Are you also someone who gets confused when it comes to the topic of private label vs. white-label?If you are nodding in yes, then here in this blog, I will clear all your doubts about the same.
Well, firstly these are the two terms prevailing in the market, and you might have heard them if you are in the eCommerce business.
The words “private label” and “white label” must be known to anybody who deals with acquiring & selling items/services. Many people treat both the terms as the same, but there is a slight difference which I am going to discuss later in this blog.
According to one study, it has been found out that millennials, who now make up 24% of the worldwide population, are especially eager to explore new items, including private labels.
This generation is likewise concerned with the value of products and the collection of data. In this study they found out that private label brands are comparable to big brands, this facing camera youth will buy them.
Now coming again to the question of the hour, how white labels and private labels are different from each other.
What are White Label Products?
White label refers to general goods or services developed by makers for distribution to one or more retailers. The retailers can relabel these items and sell them under their own names. Hence here the retailers (or) sellers don’t have control over the product specifications and manufacturers are basically creating products that are best for them to distribute.
Usually, white-label products are best for people who don’t wanna invest a lot of time into product development but at the same time want a ‘minimum viable product’ that might already exist in the market and they wanna leverage its demand.
Here is a seller, you get the opportunity to print anything on a white-label packing and therefore this will help your cause to sell products under your own brand.
What are Private Label Products?
A private-label item is manufactured by a 3rd party but sold under the retailer’s brand. Everything regarding the item or goods is under the retailer’s authority. This covers the product’s specifications, packaging, etc.
Usually what happens in a private-label production cycle is that the retailer/seller has an idea of the product and he/she knows exactly what it needs to manufacture that product.
But instead of manufacturing by themselves, they outsource it to their local factories (or) factories somewhere in china. Once the products are manufactured, they are either shipped directly to the retailer (or) drop-shipped to the consumer with the retailer’s branding on it.
White Label vs Private Label: Differences and Similarities
Now, if you pay close attention to both the definitions, you might scratch your head as they both seem similar, but there are differences which we are going to talk about in this section.
In essence, both kinds of products allow resellers to concentrate on marketing while producers are concerned with the manufacturing process. In such cases, business owners will save money and time by not having to worry any about the technical aspects of the production.
Key Similarities: Let’s cast light on the similarities of these two in detail
Production is outsourced: Both white-label and private-label products are not manufactured in-house. In most cases, the manufacturing of these products is handled by a third-party manufacturer who is responsible for the product’s design and all.
Inexpensive to start: Compared to launching a nationwide product brand with all the administration duties taking at one place. It’s relatively cheaper and efficient to start with private and white label products. Despite saying that, a physical product business still needs some hefty investments.
Control over marketing: Once a private-labeled (or) white-labeled product is branded under your name, you can choose to market it however you want and the best part is you get to decide the price of your product to book profits instead of keeping margins.
Control over packing and design too: In both the private labeling and white labeling, you will get a chance to choose your package design and packing since most of the manufacturers will already be familiar with other retailers too. They would be happy to do your packing in your way with your own design.
Key Differences: About the differences between the two
Exclusivity: The significant difference between the two comes down to exclusivity. Private label items are made solely for a single merchant; they are unlikely to be seen at competing stores.
On the other hand, white labeling implies that the very same product may be sold to numerous resellers, making it considerably easier for new businesses to engage in trade and therefore the product is no more exclusive.
Customization: A necessary keynote to distinguish between white labels and private labels is by definition, private labeling is a more customized approach than white labeling because it encourages sellers to provide their requirements to the manufacturer before manufacturing begins.
While white labeling allows sellers to only personalize packaging, usually most of the white-label items/products will be under production even before the transaction gets closed.
Industry Choice: Private labeling is more famous for tangible things like cosmetics, home items, clothing, etc. Small firms that concentrate on specialized physical items that don’t demand a lot of expertise in production generally utilize it.
Also, private labeling is widespread in the healthcare business and valuable items like food and drinks. On the other hand, white labeling is popular among the technology industry, particularly in IT, branding, and Fintech.
Since white label products could be utilized for both physical and digital items, the range of their approach is slightly more extensive compared to private label products.
Investment and ROI: Private labeling necessitates a higher initial expenditure since it indicates that a reseller performs product research and development well before the production process starts. Thus he/she will incur additional expenses, but the return on investment will match the effort.
Also, the private label approach lets you market a one-of-a-kind product that customers often like and appreciate. So, if you’re looking to offer different physical items, private labeling might be a more viable alternative.
On the other hand, white-label items are typically less expensive to produce since they don’t require additional research. White label items can provide a high return on investment if well promoted, but if it’s a tangible product, be ready for better competitors.
How to Find Manufacturers for These Products?
Now comes the question of how to find manufacturers for private labels vs. white labels. It can be overwhelming to find a reliable manufacturer, and going with an unworthy one may cost your online business. So it is critical to have a straightforward approach to finding the manufacturer for these products:-
Forums – You can approach manufacturers from Reddit, Salehoo forum, Warrior, and much more. These forums have people who share their experiences finding manufacturers and marketing private label items. There are always listings of private label producers.
Marketplace – Browsing internet marketplaces is a fantastic method to locate white or private label producers. You may look for white or private label items in your desired sector and approach the provider online to see whether they can produce the product. The favored marketplaces are eBay, Amazon, Global Sources, IndiaMART, and Alibaba.
Local – The power of the local community is not definable. Here it is an excellent way to find the manufacturer for your product. All you need to do is talk to a shopkeeper about their vendors and then approach them personally. It may consume time and energy, but in the end, it will be worth it if you can land any reliable manufacturer for your own product.
Online Directory – Another way to locate manufacturers is to make use of eCommerce online directories. Usually, these directories will have a list of all possible registered manufacturers in different niches. One such popular online directory is Salehoo; you can find many on Google by simply typing the niche + online directory on the search engine.
When approaching a supplier or manufacturer, an essential thing to remember is to be the individual they would like to work with. That involves doing your homework, understanding what you want, acting professionally, courteously, and communicating effectively. Even when you’re new to the eCommerce business, you will appear like a seasoned seller by researching and anticipating particular queries.
There you have it! Here I have mentioned all about the white label vs private label. In a nutshell, white-label lets you do marketing for a cheaper price and is suitable for emerging businesses, whereas private label requires investment but gives you exclusivity in the market.
Both models will save a lot of time that goes into the manufacturing period. And there is no denying the fact that the rise of the internet-based market has created the opportunity for both.
Thus you now know about both white label vs. private label products. Go & choose the one that suits your business requirement, budget, and needs, and please don’t forget to share your experience about the same in the comments section.