So, you are thinking about starting the online retail business with your brand name or have a desire to add some branded goods to your existing product line.
And, of course, you would like to do without splurging on renting manufacturing facilities, paying salaries to extra staff, or dealing with ordering raw materials for the production process.
Luckily, you don’t have to as you can go for one of these manufacturer-reseller business models: white labeling or private labeling. These are frequently confused terms that are used interchangeably. But in fact, these business models have some dissimilarities. What are they? You’ll figure it out shortly.
What is Private Label?
Private label products are manufactured by a third-party or contract manufacturer but are sold under the retailer’s brand name. As a retailer, you have full control of how the product looks, what it’s made of, what are the possible product variations, and so on. You can pick what ingredients to use and define the quality of the final product.
For example, you came up with a T-shirt design and want it to be manufactured by another company because you do not have the facilities to do it on your own. You provide all the information the manufacturer needs and pay for the product to be manufactured for your brand.
In this way, you get a unique privately labeled product that hasn’t been produced directly by you.
What is White Label?
So, what is white labeling? Similar to private labeling, you get your white label products manufactured by a contractor or third-party manufacturer, but with a single difference. The manufacturer offers generic products that follow the same manufacturing pattern, formula, or whatever allowing you to make rebranding, that is to sell the goods under your own merch. You have no control over the production process, the ingredient quality, or variation options. The reseller can only define how the goods would be packed and labeled.
For example, you think of selling T-shirts, but you have no resources to arrange the whole production procedure. You contact the manufacturer of the T-shirts and ask them to use their own style, pattern, and materials but to label the items with your own brand.
In this way, you get the same product your competitors have but under your own brand.
Reseller of Products
If you’ve always dreamt about running your own business but are not ready to bother yourself with the manufacturing process at all, a reseller business is a good choice for you.
Unlike private or white label manufacturing when you are still involved in the product production, you have nothing to do with manufacturing in the reseller business. You buy branded products from other companies and sell them for a profit. So, a reseller doesn’t create their own items but might still have a wide selection of goods for sale.
In this way, you purchase the product from the manufacturer or distributor and then resell it to your customers.
Private Label Vs. White Label – The Difference Explained
Both white and private labels enable you to establish your own brand by selling branded products produced by another company under your company name. When it comes to these two business models, you are responsible for establishing a marketing strategy to promote your goods and arranging a convenient customer journey. The manufacturer also does not hold any trademarks when the deal is closed.
Even though these business models look alike, there are some principal differences you should know before sticking with one of them.
|White label||Private label|
|Customization||Poor – you can change the label and package only.||Excellent – the product is manufactured according to your requirements.|
|Exclusivity||Poor – the same item is sold by other brands.||Excellent – since you can decide what type of product, ingredients, and technology the manufacturer should use, you can create a unique item that is not available from other sellers.|
|Investment||Lower – as the manufacturing process will imply sticking to the same technique, no extra investment in the development processes, staff training, and other expenses are required.||Higher – you might need to pay for creating a product design, hiring additional professionals, building a manufacturing system or process tailored exclusively to your product, marketing and advertising your goods.|
|Competition||Higher – one and the same item is sold under different brands.||Lower – you can create a unique and exclusive unit no other company will have.|
Which is Right for You: White Label vs Private Label Services
Both white and private labels are highly beneficial for retail businesses that are not into putting a lot of time, money, and effort into establishing their own brand. You already know that private labeling allows you more customization and enables you to trade truly exclusive goods under your brand name with minimal manufacturing effort. White labeling will ensure you market faster and sell even complex goods (since the production process has already been established) with lower financial investment.
Anyway, there are cases when the private label will work better for your business and vice versa.
Choose Private Label Services When:
- The product has already been designed for you.
- It’s superior to white label counterparts.
- You’re thinking about running the manufacturing processes on your own someday.
- You already produce products by yourself but want to reduce costs.
- You have a well-established brand.
- You want to have full control of the final product, its look, and quality.
Choose White Label Services When:
- You would like to enter the market rapidly at a minimal cost.
- There’s a brand demand but none of the existing products can fulfill it.
- You are inexperienced in eCommerce and would like to give it a try.
- You’re ready to compete with other brands offering the same products.
The Final Words
Generally speaking, both white and private label models will allow you to save money and time, as well as focus on your marketing strategies, inventory management, or order fulfillment by taking away the headache of manufacturing the goods on your own.
Once your brand new products are available for sale, use SellerSkills, a multichannel management app, and list your new goods on Amazon, eBay, Shopify, and Walmart in one click. Manage your multichannel inventory and orders from a centralized panel without the need to navigate between thousands of tabs in your browser. By the way, start for free and stay on the free plan forever (if 50 orders per month are enough for you).
SellerSkills team is wishing you good luck in your retail business!