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Two terms you hear a lot in the world of private label products is “white label” and “private label”. What do they mean? It is difficult to clearly define the difference between these two terms since they are often used interchangeably (though this is not correct), and there is no agreed upon set definition. These two certainly overlap but are not the same, and should not be used as such. In my previous article, I went into depth about what private labeling is. I’ll go over it again briefly and explain what differences there are in the two terms.
Private Label vs White Label
Private label and white label are both terms used to describe products and services branded by a particular reseller for sale to consumers. A private label brand generally means that a product or service is produced for exclusive sale by a particular retailer. While a white label brand means a generic product or service is created by a manufacturer and distributed to multiple providers for rebranding. So a white label manufacturer can sell for example a toothbrush (the exact same one) that is sold to 15 businesses, all who market it as their own, under their own name. In private label, this can also happen, but you also have the option for the toothbrush be tweaked a little to the seller’s requirements, so that it truly becomes exclusive to them, which is why some consider private label to be a sub-category of white label.
The term “white label” preceded the term “private label,” and originated in the music industry with vinyl records. Prior to a record being released to the public, radio stations and DJ’s would receive, in a simple white sleeve, promotional copies from artists and studios. These did not yet have the labels and artwork of the final finished record. The radio stations and DJ’s would sometimes put white labels on them to prevent competitors from knowing the source of new music they played. The term has carried over to business and marketing, where it is used to described instances where a manufacturer makes a basic generic product and distributes it to many resellers. Instead of name branding, the manufacturer allows each reseller to put its own design and identity on the product.
Why Choose To Use a Private or White Label?
In both cases, the manufacturer can concentrate on making the product or service and focus on cost savings, rather than worrying about marketing, which will be handled by the companies or individuals that will sell the product, and the companies or individuals selling the product can cut costs by not needing to worry about manufacturing. Today these costs can be lowered even more when one uses Amazon’s great FBA system, in which Amazon handles the fulfillment processes, meaning they will take care of the storing, packing and shipping once the items sell via their site. This is a huge advantage since the seller will not need to worry about any of these things. They are saving time and money that would otherwise need to be spent on these.
More and more white label has become associated to services or software while private label has become associated with physical products, and most of the time the products offered under private label are offered as the lower cost alternative products compared to the more recognizable name brand of the product or service. Another small difference is that white label service or product providers are, in some cases, permitted to self-identify with the tagline “powered by…” in order to protect the client from liability associated with issues with the service or product. In the case of private label, liability is solely the responsibility of the seller (who is also the only name on the label).
Why Private and White Labeling Work
Most resellers under private or white labeling find it is far more lucrative business than what is sold through the original name brand. With consumers always looking for ways to save money while shopping at a store or online, they often shy away from name brands and spend their money on home-brands, or will go with the seller that offers the best and most affordable deal. This has become standard practice for most savvy consumers looking to save, which is why private labeling can be a great way for entrepreneurs to make money online. Gone are the days where generic brands are held in low esteem. Most consumers understand that name brand services are not necessarily any better than what is offered by the generic or private label. Because private labelers know this, those who choose to become one can easily undercut the prices of other providers and still enjoy a profit by making the same quality product or service cost less, and therefore become more appealing to potential consumers.
What is the Difference Between Private Labeling and Hiring Services or Outsourcing?
There are many companies that fulfill functions that a business or individual cannot do themselves. As an example, much of the work done by marketing agencies is under the brand names of their clients, but they are not considered private or white labeling. Why? Because private and white-labeling is about buying a product or service with no brand name, and reselling it to consumers under the seller’s brand name. When clients buy marketing services, they don’t resell them on to consumers. So anything that is created for a business or individual, which is not meant to be sold onwards to consumers is not considered private or white-labeling. Your garden is not white labeled, even if you tell your neighbors you maintain it when it is really taken care of by a gardener you hired. You get the drift…
To Sum Up:
White label proceeded private label. For the most part, the names are nearly synonymous because the differences are relatively slight and many people do use them interchangeably. Some consider private labeling to refer to an exclusive deal, where the products are produced for use by only one retailer or business. This would make private labeling a sub-category of white labeling, except that there are people who use the term “white labeling” to refer only to a product or service that is available to multiple buyers. Others consider white labeling to refer only to services and software, and consider private labeling to refer strictly to physical products. Private labeling is generally used as a cheaper alternative to similar product or service name brands.
Both are great options that allow you to take your financial fate into your own hands. White labeling and private labeling are helpful for those who are interested in starting an online business, but need the support and resources to do so. Using private or white labels is an easy and affordable way to make money online or to add a service to your existing online business without needing the investment in conception, design and manufacturing. Amazon’s FBA further makes this easier and cheaper for a seller. Just always make sure you have a trustworthy manufacturer to work with, like Innovative Private Label, which will help you with artwork, packaging and more.