Private Label vs. White Label: Which Is Better?

When selling products, there are numerous options available to businesses today. Two of the most common methods for selling products to consumers are private labeling and white labeling. Both approaches involve a third-party manufacturer, but they offer different levels of control, customization, and branding. Before deciding which option is right for you, it's essential to understand both processes and their key differences.
In this article, we establish private and white labeling, present examples of both, discuss the main similarities and differences between private labeling vs. white labeling, and which one of these two should you choose for your business.

A private label refers to products that are manufactured by one company but sold under another company's brand. Essentially, the company selling the product does not make it themselves; instead, they work with a manufacturer that produces the product, and the retailer or brand then labels it with their own brand name and logo.
Private label products are common in industries like grocery stores, cosmetics, health and wellness, and clothing. For example, a supermarket may sell a line of canned goods with their own store name on them, even though another company actually produces those cans.
It’s a common strategy for retailers who want to expand their offerings without investing in developing new products from scratch.

A white label product is similar to a private label, but with a key difference: it is a generic product produced by one company and then rebranded and sold by multiple other companies. Essentially, the product is made by a manufacturer but is sold under various brands, with each company putting its own branding, logo, and packaging on it.
White labeling allows businesses to offer a product without investing in its development or manufacturing. They can simply purchase the product from the manufacturer and sell it under their own name. It’s often used for software, electronics, food items, cosmetics, and more.
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The key difference between private label and white label lies in customization and branding. Private label products are made by one company but sold under another company's brand, with the retailer having more control over product design and packaging. White label products, on the other hand, are produced by a manufacturer and sold by multiple companies under their own branding, typically without significant customization, making them essentially the same product across different brands.
Private label is ideal if you want exclusive branding, higher profit margins, and customization options but are willing to invest more. White label is better for quick market entry, lower costs, and lower risk, though it lacks product differentiation.

To succeed in private labeling, businesses must offer high-quality products and establish a strong, appealing brand name. A lot of the most recognized brands today are those of companies who employ this type of model as they have been very visible when it comes to marketing and branding even though they are not the true producer of the said items!
White and Private Labels are prevalent largely in supermarket products such as personal care, beverages, paper products, cleaning products, and even food.

White Label Products Examples

T-shirts and mugs are common white-label items. They are also the most sought-after product line to sell and it's super easy for businesses or individuals who wish to establish their own brand-labeled t-shirts—all the while outsourcing the production and putting emphasis on branding and sales!
Aside from t-shirts, white label products cut across many industries, ranging from beverage items such as energy drinks, bottled water, and coffee to electronic accessories like generic phone chargers, headphones, and Bluetooth speakers. There are also some generic products like home items, including furniture, decor items, and kitchenware.
These pre-existing products are produced by third-party manufacturing companies and retailed under multiple retailers, enabling said sellers to diversify their products rapidly and effectively.

Private Label Products Examples

Many large brick-and-mortar and online retailers are also great examples of those who are using a private label business model. What you find out is that the coffee you purchase at your beloved warehouse store is not quite what it appears.
Costco’s Kirkland Signature brand has sourced coffee beans from Starbucks for years. More recently, they’ve begun using terms like 'inspired' or 'custom roasted' to describe their coffee products.
Introduced in 1993, Great Value is the flagship private brand of Walmart with a vast array of products, such as snacks, canned foods, frozen foods, and household items. Due to its quality and affordability, Great Value has become a household name in America.
Another private label product is Amazon Basics is Amazon's private-label brand on Amazon Marketplace, and it's a top seller. They have office supplies, tech accessories, as well as home goods priced competitively with other sellers on Amazon. Indeed, Amazon controls about 100 private label brands selling on the Amazon marketplace platform such as Spotted Zebra (children's apparel), Good Brief (men's underwear), Wag (pet food), and Rivet (home decor).

White label vs private label strategies present different benefits to businesses looking to add products to their lines and build brand recognition. Now that you understand the key differences between private and white labeling, let's explore their benefits:

Benefits of Private Label Products

• Ownership of Production: The main benefit of private label process is that the design, materials, and quality are in the hands of retailers, guaranteeing the product meets their specifications.
• Higher Profit Margin: Without the middlemen, private label products tend to provide greater profit margins.
• Adaptability to Market Trends: Retailers are able to respond rapidly to market trends and consumer tastes, providing customized products.
• Brand Recognition and Loyalty: Specialized products under a company's brand name may increase customer satisfaction, loyalty, and differentiation among competitors.

Benefits of White Label Products

• Faster Market Entry With Minimal Investment: Multiple companies can penetrate new markets without product development complexities.
• Lower Costs: White label manufacturers' mass production of products minimizes per-unit costs, so multiple retailers selling white label products get high-quality products at reduced costs.
• Experiment Niche Markets: Even with generic products, white label products allow multiple retailers to try new products, niches, and trends with no long-term production commitment or significant investment risk.
• Consistent Quality Control: Time-tested manufacturing processes ensure consistent product quality.

Private label products and white labeling approaches give companies the power to enlarge their market size and broaden their products. Irrespective of whether you are seeking total management over product formulation or need to introduce a low-risk, fast-to-market entry, these approaches offer channels to grow. Depending on the ideal strategy, companies can optimize profitability, reinforce their brand identity, and satisfy changing customer needs better.

White label vs private label both present challenges that affect cost, control, and branding. Companies have to balance these factors to decide on the most suitable method for their objectives.

Challenges with Private Labeling

• Unreliable Quality: Because private label products rely on private label manufacturers, quality can be inconsistent between batches, resulting in possible customer dissatisfaction and higher return rates.
• Longer Lead Times: Private labeling, branding, and formulation take longer to produce, making it more difficult to act fast on trends or seasonal market needs.
• Greater Costs: Private labeling involves advanced investment in minimum order quantities, branding, and product development, which is more risky for low-budget businesses.
• More R&D Effort: Private labeling products are different from white labeling products since they involve research, testing, and product development to guarantee differentiation, taking more time and effort to bring products to the market.

Challenges with White Labeling

• Limited Customization: White label products are pre-manufactured with little flexibility in ingredients, packaging design, or brand, making differentiation more difficult.
• Quality Control Issues: As several brands are using the same manufacturer, quality can be unpredictable, and companies have minimal input on improvement.
• Less Branding Control: White label brands are dependent on third-party vendors, and therefore, have limited control over package or design modification to enhance unique brand identity.
• Lower Profit Margins: White label products are more competitive since the same products are sold, usually reducing prices and lowering overall profitability in comparison to private label products.

Understanding these challenges can help retailers make informed decisions about which labeling strategy best suits their goals.

Deciding between white label vs private label strategies is a strategic choice that depends on your business goals, resources, and the level of product and brand control desired.

When to Choose Private Label?

• Need for Special Products: Private labeling provides the option for private label companies to produce brand-specific products. Design, ingredient, and packaging customization are all included in the manufacturing process, so the product perfectly represents the brand and is distinct in a competitive marketplace.
• Control Over Specifications and Quality: Private labeling provides businesses the ability to customize all aspects of the product, ranging from ingredients to packaging. Such control makes it possible to ensure that the product is in line with a particular quality specification and appeals to the customer, thus improving the brand image.
• Willingness to Spend Time and Resources: Private label manufacturing typically involves considerable investment in development, research, and production. Companies that are ready to make this type of investment can derive value from developing unique products with greater profit margins and building loyal customers.

When to Choose White Label?

• Quick Market Entry: White label products are already produced and can be speedily branded and introduced into the market. This strategy is ideal for businesses that wish to quickly expand their product line without the lengthy product development process.
• Limited Budget and Resources: White label products offer an affordable alternative to a company's brand with a limited budget and resources. It spares them the expense of the whole product development and reduces the initial investment needed.
• Market Testing: White labeling provides the agility to experiment with new product lines or markets at much lower risk. Businesses can actually test customer demand and market potential without committing to large-scale manufacturing processes.

Finally, the choice between white label vs private label must fit your company's objectives, financial resources, and the extent of control you want over your products and branding.

Identifying the appropriate suppliers is the first step toward a successful private label or white label business. Torg facilitates the process of finding trustworthy manufacturers who share your business vision. You can look for private label products that you want to be unique or pre-made white label solutions, and Torg offers an efficient platform to compare suppliers, negotiate, and expand your product line cost-effectively.
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1. How to find private label manufacturers?
There are some methods for finding private label manufacturers, such as visiting trade exhibitions, checking online directories, and making contact with industry experts. Nevertheless, it is easy to use Torg, as this offers a sole marketplace in which companies are able to compare producers, consider different products, and close deals on one website.
2. How to find white label manufacturers?
White label manufacturers are found by searching through industry databases, contacting wholesalers, or dealing with existing distributors. Torg provides a more convenient method by enabling business to directly connect with screened white label suppliers, providing quality products at competitive prices.
3. Is private label better than white label?
Whether private label or white label is suitable for you is determined by your business model and objectives. Private label products provide better control and personalization of brands but involve a higher investment, whereas white labeling is a quick and affordable option to increase the range of products. If you are not clear about which direction is most appropriate for your company, Torg can assist you in analyzing both options and discovering the appropriate suppliers for your requirements.
4. Is private label still profitable?
Yes, private labeling and private label products are still profitable, particularly in niche markets with excellent brand positioning. Businesses that make investments in quality, branding, and customer loyalty can enjoy high margins and sustainable success.
5. How profitable is white labeling?
White labeling is very profitable because it involves lower initial investments and rapid scalability. Businesses that are able to market and differentiate white label products well can generate high revenue at low investment.