If you know anything about the eCommerce business niche, “white label” and “private label” are two popular terms you’ve heard, probably (incorrectly) interchangeably.
While they do share a lot of similarities, you also need to respect the differences. This white label vs. private label guide will help you decide which strategy will help you unlock the full potential of eCommerce. Here’s everything you need to know:
White Label and Private Label Definitions
The first question to ask when comparing these two terms is simple: What are they?
“White label” is a term that describes generic products sold by multiple retailers, often under their own name and branding. Several brands will receive the same product, but use their own brand on the packaging and leverage digital marketing to promote it to their respective audiences.
Conversely, the private label definition states that a product will be sourced from a manufacturer specifically for one retailer and is made to fit the retailer’s needs. For example, a product’s color may be changed to match a specific brand. Crucially, the products are unique to the retailer, thus being made for exclusive selling.
Both types of product sourcing can be very profitable and remove many of the costs and constraints linked to developing products from scratch by yourself.
White Label and Private Label Examples
Before looking at private label vs. white label dropshipping or product manufacturing, it is vital to understand how they work in practice.
Steel water bottles are a great example. A white label water bottle may be a standard steel water bottle subsequently branded with an adhesive wrapper. Therefore, two companies could sell essentially the same container, but charge different prices based on their brand positioning and audiences.
Conversely, the shape, color, and size of a private label water bottle are all designed specifically with the buyer company in mind. For example, private label manufacturers may emboss the retailer’s logo on the metal for a truly exclusive feel.
Private vs. White Label Pros and Cons
Both options are advantageous over manufacturing products from scratch, as the outsourced approach removes the need for on-site stock management and order fulfillment. Private label products made by small-business operations and enterprises now account for around 19.5% of the US market, but white label manufacturing is still vastly cheaper.
White Label Pros
- Great for dropshipping
- Often the cheapest solution on the market
- Quickest approach as products don’t need to be exclusive
White Label Cons
- Your product will essentially be the same as many others on the market.
- No customization options outside of the branding elements
- Mass-produced items with no real quality guarantees
Private Label Pros
- Your products stand out from generic brands
- Guaranteed quality
- Easy to make improvements over time
- Cheaper than in-house production
Private Label Cons
- May take longer to produce
- Some private label manufacturers have minimum order quotas.
- More expensive than white label
White Label and Private Label Manufacturer Checking
Whichever decision you reach in your private label vs. white label debate, finding the right manufacturer will be essential before you start promoting your branded products on the eCommerce website you built. Otherwise, you could seriously ruin the brand reputation to lose existing customers and new sales alike.
Here are some simple steps to determine if your chosen manufacturer is a good fit for your brand:
- Request a product sample first to verify quality.
- Place two orders to different addresses – one with just a single item and the other with a whole batch.
- Monitor the order fulfillment processes, particularly the communication and delivery speeds.
- Review the total manufacturing and order fulfillment costs, including any hidden fees.
- Conduct some research to see how they deal with defects or customer returns, as this will reflect on your brand.
Ultimately, the difference between white label and private label products will be rendered irrelevant if you choose the wrong manufacturer. As such, following the above steps is crucial.
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While many new eCommerce business owners think that white label vs. private label differences are negligible, the truth is that subtle changes can considerably influence your business growth. There is no single right or wrong answer, and your choice should depend on the products you want to sell and where consumer expectations lie for your brand. A private label inventory may stand out more, but can come at a premium cost and slower production. On the other hand, a white label production will save you plenty of money and time, but might make distinguishing yourself quite difficult, and leaves you little control over product quality.