While both white-label and private-label production involve a retailer or reseller working with a production company to produce a product to sell by a retailer, there are a few differences worth noting.
Many retailers will even utilize a combination of white label, private label, and custom manufacturing, depending on what types of products they are looking to add to their stores inventory.
The biggest difference is that with a white label deal, manufacturers may sell the same generic goods to several retailers, while under private label, the deal is with one retailer exclusively.
Private labeling is when a manufacturer creates products that are sold exclusively by a third party under a different brand name. Therefore, private labeling allows the retailer to outsource the production of goods to the manufacturer and sell high quality products at scale.
The process is buying a product or service from a single manufacturer, improving, altering, or changing the product in some way, and then attaching their own brand to the product and selling it.
The private label business continues to grow increasingly popular among those looking to start an ecommerce business, but do not want to invest in product research and development
The buyer owns the product, and it cannot be sold to other retailers.
So, private labeling is when a supplier 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.
This model is used widely in today’s eCommerce landscape, including for private label dropshipping.
Private label projects are more costly and time-consuming than white labels, but they enable brands to sell their own, unique products at other retailers, with no risk of emulating others in the marketplace.
If a retailer receives an unbranded product directly from a manufacturer, adds its brand, and markets it as their own, this process is considered private labeling.
Private labeling can be a lengthy process because of the costs of marketing, hiring developers to improve or change the product, finding niche target markets, and creating brand recognition.
One could say a business uses private-label products or services if they are designed and manufactured for sale by another business specifically for one particular retailer.
Privately labeled products are cheaper up front, but have similar quality standards as the original manufacturers, while white-stock products, such as Nike shoes, are more expensive up front with no exclusivity rights.
In the case of apparel, it is common to see manufacturers using either white label or private label apparel interchangeably for their line of wholesale apparel products, which are available for ordering with lower minimums and selected customization options.
White label vs private label
Just like the private label, while label is a business model in which a company sells goods that were produced by third parties, but stamping its brand on the items and not that of the manufacturer. Thus, it relies on the expertise of another and offers its name in exchange for increasing sales and profit for both.
The main difference is that, in the case of private label, there is an exclusivity contract between the brand that sells and the one that produces the goods. In this way, the manufacturer cannot trade with other companies, and the seller has unique items in its catalog and shelves.
In white label there is no such requirement and products can be freely traded with other stores and companies. Thus, the decision to join the Private Label or the non-exclusive contract must be carried out with planning and partnership between the seller and the supplier, making an agreement that is beneficial to all.
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?