery? Are you selling to a different market than your rivals? When you sell the same products, it’s up to how you sell it.
White labels and private labels work best with strong brands — brands with a dedicated community and rock-solid reputation. Often, it’s the brand that influences where the customers end up buying the product from.
It’s also worth mentioning how white labels and private labels can complement any other ecommerce model as well. Specifically, they let you expand your product range into new territory with products you’re not used to selling. So if you’re a beauty brand and a lot of your customers are talking about perfumes, you could release a white or private label fragrance without disrupting your regular product sales.
The Best Product Sourcing Strategies for White Labels and Private Labels
Here are the best ways to source products for the white label and private label ecommerce business models.
1. Online Directories
In addition to trade shows, exhibitions, and simply just browsing your local stores for inspiration, there’s a wealth of online directories and resources dedicated to showcasing white and private label manufacturers. Here’s a quick list of sites to find white label and private label manufacturers:
Online directories are convenient, but that’s a double-edged sword — your competitors also have easy access to the same manufacturers as you do. If you’re doing a private label model, it’s no big deal, but white label brands need to pay closer attention to who’s selling what.
2. Always Sample Products
As with dropshipping, you want to personally ensure that the product delivers on everything it promises. Don’t commit to selling a product until you’ve tested it with your own hands. Aside from making sure your supplier is telling the truth, you also want to understand how the customer will use the products. Hopefully, this could inspire some new marketing angles, maybe even discovering some uses even the manufacturers isn’t aware of.
3. Consider Shipping Logistics
Where you source your products from is more complicated than just choosing the lowest price or best quality. You need to consider shipping logistics as well — how often shipments can come into your fulfillment centers, whether or not you can get a discount on bulk orders and whether or not you can realistically ship that amount.
Make sure you crunch those numbers beforehand, without missing any hidden shipping fees. It also pays to check out some previous references of your manufacturers to make sure they’re reliable and punctual.
4. Use Private Label Features to Hone in on Niche
The advantage of private labels over white labels is a big one — not only exclusivity, but also the opportunity to customize the product. You can use this asset to its fullest by tailoring the product to your specific niche audience.
In theory, you know your niche market better than anyone, including the manufacturer. If you can provide some insight or expertise that makes the product more attractive to your customer base, incorporate it into the product design. This makes the product itself better, and also strengthens the bond between your customers and your brand by proving that you understand them.
The white label and private label business models are similar to the dropshipping model, especially when it comes to risks. Although white and private label brands control their own shipping, the lack of control over the products themselves is the same. As is the case with dropshipping, you must take extra precautions over which suppliers you do business with, as they’re closer to business partners. Their own reputation and reliability reflects on your brand, for better or for worse.
Interested in learning more about product sourcing? Check out our guide outlining the best sourcing strategies for every ecommerce business model.