You’ve probably walked into a store and seen countless versions of what is essentially the same product. Maybe you’ve used two different DVD players that look and work in the exact same way but are marketed under totally different labels. The difference among these perfectly similar products come about in their branding. When it comes to branding, there are three kinds that you should be concerned about: name or national brands, private labels brands and white label brands. Among these, private label brands and white label brands are both used to describe products branded by resellers for sale to the final consumer. Both forms of branding are quite similar to the extent that some people wrongly use the terms ‘private label’ and ‘white label’ interchangeably. However, the terms are not synonyms and there exists clear differences between them.
What is private label?
A private label product is one that can be sourced from a manufacture then sold under a retailer’s own brand.
A private label product is one that can be sourced from a manufacturer then sold under a retailer’s own brand. These products are therefore manufactured for exclusive sale by a particular retailer. Once the product is sourced from the supplier, retailers can modify the product however they want in order to create their own unique brand. Private labelled products tend to be cheaper than national brands and so have the potential to bring in huge profits if the marketing is done right. While the low prices were associated with poor quality in the past, this is no longer the case as emerging technologies have made the manufacturing process easier and more cost effective. Due to this, private label products are now made according to exacting standards and are required to meet required market regulations before distribution. This has greatly reduced the difference in quality with name brands hence improving the popularity of private label products as shown by the increasing market share especially across Europe.
Private label products are widespread. By simply entering a retail outlet, you are guaranteed to spot a number of private label products among generic items like flashlights. Private label brands are also very common online with many sellers on Amazon, Ebay and other trading platforms selling such products.
Where to find manufacturers?
Since private labelling relies solely on the manufacturing capabilities of the supplier to create high quality products, finding a suitable manufacturer is one of the most important things to consider. Additionally, a manufacturer offering low production costs is very desirable, because low costs means greater profit margins for the retailer. Many private labelers therefore turn to overseas manufacturers (mostly in China) to source their products. Even though there are extra costs to contend with like shipment fees and tax, the overall costs are still much lower than you would find when manufacturing in the US. However, it comes with a downside. Finding manufacturers from overseas is fraught with challenges as you have to navigate a terrain filled with dishonest suppliers, frauds and outright scammers. Here is a new option to find private label manufacturers.
What is white label?
A white label brand refers to instances where a manufacturer creates a basic generic product or service then distributes it to a large number of retailers
The term ‘white label’ actually has its origins in the music industry and specifically with vinyl records. Before records were to be released to the general public, radio stations and DJ’s would receive promotional copies. They would then put white labels on them to prevent competitors from knowing the source of the new music being played. Today, the term has long since been applied in commerce and marketing.
A white label brand refers to instances where a manufacturer creates a basic generic product or service then distributes it to a large number of retailers. Unlike in name brands, the manufacturer allows these retailers to resell the product under their own brand.
To the final consumer, it will be like the product belongs solely to the retailer and may have no connection with the manufacturer. Although the manufacture receives little credit for the product, white label brands still offer a number of benefits. To shed more light on this, check out this article by Drew Gainer at Forbes.
Common retailers of white label products include electronic companies which tend to sell generic products like TV remotes, computer keyboards, radios and many others.
Differences between white label and private label
The first difference clearly lies in their definition. In white label branding, the product is distributed by the manufacturer to many suppliers who then resell the product under their own brand. For instance, a manufacturer may distribute electronic accessories like computer keyboards to different retailers. These retailers can resell the identical keyboards as their own brand but without making any changes to the product. On the other hand, a private label brand is a product produced for exclusive sale by a specific retailer. The retailer can alter the product as he or she sees fit. For instance, computer keyboards sourced from a manufacturer can have some added features and modifications to set them apart from other products. The product therefore becomes exclusive to the private labeler.
Another difference has also come about in whether or not the term in question refers to a product or a service. Private label has begun to identify more with tangible goods like shoes that are sourced from manufacturers and resold under the retailer’s brand like . However, white label has become more associated with non-physical items like services or software. Like with products, the services and software are distributed to retailers who resell them as their own.
Websites can make use of private labels to sell services without having to setup the necessary infrastructure. Smaller banks may also outsource certain services such as credit cards or check processing to bigger financial centers. The cards and checks can then be branded as the property of the smaller banks.
A more common example of white labeling is YouTube. Whenever you post a YouTube video you are using their service. They have white labeled their product to you, and you put your own video on their platform and infrastructure. The same with Wix and other web building platforms. The distinction between white and private label becomes especially murky where technology steps in.
White-label service providers or product manufacturers may sometimes be allowed to identify themselves with the product or service. In such cases, the phrase ‘powered by……’ is used. This is done to protect the client from any liability that may come about because of poor performance or issues present in the products. In private label, all liability falls on the shoulders of the retailer.
Should I White or Private Label my Product?
It is becoming more and more accepted that building a white product is much easier than creating your own brand. Doing the whole thing by yourself, from startup to customer support to manufacturing to accounting to marketing is a whole lot of work. It is best in a complex world to outsource at least some of these necessary steps. If it is your first venture you are bound to lose a lot of money learning from first time mistakes. Ultimately, white goods are quick and easy to brand, save you time and money and keep customers happier. In terms of quality there is little difference between white goods and national brands. Studies have shown that in taste tests for foods little difference is noted for white products and their more expensive counterparts. Whether you should white or private label depends on the product and the deal on offer. But it goes without saying that taking a product that has already been created and rebranding it is far easier than inventing your own from scratch.
If you happen to be considering white or private label products, there are a few things to keep in mind. First, whether you should white/private label or not depends on the industry. In some industries people are looking for a cheaper alternative and in others they desire a dependable and well recognized brand. . This can be further broken down by gender, region, macro-economic development etc. Research has also shown other interesting trends, such as:
- Women are especially likely to check out store brands
- Guys are very accepting of generic health and beauty product
- Fewer people assume a brand name means top quality
There is lots of research to be done. Whether you decide to private label or not, you should ensure you have a dependable manufacturer at hand to get the goods produced. It may be best to get a good third party manufacturer to cut out the hassle of finding your own and invariably making costly mistakes along the way.