Is there a battle between private label vs white label companies? Probably more confusion than battle. To explain the difference between white label and private label, we have prepared this article: it will help you quickly understand the topic and discover the details of building relationships between teams in the professional product retail industry.
It is worth noting that white label and private label are similar concepts that have a common core but differ in details. In both cases, we are talking about the resale of goods or services on behalf of the company's brand. And in both cases, the products and services resold under the company's brand are produced by someone else. And that's where the similarities between private label and white label end.
In all other aspects, we are talking about completely different relationships between:
Understanding the difference between private label and white label is of great importance for market newcomers. Therefore, this article was prepared specifically for beginners in retail. If you are already experienced in marketing wars, we invite you to explore SmartyAds’ white label ad solutions right away.
What does white label mean in business? The term white label, originally hailing from the music industry, is used to refer to generic products or services created by manufacturers for sale by other retailers.
The resellers can then repackage these products, put their brand on, and sell them as their own. Similarly, white-label ad tech products mean that one can buy an unbranded platform or other solutions, customize it to their needs, and resell it under their brand name.
For many companies, this is a good deal, as they don’t have to create the actual product and can focus primarily on branding and marketing. Interestingly, sometimes different retailers can even charge differently for products of the same origin, because of their position on the market.
So, one can see that such a business model works notably well for companies with already established and popular brands. Moreover, this model also offers a lot of benefits to little-known startups, as it doesn’t require huge investments or experience.
In the IT industry white-label company has a primary focus on developing software solutions that other brands can label and resell as their own. Such white-label software has a lot of benefits. Let's review some white-label examples.
Let's review the case with ad tech white label providers; they have an existing product that they sell to other retailers who can capitalize on it. What benefits does a brand receive from it?
White-labeled software is pre-built which means it requires less labor to install or deploy (normally software development employs a lot of stages from coding to workflow organization and licensing). Here's an example of white-label DSP:
Some argue that while labeling, a brand gets a generic product. However, in IT it highly pays off since the software is tested, so it eliminates possible malfunctions, bugs, and other related problems with functioning.
In ad tech, the major difference between solutions built from scratch and white-label solutions also lies in user-friendliness. Such a solution is not used by one company only. Hence, developers do their utmost to make their technology intuitive and easy to operate: they adjust the user interface, and make important updates, and on-demand integrations.
With white labeling, the brand can get the desired product much faster in comparison with building an identical product from scratch. Thanks to this retailers normally sell products much faster and thus, achieve profits more swiftly.
In ad tech, a brand adopts the same product and based on the pre-built tech core creates its own brand solution with its own brand name within several days.
Now that we’ve clarified the white label definition, it is time to answer the question — ‘what is private labeling?’. One can say that a company uses private label products or services if those were designed and produced for sale by another company for a specific retailer exclusively.
Private label manufacturer or private label brands creates products following the resellers’ specifications, so the product is customized even before it gets labeled. That's called private labeling.
Private-label business models are widely used in the beauty industry, manufacturing, and outfit production. It is often more affordable to get these products via private labeling. This is why private label services have a huge potential.
Because of this, a typical retailer often goes to a private label manufacturer since the final product helps to compete with more recognizable brands.
For example, a retailer gets a private label product to offer a similar style of outfit for a lower price compared to other well-known clothing providers. In this case, the price is a factor that helps a retailer to become more popular than competitors.
As we can see, the concepts of white label vs private label are somehow similar, as the mechanics of how these business models work are very much alike. Nevertheless, the definitions give hints to us that some differences are so significant that they can play a decisive role in your business strategy.
So, let’s start the comparison, what is white label vs private label?
Okay, so we have come to the white labeling vs private labeling comparison. The table below provides a detailed assessment of both approaches based on the same criteria. We hope that this information is exhaustive for your needs. If not, please contact us for a consultation.
Private LabelWhite LabelExclusivityA private label manufacturer creates the product exclusively for one specific retailer, so competitive retailers aren’t likely to have similar products. If a reseller chooses to sell private label products, it will most likely have some specific features in its design, texture, or materials that resellers specify before the manufacturing process starts.A white-label manufacturer creates the same product that can be available for multiple resellers, which means that for new companies in specialized industries, it will be much easier to enter the market with a pre-built solution.Property owningA private-label product or service is manufactured by a company that does not own the intellectual property rights to the technology. For instance, you contract a factory to produce a unique metal alloy according to a formula that is patented and owned by you. You then sell the metal under your own brand. Private label means that the manufacturer is not the owner of the technology. A white-label product or service is the property of the company that offers it to you. For instance, you buy hunting knives made by a company utilizing their unique technology. These knives are branded with your logo and other attributes and are marketed on behalf of your company. No one knows that you are not the direct manufacturer of these knives. At the same time, even though you sell these knives under your brand, you don't know how to produce them. White label meaning that the manufacturer is the owner of the technology. However, there is an exception: in some cases, the technology can be bought back, and the ownership of the technology is transferred entirely to the retailer. Industry choicePrivate labels are generally more common for physical products, such as cosmetics, household items, outfits, etc. It is usually used by small businesses that focus on specific physical goods that don’t require great complexity in production. Private labeling is especially popular within the healthcare industry and consumable goods like food and beverages.White label, on the other side, is a widely-used business model within the technology sector, especially branches like IT, marketing, and AdTech. White label can be used for physical products as well, so the scope of this model is somewhat bigger if we compare white label products vs private label.Products’ customizationPrivate labeling by nature is more customizable than the white label, as this business model implies retailers are sending their specifications to the manufacturer before the actual production starts.Usage of white labeling gives you the freedom to customize packaging, but usually by the time the deal is closed, products are already finished. However, that does not necessarily mean that resellers of white-label products have no options to change them.Investment and ROIPrivate labeling requires more investment, as it implies that a reseller conducts research and product development before the manufacturing process. This will probably take additional costs and require hiring additional professionals, but the ROI will also reflect the effort. This model allows you to sell a unique product, which is something consumers usually like and appreciate. So if you’re interested in selling unique physical products, private labeling can be potentially a more profitable option.White-label products usually come at a lower cost of production, since it doesn’t require extra investments into the development process. If marketed correctly, white-label products can get you high ROI, but be prepared for stronger competition if it is a physical product. Marketing strategy and pricingIn a private label model, a retail company that sells manufactured products under its own brand chooses an independent marketing strategy and sets the price of the products or services offered based on unique factors. Retailers can give the product any name or image they want.In a white-label model, the situation is similar: the retailer chooses the marketing strategy and sets the price of the product according to its unique factors. The retailer is the one in full control of the advertising strategy and the whole marketing process, from brand image to customer journey path creation and finally, purchase.Taking into consideration previously listed differences, one can make a rational conclusion that private labeling vs white label manufacturing models is suitable for many companies. Still, the choice must be made depending on business goals.
For small businesses focusing on physically customizable goods, a better option is private labeling, while the white label has more advantages for internet-based businesses, especially in the field of digital advertising. We will consider the advantages of private label products vs white label for different businesses in one of the next sections.
Many newcomers start to get confused about the possibilities of these two models when it comes to real-life business. Using the example of a demand-side platform, let's understand once and for all what is the difference between white label and private label.
As you can see, sometimes white labeling vs private labeling in software development is a choice without a choice. Because a ready-made white-label solution costs thousands for a monthly subscription. While private label will cost millions per year.
Since we at SmartyAds specialize in information technologies and advertising platforms, we will talk about software private label or white label solutions. We emphasize that the situation in the software market may differ from the market of physical goods, as well as trends in the industry.
The main software industry trends include the following.
This list can be continued for a long time, but in general, the product identity of software looks like the above.
Both private vs white label models ensure that a reseller doesn’t have to put a lot of time and effort into the manufacturing process.
Product design and creation are usually also parts of the job the manufacturer does; although, a reseller can sometimes add specific details to the product or customize it after manufacturing. But generally speaking, both models allow you to focus on other aspects of your business and save time and money.
The main distinctive advantage of private labeling is uniqueness. With private labeling, merchandisers get an opportunity to sell an exclusive product and worry less about competition. It also has good potential regarding profits, plus, it is easier to start without huge investments, especially when the right target niche is chosen successfully.
Private labeling is a great choice if you want to focus on delivering a specific type of product to a specific audience.
The white label model is even easier and cheaper, given that the product is already developed and manufactured, so no additional research is needed from the retailer and the potential profits are higher.
White labeling gets even more promising if you already have an established client base, so the only thing you have to worry about is a good marketing strategy, the rest is done for you by the manufacturer. This is especially true for the technology sector, where the process of new solution development may take up months or even years.
With white labeling, you can get a finished solution customized for your business needs within a short time, one month tops.
This way, you can start earning almost immediately and the only thing you’ll have to worry about is building your business strategy and product marketing. Besides, sometimes even already established companies require changes and a shift to white label ad tech platform.
As we have already mentioned in the previous section, white labeling is a fairly popular and beneficial option for digital businesses, including ad-tech and digital marketing.
Private label can also be beneficial for many retailers that strive to easily build their own products. Instead of wasting tons of time and money on developing your own solutions, which can be potentially risky, you can now purchase a pre-built platform tailored to your goals and tested on numerous other businesses.
Our offer includes several programmatic solutions, built by professionals for professionals. Work with publishers using our White Label Supply Side Platform or choose White Label Demand Side Platform if you want to focus on the advertisers’ side of the deals. To launch your own open programmatic marketplace opt for our White Label Ad Exchange SmartHub.
How does White Label differ from Private Label in programmatic advertising?
AnswerThe difference between white label and private label in programmatic advertising is fundamental: either it is off-the-shelf software with a monthly subscription fee, or it is software designed from scratch by a team of developers under your leadership. The second option, private label, is available only to a few companies with millions of dollars in budget per year.
What cost factors should businesses consider when choosing between White Label and Private Label?
When considering such options as private label and white label, be sure to pay attention to the implementation budget for the chosen model, the time to enter the market, direct and indirect risks, the complexity of scaling and development, and the payback period.
Can you provide examples of successful implementations of White Label and Private Label solutions in programmatic advertising?
The SSP + Ad Exchange example: we have dozens of customers who started their journey as a programmatic platform provider using our white-label solution. We also have analogs of private label solution examples, where the platform owner invested hundreds of hours in customizing the platform and then bought back the program code, moved to their servers, and became independent.
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Are you familiar with white label vs private label? Designing and manufacturing your own products and selling them on your eCommerce website is an adventure in and of itself. Once you have a minimum viable product (MVP), an eCommerce SEO strategy and eCommerce PPC can get you initial traffic that leads to sales.
But what if you didn’t need to spend time producing your own goods? Is there a way to be profitable without creating new products? There is, and it’s called private labeling. Private labeling is when one business sells goods to another business that markets and sells them under different branding.
Learning about white label vs private label and how to leverage it is an important step in discovering how to become a wholesaler, how to run a dropshipping business, or starting an eCommerce business. Read the essentials of private labeling, how it’s used, and white label vs private label.
When it comes to white label vs private label, note that private labeling is different from white labeling. Private labeling is when a product line is sold exclusively through one retailer, like AmazonBasics. White labeling is the process of selling a generic product to multiple retailers, who brand and price the product for their target market.
Private labeling is when a supplier or manufacturer produces goods that are retailed, packaged, and sold exclusively by a third party. This means that the first company profits by selling goods to third parties, and the third party profits by selling to consumers. Private labeling is used widely in today's eCommerce landscape, including for private label dropshipping.
The private label process is useful for a variety of reasons. One, it allows companies strong in manufacturing capability to maximize their profits. They don’t need to worry about heavy marketing and retailing when they can sell products to companies that are skilled in these areas. This is one of the biggest differences when it comes to white label vs private label.
Two, it provides companies that don’t yet have work in process inventory or finished goods inventory products to sell. When you don’t need to produce the goods yourself, you can commit more time to your eCommerce marketing strategy and reading how to increase eCommerce sales. It also makes questions like, “Is dropshipping worth it?” much easier to answer, because there’s less work to do on your part.
This principle benefits parties throughout the supply chain, as well. Wholesalers profit when their products reach B2B (see B2B meaning) and direct to consumer companies, often through an online marketplace. This means wholesale marketing strategies and growing wholesale sales are of primary focus for these companies.
Three, it makes concerns like wholesale vs. retail price easier to resolve. When a third party buys goods from a supplier, often through a wholesale purchase agreement, they don’t have complicated costs to cover in pricing. They simply need to include the expense of acquiring the product--which is part of the cost of goods sold--and add a margin (see markup vs margin).
Private labeling is common in industries of all kinds, from food and electronics to information products and clothing. It’s a practice that allows businesses of any size and scope to retain their key competitive advantages.
Most wholesalers are happy to sell raw materials inventory that a third party later sells as merchandise inventory, by way of private labeling. It gives businesses all throughout the supply chain an opportunity to sustainably grow profit and maintain a high fill rate.
When a customer purchases a privately labeled product, unless they’ve done extensive research, they won’t be aware of this. Generally, private labeling doesn’t affect customers at all. If anything, private labeling allows retailers to spend more time on eCommerce marketing and branding--the main vehicle for generating consumer interest.
A private label brand is a business devoted to creating products that third parties can sell as their own. They don’t market, brand, or retail any of their own goods. They are focused solely on manufacturing products that are sold to other companies, who sell them to other businesses or consumers.
Private label brands also support kitting, which is the process of packaging related products in the same box. This gives a third party increased flexibility in what kinds of products they sell and in what ways.
Private label companies are typically not in close contact with people other than the businesses working with them, or individuals who love industry research and reading eCommerce books. This is to everyone’s benefit, as it reduces confusion and builds brand loyalty. Keep this in mind when understanding the difference of white label vs private label.
Private label brands are developed and managed by retailers. Naturally, the term “retail” is broad and can imply everything from a retail store chain down to the individual staff members working in a store. A retail office is composed of various team member specialties that ensure private label goods achieve maximum ROI.
Supply chain specialists are responsible for managing how raw goods are transformed into ready-made products for selling, and every step in between. These professionals oversee the stages of private label goods in order to become successful in-store brands.
Supply chains are complex and involve numerous moving parts on any given day. There are material suppliers, manufacturers, distributors, government agencies, wholesalers, retailers, and more. Supply chain experts ensure each element is in cooperation with the others, including wholesalers.
Information products are private label products that aren't managed by supply chain specialists. Information products, like eBooks, courses, and audio downloads, are used by many types of eCommerce businesses. These products answer a specific question (or multiple) for the person who bought them. They can also be bought, modified, and sold without involving physical supply chains. This is a crucial part of white label vs private label.
When thinking about private label vs. brand, numerous differences come to mind. It’s important to understand the differences in order to market your business properly.
Here are the primary differences:
Knowing how powerful private labeling can be, you’re probably thinking about examples of private label brands. While some private label companies don’t advertise their goods, you’d be surprised at the businesses right under your nose.
Here are some private label brand examples:
While private labeling can help any venture become profitable, there are a few companies that stand out. This is due to a combination of sourcing quality products, building strong relationships with customers, and engaging in memorable branding. Brands that know how to take an existing product and make the most out of it from an eCommerce perspective end up successful. In some cases, it's considered that private label products are high quality.
Here are a few of the most successful private label brands:
Many companies decide on selling private label products to boost their profit margin. When you sell private label, you may expand on different types of products long-term. Brands managed through private labels allow for more customizations within the product category or product idea. These may be marketed through social media and other marketing efforts.
Many people understandably associate launching an online business with hefty costs, long hours, and lots of paperwork. Running your own company does take work, but you can reduce the amount needed through private labeling.
Instead of wondering what the right products are, you can leverage proven concepts for faster success. Both white labeling and private labeling provide greater flexibility on the marketing and branding end while keeping costs lower. When it comes to white label vs private label, there's no guarantee that one product or service is of higher or lower quality. Both white and private brand products may be sold in-store and through eCommerce platforms.
Understanding white label vs private label may be tough to understand as a new business owner. This is true if you're starting a wholesale coffee beans or wholesale coffee distribution business, opening a coffee shop, or opening a business of a similar product. To learn more about white label vs private label, read through the following questions and answers.
White label vs private label differs in that white label products are generic and sold to multiple retailers who then brand and price the products based on their niche market. Private label products are exclusively sold to one retailer and are unique to them. When selling wholesale coffee and similar products, you will have to determine whether you want to choose white label or private label products.
Private label brand examples include the following:
When learning white label vs private label, it's important to differentiate the different store products and whether they're private labels or white labels.
An example of a white label brand is known as a store brand product such as "365 Everyday Value" from Whole Foods Market. These products include the retailer's name and are generally less expensive than other bigger brand products. This is essential to understand when looking at white label vs private label. The term white label refers to generic product items sold under larger names.
It's common for private label brands to produce more profit when compared to white label brands. This is because private label brands don't have the same branding cost from national brands or middleman fees. As a result, they have better profit margins.
Yes, every business can make products for other companies to sell under their brand. Nevertheless, there are certain laws and regulations that need to be taken into account. For example, if you wish to partner with producers of white-label alcohol products or food, you need to research the specific regulations regarding the shipment of such items.
A lot of companies have started offering white labeling in recent years. That increases their market share even though the products are not sold under their brand.
The main reason why businesses partner with producers of white-label products is that they don’t need to invest in the equipment and the know-how associated with making these products. In fact, there are whole businesses that sell various goods with their brand that are made by another company.
White-labeled products can also be used for testing the market. Companies can purchase products with their own brand and release them to the market as MVPs (minimum viable products). That way, they can gather data on the interest in these products, the ROI (return on investment), and other metrics such as the time it takes to liquidate the inventory.
Yes. You can easily offer white-label products to other brands or start a business that sells white-label goods manufactured by other companies. The main benefit of that approach is it can give you time to build up your own manufacturing. Furthermore, unlike with dropshipping, by offering white-label goods, you’re developing your own brand. You also have the chance to test what products work well in terms of profits for your business.
The four types of private labels include: