White Label vs. Private Label - Ultimate Guide for Beginners

I’ve dealt with private- and white labeling products and wish I would have had someone to guide me through it. Thus, I made this guide to prevent you from suffering a similar fate.

I’ll help you understand the differences between both branding options, who should choose either, along with tips to help you get started.

Let’s get started.

Key Takeaways

• White label products offer quick market entry and testing.
• Private label products allow for customization and brand differentiation.
• White label is ideal for budget-conscious or new businesses.
• Private label is best for building a strong brand.
• Choose the label type that aligns with your business goals.

Understanding the Basics

Here’s what you need to know:

• White Label: Generic products rebranded by businesses for quick market entry or testing ideas. (Best for new businesses or budget-conscious ventures)
• Private Label: Customized products designed exclusively for a retailer, offering higher control and brand differentiation. (Best for established businesses building a strong brand)

I’ll provide examples and explain in more depth what each label type is and why you should choose them.

Let’s begin with white label products.

1. What are White Label Products?

• Best For: Businesses that want to launch a product line quickly or test new product ideas with minimal investment.

White label products are generic items produced by one company but sold to other businesses for rebranding. These products lack any brand identity, allowing the buyer to add their logo and label.

They are sometimes referred to as OEM (Original Equipment Manufacturer) products when unbranded at the point of sale.

Here's an example:

Imagine you want to launch a clothing line but lack the resources to design and manufacture your own T-shirts. You can partner with white label—in this case, blank clothing or blank apparel—manufacturers like Printful or Printify.

Both companies provide plain T-shirts in various styles and sizes.

You can then customize them with your designs and branding.

Benefits of using white label products include:

• Fast entry into the market without needing to develop your own products.
• Reduced costs compared to creating a product from scratch.
• The ability to focus on marketing and sales rather than manufacturing.

Want to learn how to customize products further? Let's dive into the world of private label products.

Summary: White label products are ideal for businesses seeking a fast and cost-effective way to enter the market or test new product ideas. They offer the freedom to create a branded product line without handling manufacturing.

2. What are Private Label Products?

• Best For: Private label products are best for businesses that want to build a strong brand and offer unique products to their customers.

Private label products are created for a retailer by a third-party manufacturer. This differs from in-house manufacturing, where a company produces goods within its own factories.

With private label, the retailer controls the product's design, ingredients, and packaging. Examples include Target's Up & Up brand, Walmart's Great Value brand, and Amazon's Solimo brand.

Walmart’s Great Value brand.

Are you confused about how they differ from white labels?

White label products are generic items that you rebrand. Private label products are custom-designed and exclusive to your store. Private label offers more control and differentiation but requires greater investment than white label.

Benefits of private label products include:

• Higher control over product quality and features
• Potential for increased profits
• Ability to differentiate your brand in the market

Let's delve into the similarities between white label and private label products!

Summary: Private label products allow you to create unique, customized offerings under your own brand. They are ideal for businesses aiming to build strong brand recognition.

3. Similarities Between White Label & Private Label

Here are the areas where white and private labels are similar:

• Third-Party Manufacturing: Both models rely on outsourcing manufacturing to a third party. This eliminates the need for in-house production facilities, saving you time and resources.
• Branding: Allows you to build brand identity without creating the product from scratch.
• Cost-Effective Market Entry: A more affordable way to enter the market compared to developing products entirely in-house. This makes them attractive for businesses testing new product ideas or launching with a limited budget.
• Reduced Time to Market: Reduces the time it takes to bring products to market compared to in-house development. This allows you to capitalize on market trends and respond quickly to customer demand.
• Focus on Sales and Marketing: By outsourcing production, you can dedicate more resources to building brand awareness, marketing, and driving sales.

White- and private labels involve selling products made by another company under your own brand. This similarity is often where the confusion arises. The main difference lies in the degree of customization and exclusivity you have over the product.

Summary: White label and private label let you establish your brand without in-house manufacturing. The core difference lies in customization and control over the product.

Differences & Choosing the Right Model

Here are the main differences between white- and private label products:

• Control Over Branding & Customization: White label offers limited control, while private label allows customization.
• Startup Costs & Investment: White label is cheaper upfront, private label requires more investment.
• Speed to Market: White label products reach the market faster than private label.
• Product Uniqueness & Competitive Advantage: Private label offers unique products, white label products are generic.
• Intellectual Property Considerations: Private label needs IP agreements, white label has limited IP ownership.
• Target Market Fit: White label suits a broad market, private label targets specific niches.
• Pricing Structure & Profit Margins: White label may have lower prices, private label offers higher margins.

Here’s a video explaining some of their differences:

Keep reading to learn more about these differences and to see real-world examples. Use these differences to help you determine which label type is best for your business.

1. Control Over Branding & Customization

White label products offer limited control over branding options. You add your logo and modify packaging elements. The base product design and features remain unchanged.

Private label products grant you significant control over branding and product specifications. You can work with the manufacturer to tailor ingredients, features, and packaging for a unique offering.

Bulk Apothecary offers private labeling services for custom oils.[1]. However, they also offer pre-made products that lack branding and allow you to add your own.

Summary: White label allows basic rebranding, while private label allows for customized product creation specific to your brand.

2. Startup Costs & Investment

Here are 2 scenarios to consider:

White Label Scenario:

• Product sourcing: You find a white label supplier offering generic computer mouse casings at $3 per unit.
• Customization: You hire a designer to create your brand logo and packaging elements at a cost of $200.
• Initial investment: You order 500 mouse casings ($1,500) and pay design costs ($200), totaling $1,700.

$200 is the lowest price estimate possible for such graphic design services. According to many designers, they’ll charge at least $300 for a logo and $600 for brand packaging [2].

Private Label Scenario:

• Mold development: You work with a manufacturer to design a custom mold for a unique ergonomic mouse shape. The mold development cost is $2,500 or more [3].
• Manufacturing: The manufacturer charges $4 per unit, with a minimum order quantity of 500 units, totaling $2,000.
• Packaging: You design custom packaging reflecting your brand at a cost of $500.
• Initial investment: Your total cost includes mold development ($2,500), manufacturing ($2,000), and packaging ($500), totaling $5,000.

The white label option is cheaper upfront, allowing you to enter the market quickly. However, investing in a private label product involves developing a unique product but grants you more exclusivity and potential for differentiation in a competitive market.

Summary: White label offers a more budget-friendly entry point, while private label involves a higher initial investment for customization.

3. Speed to Market

White label products offer the fastest way to enter the market. You select and rebrand existing products, often ready to ship. You can launch a new product within weeks.

Private label products generally take longer to bring to market. The product development and manufacturing process can take several months.

Summary: White label is ideal for rapid market entry, while private label involves a longer development timeline.

4. Product Uniqueness & Competitive Advantage

White label products typically offer limited product uniqueness. For example, several businesses might sell the same white label T-shirt from Blank Label (white label website) under different brands.

Private label products allow you to create unique offerings tailored to your niche.

Examples include:

• A snack brand with custom flavor combinations and branded packaging.
• A tech accessory line with unique designs and features.
• A furniture brand offering exclusive styles and materials.

Think of brands like Target's Up & Up (household essentials) or Kirkland Signature (various Costco products). These are private label lines offering unique variations and value propositions that set them apart from generic competitors.

For instance…

Kirkland Signature’s selection and bulk-buying options offer convenience and savings for shoppers.

Target's Up & Up focuses on offering a variety of everyday essentials under one brand, making it easy for budget-conscious shoppers.

Let's talk about intellectual property considerations.

Summary: Private label products allow for greater product differentiation and stronger competitive positioning compared to white label products.

5. Intellectual Property Considerations

With white label products, IP ownership typically remains with the manufacturer. For example, if you rebrand generic phone chargers, the original design and any associated patents remain with the manufacturer.

Private label products often involve collaboration on developing new IP. For example, if you work with a manufacturer to design a unique fitness tracker, your contract should define who owns the rights to the design and any new technology.

Now, let's discuss how to determine the ideal target market for your products.

Summary: Private label requires careful attention to IP agreements, while white label typically involves limited IP ownership by the reseller.

6. Target Market Fit

White label products often cater to a broader, less-specific audience. For example, a generic phone charger appeals to anyone needing a charger, regardless of specific preferences.

Private label products allow you to tailor offerings to a specific niche.

For example, a brand like Salt & Stone COULD offer a skincare line for athletes might include caffeine to reduce inflammation and boost circulation. Its marketing would also focus on athletic lifestyle and performance benefits.

Let's delve into how this choice impacts your pricing and profit potential!

Summary: Private label allows for precise targeting, while white label suits a broader, less-defined market.

7. Pricing Structure & Profit Margins

White label products typically have lower wholesale costs. Margins can range between 10–30% depending on the product and competition.

Example: A generic T-shirt selling for $15 might have a wholesale cost of $10, yielding a $5 profit margin (33%). However, profit margins might be slimmer due to competition from other resellers.

Private label products often command higher prices due to uniqueness and perceived value. Margins for these products can potentially reach 40–50% or higher.

Example: A custom-designed skincare product retailing at $50 might have a production cost of $20, yielding a $30 profit margin (60%). This custom development can lead to greater profit potential but also requires a larger initial investment.

Note: These are simplified examples. Real-world profit margins are affected by factors like production costs, marketing expenses, and market demand.

Let's look at some real-world examples to illustrate these successes.

Summary: White label may offer lower prices, but private label has the potential for higher profit margins.

Real-World Examples of White Label & Private Label Success

Can brands find success in white label products? Again, white label products are meant for testing, but such tests can propel your business into a successful one.

That’s where Dollar Shave Club (DSC) comes in.

This company started by offering white-label razors at a competitive price, building a brand focused on convenience and value. Now, they make more than $100 million annually [4].

It’s difficult (but possible) to replicate DSC’s success. Their success came from a viral YouTube video. With enough creativity, you could achieve something similar on YouTube or other platforms.

It’s also possible to become successful with private label products. Here are some examples:

Kirkland Signature (Costco): Their focus on quality and competitive prices has made it a successful line, contributing significantly to Costco's bottom line.

Up & Up (Target): Offers everyday items across various categories, often providing value-driven alternatives to name-brand products.

Amazon Basics: Amazon Basics leverages its e-commerce dominance and competitive pricing to drive sales.

Harrods Own Label: This luxury department store's private label line emphasizes quality, exclusivity, and a diverse product range, catering to its discerning clientele.

Finding specific examples for smaller businesses is trickier as they often don't disclose their manufacturing strategies. However, since these bigger companies can do it, that means it is possible for you to mimic their success.

Examples of White Label & Private Label Products

The following sections will provide examples of white and private label products and industries to give you inspiration.

1. Common White Label Products

Imagine you're shopping online and come across several water bottles with different brand logos. Now picture another section with plain, unbranded water bottles.

Those generic bottles, devoid of any specific brand markings, are likely white label products. White label manufacturers create these blank-slate items for businesses to customize with their own branding and logos.

Here are some everyday items you might encounter that could be white label products:

• Water Bottles: Generic water bottles or sports drink containers ready for a brand's logo and custom label (e.g., Retulp)
• Vitamins and Supplements: Unlabeled capsules or bottles with a specific formula (e.g., private Label Express).
• Beauty Products: Unscented lotions, generic jars, or plain tubes perfect for a cosmetic company to fill with their unique formulas and brand identity (e.g., MySwissLab)
• Promotional Items: Tote bags, mugs, or phone grips without logos—ideal for businesses to customize with their branding for giveaways or merchandise (e.g., Gelato, the website).

These are a few examples, and the possibilities extend widely across various industries.

Summary: Items like T-shirts, phone chargers, and kitchenware are common white label products, offering a quick way for businesses to launch custom offerings.

2. Popular Private Label Industries

Private label thrives in several key industries, including:

• Beauty and Personal Care: The wide array of private label cosmetics, skincare, and haircare products is a testament to its success. Think brands like Sephora Collection or Ulta Beauty's store brand.
• Food and Beverage: Gourmet snacks, specialty coffee brands, and store-brand groceries often utilize private label models for product development.
• Supplements and Health: Many vitamin and health-focused brands create their unique formulas through private label manufacturers.
• Pet Products: Specialty pet food, treats, and custom-branded pet supplies are found in the growing private label pet industry.

These industries benefit from private label's ability to tailor products to specific market niches, offering unique formulas, packaging, and branding that stand out from the competition.

Time to see when to choose either label type.

Summary: Private label dominates in industries offering customization options like beauty, food, supplements, and pet products.

When to Choose White Label or Private Label

Here’s when to choose each label type:

• White Label: Fast and affordable launch, ideal for testing initial product viability.
• Private Label: Long-term brand building and superior control over unique product offerings.

Still confused on which to choose? Then check out the following sections for more information.

1. Limited Resources & Need for Quick Launch

• Best Choice: White label

When you have limited resources and need to launch a product quickly, white label is the ideal choice. White label products offer an affordable and time-efficient solution, allowing you to source ready-made items and focus on branding and marketing.

For example, if you want to test a new line of T-shirts, white label suppliers provide a cost-effective way to obtain plain shirts and experiment with designs without investing in manufacturing.

If your goal is developing a strong brand with unique offerings, let's explore how private label solutions are better.

Summary: White label is the best choice when aiming for a quick launch on a limited budget.

2. Prioritizing Brand Building & Customization

• Best Choice: Private label

If establishing a strong brand identity and offering custom-tailored products is a priority, private label is the optimal choice. It allows you to develop unique formulas, designs, and packaging to differentiate yourself in the market.

Let’s say you want to create an organic skincare line. Private label collaborations enable you to control ingredients, packaging, and branding for a truly distinct offering.

Summary: Private label is ideal for creating unique products that enhance brand identity and offer customization.

3. Seeking Unique Products for a Competitive Market

• Best Choice: Private label

To stand out in a crowded marketplace, private label lets you to develop unique products. Working with a manufacturer, you can customize everything from ingredients and features to packaging design.

For example, if you want to compete in the saturated fitness apparel market, private label allows you to develop clothing with innovative fabrics or specialized features tailored to your target audience.

Summary: Private label is essential for offering unique products to compete in saturated markets.

4. Your Long-Term Business Goals

• Best Choice: Nuanced

If you aim for rapid market entry and testing new products, white label offers a low-risk, low-investment starting point. However, if your focus is on building a strong, differentiated brand with unique offerings, private label provides the foundation for long-term success.

Summary: White label suits short-term testing, and private label aligns with long-term brand-building.

5. Your Existing Brand Strength

• Best Choice: Nuanced

If you're a new business, white label allows you to gain market traction and test your branding before investing in private label. Alternatively, established brands often leverage private label

to expand product lines while maintaining their core brand identity.

Before making a final decision, let's weigh the pros and cons of each model.

Summary: New businesses can utilize white label to build brand recognition, while established brands might consider private label for expansion.

Pros & Cons of Each Model

In short:

White label offers a fast and cheap way to launch products, but limits control over branding and features. Private label allows for customization and higher profits, but requires a larger upfront investment and longer lead time.

I’ll dive further into the pros and cons of each label type throughout the following sections.

1. White Label Pros & Cons

White label pros:

• Emphasize speed: Fastest way to enter the market with a new product.
• Lower costs: Reduced investment compared to custom product development.
• Test the waters: Ideal for testing new product ideas before committing fully.

White label cons:

• Not much control: Provides limited control over the product design and features.
• Limited control: Generic products mean less differentiation in the market.
• Potentially lower margins: Competition with other resellers can drive prices down.
• Inconsistent quality: Potential for inconsistent quality if the supplier is not reputable.

Summary: White label is ideal for quick market entry and testing ideas but offers less control and potential for brand differentiation.

2. Private Label Pros & Cons

Private label pros:

• Complete customization: Tailor products precisely to your brand and target market.
• Build a strong brand: Create unique products that make your business stand out.
• Higher profit potential: Exclusivity allows for greater price control.

Private label cons:

• Upfront investment: Development (molds, etc.) and larger order quantities cost more initially.
• Slower to market: The customization process takes longer than rebranding.
• Higher MOQ: Minimum order quantities may be higher than white label options.
• Time requirement: Requires managing the manufacturing process with the supplier.

Ready to explore how these models might evolve in the future? Let's dive into the potential future of white label and private label.

Summary: Private label offers control and brand differentiation but requires more investment. It's ideal for businesses building a long-term, unique brand presence.

The Future of White Label & Private Label

Here's a look at how the future landscape of white and private label models may evolve:

• E-commerce Growth: Global e-commerce sales are projected to reach $6.9 trillion by 2025, fueling demand for white label and private label solutions [5].
• Focus on Sustainability: A survey found 85% of consumers are shifting towards buying from sustainable brands, driving a need for both models to adapt [6].
• Technology Advancements: Automation and 3D printing could make customization easier, potentially blurring the lines between white and private label models.
• Increased Personalization: White label products might offer customizable packaging or minor feature variations. Private label products can leverage technology for deeper customization options.

The lines between white label and private label might become less noticeable in the future, driven by these trends.

Here’s an example:

A business could start with white label apparel while offering custom embroidery options for personalization. A white label supplier might integrate with 3D printing technology, allowing buyers to customize product shapes and features beyond basic rebranding.

And sustainability could involve white label products made from recycled materials or private label offerings with carbon-neutral production methods.

Ready to answer some common questions about white label and private label? Let's dive into some FAQs.

Summary: The future of both models is influenced by the booming e-commerce sector, the consumer demand for sustainability, and the potential impact of technological advancements.

FAQs for White & Private Labeling

Read on to find frequently asked questions about white- and private labels.

How Do I Find Reliable White Label Suppliers?

Online directories like Alibaba, Thomasnet, and TradeKey offer extensive listings of white label manufacturers. Industry-specific trade shows are also an excellent resource for finding and connecting with suppliers.

How Can I Protect My Brand When Using Private Label?

Work with a reputable manufacturer and sign a non-disclosure agreement (NDA) to protect your confidential product information. Register your trademarks, copyrights, and any unique designs or patents to strengthen your legal ownership.

Can I Combine White Label & Private Label Strategies?

Yes. Start with white label products for initial offerings. Later, develop custom private label products to enhance your brand's uniqueness.

Conclusion

Understanding the difference between white label and private label is crucial for any business looking to expand its product line. White labeling offers affordability and speed, while private labeling provides greater control over branding and customization.

Do you need help finding potential white label products for your business? Try our product database tool for free and watch it work its magic.