Private Label vs White Label: What’s the Difference

While many will use white label and private label interchangeably, each is completely different. The division in similarity truly begins at the manufacturer. Some of the basic differences between the two labels can be summarized as follows:

White Label:

1. Generic Production: White label products are generic and are not tailored to any specific requirements of the retailer.
2. Multiple Retailers: White label products are the same product, rebranded and sold by multiple retailers with minimal customization.
3. Quick Market Entry: Due to the lack of customization, these products can be picked up and branded quickly without intense product development investments.
4. Limited Differentiation: From the manufacturer’s point of view, white label products are sold quickly to many different retailers, leaving little room for differentiation between brands.

Private Label:

1. Customized Production: Opposite of white label products, private label products are specifically curated to the design of the retailer.
2. Exclusivity: The design and product of private label products are not distributed to multiple retailers. These are items sold under only one company.
3. Brand Identity: Due to the uniqueness of private label brands, the brand identity is built significantly compared to white labels.

Is is essential for retailers to look at their company and strategize which approach will be more successful. It is important to explore each option deeper to avoid common misconceptions.

To put it simply, private label refers to products that are manufactured by one company and sold under the label and brand of another company. The main difference between private label and white label is the customization and control the retailer has over the product design. Private labels can change and configure the product recipe, branding, and marketing to be exactly what they imagine it to be. There are many benefits from pursuing private label, including:

1. Brand Differentiation and Loyalty: Private label products allow the buyer to create and sell unique products, which are only sold under their brand. This exclusivity aids in differentiating the company from its competitors and breeds loyalty among customers.
2. Higher Profit Margins: Due to the direct contract between the retailer and the manufacturer, private label items can be produced at a lower cost. There are no brand fees or marketing costs associated with supply chain intermediaries. This cost efficiency translates to higher profit margins compared to selling third-party or national brand names.
3. Great Control Over Product Quality and Specifications: With an increasing desire among the general public for quality in their products, there is no better way to cater to the audience than producing private label products. Retailers have more control over the development process, including design, ingredients, and quality standards, ensuring high customer satisfaction.

Because of the customization, control, and direct communication, private labels provide benefits not found in white labels. They can differentiate their brand, maintain customer loyalty, foster higher profit margins, and control product quality and specifications. These benefits extend to the retailer, manufacturers, and, most importantly, the consumer.

White label refers to products produced by a manufacturer that are rebranded and sold by multiple retailers as their own product. Contrary to private label, there is no customization of white label products. These items are generic, enabling businesses to quickly and easily move products as there is no product development and little quality control. Some benefits of selling white label include:

1. Quick Market Entry: While private labels emerge into the market having had time to customize and develop a specific product, white label products aim to expand product lines and enter new markets without the time and expense of developing and manufacturing their own products.
2. Reduced Costs and Risks: By leveraging products that were previously developed and tested, companies can cut costs and risks associated with product development, quality control, and manufacturing significantly. This is advantageous for smaller companies and startups with limited resources.
3. Flexibility and Scalability: Buyers do not have to worry about logistics and infrastructure that is regularly required for increased production because of the flexibility white label provides. Businesses can focus on the presentation of the product to a specific audience due to the limited customization in the actual product.

While private label has many benefits, white label addresses different advantages, such as quicker market entry, reduced costs and risks, and flexibility and scalability in branding. Businesses can hone in on what will sell to their audience best while moving products quicker than private labels potentially can.

The main differences between white label and private label can be grouped into two categories: Customization/Exclusivity and Market Strategy/Control.

Customization and Exclusivity:
White Label:

• Generic Production: White label products are typically generic and not customizable for a specific retailer, removing customization and exclusivity from the product almost entirely.
• Multiple Retailers: White label items can be rebranded and sold by multiple retailers with little to no change, creating a general product rather than an exclusive one.
• Limited Differentiation: Since the same product is available to sell from various retailers, there is limited opportunity to brand the product differently, resulting in competitive but non-creative branding.

Private Label:

• Customized Production: Private label products are manufactured to meet the direct specifications and requirements of a single retailer. The entire concept is based on the necessity of customization in the product.
• Exclusive to One Retailer: With such a level of uniqueness expected in private label, the specifications are drafted into a contract signed by both parties, ensuring distinctive parameters are maintained exclusively.
• Brand Identity: Due to the personalization of the retailer, a special brand identity and exclusive items are manufactured that cannot be found elsewhere, fostering unique brand identity and drawing in the target market.

Market Strategy and Control:
White Label:

• Quick Market Entry: Minimal product development in white label allows for a quick entry to the market, pushing new products faster than private labels.
• Lower Costs: White label products generally involve lower costs due to minimal customization or extensive product development, reallocating saved money to more necessary areas.
• Shared Control: The manufacturer maintains control over the product's design and specifications, limiting the retailer’s influence on quality and innovative features.

Private Label:

• Brand Differentiation and Loyalty: Products created via private label differentiate the company from competitors by specific brand features, building customer loyalty through unique offerings.
• Higher Profit Margins: By removing intermediary parties, private labels work directly with manufacturers, producing products at a lower cost, resulting in increased profit margins.
• Greater Control: Retailers in private labels have noticeably more control over the product development process, including design, ingredients, and quality standards, guaranteeing products meet their specific needs and preferences.

Various examples of white-label and private-label supplements demonstrate the differences between these two label types.

White-Label Supplements:

1. Multivitamins: Generic multivitamin blends produced by a single supplement manufacturer can be rebranded and sold by multiple companies under their own label.
2. Protein Powder: Protein powder can be formulated and approved to be sold before being rebranded and marketed under various fitness brands.
3. Fish Oil Capsules: Omega-3 fish oil supplements are manufactured by a single producer and distributed by different companies under their individual brands.

Private-Label Supplements:

1. Myprotein - THE Whey+: Myprotein, a leading sports nutrition brand based in the UK, offers THE Whey+ protein powder with high-grade ingredients and unique formulas, sold exclusively under their brand.
2. DM - Das Gesunde Plus Omega-3 Kapseln: DM, a popular drugstore chain in Germany, offers private-label supplements like Omega-3 Kapseln under the brand “Das Gesunde Plus,” sold exclusively in DM stores.
3. Holland & Barrett - Radiance Multivitamins & Minerals: Holland & Barrett, a UK-based health and wellness retailer, develops unique blends of essential vitamins and minerals, sold exclusively in their stores and online.

The food industry provides numerous examples of both white-label and private-label products.

White-Label Food Products:

1. Canned Vegetables: Manufactured by a common supplier and rebranded by multiple supermarkets.
2. Pasta: Produced generically and distributed to multiple retailers under various labels.
3. Bottled Water: Basic and easy-to-produce, making it a feasible candidate for white-label production and rebranding.

Private-Label Food Products:

1. Tesco Finest Ready Meals: Tesco, a UK-based retailer, offers premium ready-made meals with exclusive recipes and high-quality ingredients, sold exclusively in Tesco stores.
2. Lidl Deluxe Cheese Selection: Lidl’s “Deluxe” range includes a selection of cheeses crafted to meet specific flavor profiles and high-quality standards, sold exclusively in Lidl stores.
3. Costco Kirkland Signature Olive Oil: Costco’s private-label brand, Kirkland Signature, offers a range of food products, including premium olive oil sourced from specific regions, sold exclusively at Costco.

Understanding the differences between white label and private label products is essential for making informed decisions regarding product development, market strategy, and brand identity. Each approach has its benefits, depending on a company's goals and resources. Private labels offer exclusivity and higher profit margins, while white labels provide quick market entry and reduced costs. By evaluating the unique advantages of each, businesses can select the best strategy to optimize their product lines and enhance their brand presence.