White Label vs. Private Label: Differences Explained

ByDanica Djokic
March 14,2022

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.

The Takeaway

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.

Frequently Asked Questions
What's the difference between a private label and white label?

White label products are generic items that a manufacturer makes for several businesses but can be personally branded to differentiate from the same products sold by your competitors. Private label items are exclusively branded, allowing you to request changes from the manufacturer. For a more detailed answer, read our guide above.

Is white labeling legal?

White labeling is a completely legal protocol that allows multiple businesses to customize and sell generic products under their own brands. However, eCommerce companies will often need permissions via a White Labeling Agreement. This is something all white label companies must research in advance.

Is white labeling profitable?

White labeling can be very profitable, as it reduces initial outlays and financial exposure. However, the products will only succeed if they (and the brand) are aligned to market demands and pricing structures. Likewise, the company must know how to drive traffic to its website and product pages.

Can you private label alcohol?

Yes. Alcoholic private label products include a range of spirits and whiskeys. However, any beverages must be made by a registered distillery. At the same time, the product will need to provide the same information regarding ABV percentages and related factors as any other alcoholic beverage.

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By Julija A. · March 14,2022
If you’re the sort of person who enjoys regularly getting out of the office and doing interesting work, then learning how to become a house appraiser could be ideal for you.  Appraisers are professionals who work closely with other stakeholders across the real estate sector, including agents, buyers, banks, sellers, and investors to determine “fair value” for properties. With their help, sellers and banks can find out how much real estate is worth, allowing them to plan accordingly and know what to expect. There are currently more than two million real estate agents in the US, so being qualified to appraise houses is a valuable skill.  What Does a House Appraiser Do?  A house appraiser’s main task is to determine how much a particular property is worth. 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By Julija A. · March 11,2022
While it might not necessarily stand out as the most exciting business sector to get into, the shipping industry is easily one of the most important for domestic and international commerce. Quite frankly, there has never been a better time to start a shipping company either. Studies show that around 90% of international trade relies on the freight industry. When you know how to start a shipping business in style, the opportunities to generate significant financial returns while simultaneously helping companies and consumers around the globe are fantastic. This guide will help you learn the various steps for starting a shipping business in 2022 and beyond. Let’s get ready to deliver the goods. Why Start a Shipping Company? Before looking at how to start a shipping company, you need to be properly motivated to enter this arena. First off, you should know that the shipping industry was valued at $14 trillion in 2019 and continues to show a steady improvement year on year. 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From cars to food and consumer goods to raw materials, global trade is dependent on freight companies like the one you plan to launch. Responsibility - the chance to make a difference in the world is something many entrepreneurs aspire to do. Carbon emissions from the shipping industry have been reduced, and industry leaders aim to reach a 50% reduction by 2050. You can play a significant role in this development. Engagement - every business owner enjoys a challenge, and starting a shipping company will present new ones daily. From building your business strategy to overcoming financial and logistical obstacles, this is an industry that offers a chance to dive deep. Furthermore, studies have shown that the volume of shipments for B2B, B2C, and C2B parcel delivery across 13 major countries has grown from 43 billion units in 2014 to 131 billion in 2020. Given the way our consumer habits have changed during the pandemic, the figures are only climbing. 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Learning how to determine whether a House Bill of Lading (HBL) or Master Bill of Lading (MBL) is required. The need to research when cargo can be shipped without insurance and which kind of insurance is needed when it can’t. A deep understanding of the HS Code or Tariff and how it’ll impact your domestic or international shipments. An ongoing demand to manage logistical factors that could impact shipping containers in multiple countries.  If you don’t have all the relevant experience and information at the start of your journey, you can educate yourself on the state of the shipping industry before officially launching your business. However, you must be honest with yourself regarding your ability to commit to the work even during stressful times.  How to Start a Shipping Business It will require a lot of hard work to force your way into this crowded industry, but it is possible. However, the versatility and self-control inherent in the industry will offer you many options. As such, your research can even extend to ideas like how to start a shipping business from home - a concept that will help reduce some of your financial exposure. In some ways, the shipping industry is no different to any other, not least in the sense that you must find your own path. Nonetheless, the following steps should point you in the right direction. #1. Research the Market Knowing that you want to start a freight company is one thing, but knowing the exact type of venture you wish to operate is another. There are several niches within the industry that you may wish to pursue, such as: Cargo shipping Container shipping  Dropshipping With 90% of goods being transported by sea, there are so many categories of shipping you can get into. You may also find that your future lies with a niche like hazardous goods, in which case you’ll also need to consider your clients. They could fall under the category of B2B, B2C, or C2B, ranging from small contractors to major organizations. Getting into a niche that you feel passionately about is advisable, but you must also check out the relevant regulations, ranging from international laws and customs regulations to insurance coverage. The findings should influence your subsequent decisions. #2. Build a Business Plan A strong business plan is one of the most valuable documents that you can have during the early stages of planning and launching your shipping business. Aside from being a tool that can help you gain funding from banks or guide your team, it’s also something you can always look to for a better understanding of your company and where it’s headed. It’s technically possible to write a one-page business plan, but when looking at a shipping business international venture, you’ll probably benefit from a more comprehensive business plan and proposal. 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In addition to registering the business, you’ll need your tax identification number and will also benefit from having a: Certificate in Shipping Business Certificate in Marine Transportation Certified International Trade Professional (CITP) status The legal requirements for this industry are more stringent than for many small retail businesses. But whether you open a sole proprietorship or - more likely - an LLC, getting this paperwork under control is essential. #4. Access Funding Knowing how to start a shipping container home business counts for very little if you don’t have the capital, especially as you’ll be dealing with large sums of money. Buying a cargo ship can cost over $10 million, and even the alternative methods like setting up a UPS franchise will require significant funding.  Large operations will need an office, furniture, and office equipment. Even when looking at how to start a shipping business from home, there will be staffing costs, vehicle rentals, containers, and shipping equipment that can easily cost tens of thousands of dollars. Some options for funding the business include: Business bank loans and personal funding Private investors who can also offer mentorship and contacts Crowdfunding or loans from people you know Your state may also offer business grants for startups, which is another route that’s always worth pursuing. #5. Get Insured and Organized There are many administrative tasks that must be completed before you start trading, such as getting a bank checking account and applying for your Employer Identification Number so that you can pay your employees. Having already completed your Certificate of Incorporation, you’ll also need Operating Agreements and Insurance Policies. Joining the National Customs Brokers & Forwarders Association of America (NCBFAA) is another key responsibility, while you’ll also need to protect intellectual properties with copyrights and patents. You must also: Organize your freight, maritime, and shipping supply chain management Handle your employment agreements and non-disclosure agreements Seek the right insurances, such as general, risk, health, and workers’ compensation You must also need to establish policies and contingency plans to overcome any problems that may occur while running the company. Maintaining compliance while also serving employees and clients in the right way is essential at all times. #6. Decide on Your Location The location of your business will be important for many reasons, not least your convenience. Even if running a home-based company, you’ll want to know that your cargo and shipments come in or out from a nearby port. You’ll also want to consider where your warehouses are stationed, while also looking into trucking logistics. Knowing that your warehouses, your parking lot for fleet vehicles, and your containers are kept on one site can be beneficial, not least for managing costs. Be sure to consider: Accessibility to the site and getting to shipment locations The strength of competition from other freight companies in the area Any local regulations or laws that could affect your cargo business Location is particularly vital when you want to start a domestic shipping business. That’s because 44% of customers will wait two days for fast delivery, but under 25% will wait for four days. Given the demand for fast solutions, this is one of your most important decisions. #7. Assemble Your Team You cannot expect to run a shipping container company alone, even if it’s a small one. While nearly two-thirds of companies state that retention is harder than hiring, finding candidates with the knowledge and experience to drive the business forward is key.  Many hands make light work, especially when their talents can fill the skills you might be lacking personally. Your workforce will inevitably include:  Office, administration, and HR staff Truck drivers, shipment packers, and warehouse teams Engineers and cargo ship workers If you don’t need to hire all of those people right away, delay it until you do. This will free up more capital while also allowing you to invest more time in the employees you have. Still, you must keep one eye on this to promote smooth long-term growth. #8. Build Business Relations While managing your in-house teams is important, you must also establish strong relations with partners. As a startup, it’s almost impossible to handle every aspect of the freight shipment journey without other companies. You’ll need to have strong connections with: Sellers, who will essentially be your clients Freight forwarder companies once shipments arrive at the destination country Buyers, who may sometimes come directly to you rather than a seller You may also find that you need the help of various tech and software companies to maintain safe, trackable operations at all times.  The necessary business relations will depend on whether you ship by land or sea, as well as the nations you export to. Nonetheless, strong connections with the companies whose items you’ll ship should reduce delays and errors. #9. Establish Your Brand Branding might not feel like that important a step for a shipping business, but the right company image is as important as understanding the features of the NVOCC, like bills of landing or securing the right certifications. Having a solid brand inspires trust from clients and provides peace of mind for workers. Many of your branding issues will be solved instantly if you take on a franchise. However, when starting from scratch, some of the key responsibilities to consider are: Ensuring that the brand personality aligns with your shipping niche Designing a website that engages your audience and inspires trust Getting placements in the right directories, publications, and online outlets Above all else, you need to know that your branding is consistent. Meanwhile, customer care can be incorporated into your branding. Once you’ve been operating for a while, testimonials from your biggest clients can be a key step to winning more contracts. #10. Start Operating With all your preparations now complete, you’ll finally be able to start trading as a shipping business. Whether you’re using maritime or freight shipments, securing leads will be vital. You’ll need to embark on a full and thorough marketing campaign to properly establish yourself.  Winning clients is one thing, but keeping them is another. Finding the best CRM software will be pivotal, as you can use this program to manage all your communications and identify consumers’ behaviors. To provide a tailored service, you should focus on: Updates and tracking information on all shipments Quick invoicing and easy payment facilities Automated orders to streamline client operations Of course, there’s nothing like experience to help improve your company over time, but the aforementioned steps should ensure that your venture gets off on the right foot. If all goes well, your shipping business will be set for years of success. Further Reading The Best Ecommerce Website Builder - Our Top Picks The Best Ecommerce Platform - Find Customers Globally The Best Wholesale Websites  The Final Word The freight industry is one of the longest-standing and most stable business sectors, and it can certainly accommodate new startups. As long as you know how to start a shipping business with compliance, convenience, and cost-efficiency in mind, there’s no reason why you shouldn’t discover a smooth road to success.
By Julija A. · March 11,2022

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