Table of Contents
Ever wonder why at the store you see that there are so many of a very similar product for sale? For example, you see a million versions of what seems to be the same Cornflakes. But why are a lot of these same products labeled under a variety of different brands? The main difference in these highly similar products is how they are branded.Generally speaking there will be 3 main brands of a product sold in a store. These three brands include national or named brands, private label brands, and white label brands. For this article though we will only focus on two of these methods of branding. White labeling and private labeling.
What is White Label?
Let’s start by talking a little bit about what we mean by a white label brand. A white label brand refers to a generic product that is created by a manufacturer and distributed to an array of providers to be re-branded. The term white label was first used in the music industry. Radio stations would be sent unpolished demo CD’s from musical artists. The stations would then put white labels on these CD’s to prevent competing music companies from knowing the source of the music they were playing.
In the world we are focusing on, the marketing and business world, the term white label is used to describe when a manufacturer creates a basic product and distributes it to an array of re-sellers. The manufacturer of the product then allows each re-seller to put their own brand label on the product and sell it as their own.
What is Private Label?
So now that we’ve defined what exactly we mean by white label now we will explain what exactly we mean by private label products or services. A private label brand or a phantom brand refers to a product produced for exclusive sale by a specific retailer. Private label brands also tend to be more affordable than their national brand competitors. At one time the low cost of these brands meant they were poorly made.
However, as technology across emerging countries becomes more sophisticated, manufacturing becomes easier and faster. Since today private label products are sold worldwide they must be up to snuff. It is absolutely necessary that all products are made at the highest level quality and meet relevant single or global market standards including sustainability and environmental impact. Private label branding is used in commerce to reach an audience worldwide.
What is the difference between white label and private label?
Now that we have talked a little bit about private label and white label branding you’re probably thinking to yourself both of these methods sound basically the same. So what’s the difference? The main differences between white label and private labels are in the way they are produced and eventually distributed:
- White label brands are generic products (e.g. a generic brand of cereal) designed by manufacturers and distributors to multiple providers for re-branding purposes. For example, a manufacturer of a white label brand would sell his cheerios to one or more distributors. Each of these distributors would then take those cheerios and re-brand them as their own unique brand without making any changes to the product. On a surface level to the consumer, the product may have no connection with the original manufacturer.
- Private label brands are a little bit different than white label brands. Private label brands refers to products produced for exclusive sale by a specific retailer with differences that the retailer wants in his product. For example, Health Source Granola Bars may be designated as the granola bar brand that can only be sold by Shop it Up Groceries.
Pros of White Label
White label branding has several main advantages. First of all a company that purchases a white label product doesn’t need to spend time and money calculating the best way to create a new product. The company is able to dodge all the troubleshooting involved with working outside their knowledge base or wasting money in finding a new way to produce a specific product. Marketing your own brand can also be a little risky and a large roadblock for an entrepreneur or small start-up business. Additionally makers of products, if they decide to go with white labeling, no longer have to worry about branding their own products because their purchasing company does that for them.
White labeling allows you to access amazing clients that you wouldn’t have been able to find on your own. This is great especially if you are a newbie in the business world. If not for working with the white label branding model, building your client base could be very difficult. White labeling is able to provide you with the opportunity to be completely focused on both what you love and what you are good at doing. White labeling will also relieve you of stressing out about how your product is sold and afford you the opportunity to be more focused on your overall business strategy as opposed to having people try things which they don’t have much experience in.
Cons of White Label
White labeling doesn’t just come with a lot of pros without cons too. First of all when you white label you lose control of your project because when you’re working for another company you may not be able to give as much input into how that project is carried out. Another drawback of white labeling is you don’t get credit for your work. With white labeling, purchasers of white label brands get to put their name on your work.
Pros of Private Label
Private labeling has its own unique advantages for businesses. Private labels tend to provide merchandisers with a greater profit margin than national brands. Even crazier than that a lot of supermarkets sell national brands at less than break-even prices to get shoppers to buy their private label goods too. Private labels tend to be more exclusive. In fact private label brands don’t usually tend to be something merchandisers need to worry about when competing with competition. Sometimes even popular private label brands tend to be a re-seller’s main attraction for customers.
— IRI (@iriworldwide) November 1, 2016
Popular White Label Products
White label products fit into a whole range of categories. One fairly common seller of white label products are electronic companies which tend to sell generic white label products under their own brands. Some of the main types of these products, which they sell, include DVD players, computer keyboards, computer mice, radios, and TV remotes.
More major electronic brands also tend to invest in technology to design and manufacture higher-end products which may include high-end mobile phones and computers. They also tend to put their brand names on more reasonably priced white label electronics in the hope of expanding their offerings too. Big-box retail stores and supermarkets also tend to sell a number of white label products that feature their own branding.
Popular Private Label Products
There is a whole range of private label products out there up for sale. Here is a list made up of the best types of private products sold online (in this case via Amazon):
- Evergreen products- In other words that buyers will repeatedly buy this product (e.g. shampoo because people always run out of it and therefore there is always a demand for it).
- The product is heavily searched for online- In other words people are regularly putting the item in the search bar on Amazon or another similar site to look for this item and buy it.
- Products without a crazy amount of competition.
- Products that are simple and cheap to produce because the cheaper the product the more you can make of it for a lower price. This will generate larger sales and an overall profit margin.
Should you use white label or private label?
We’ve talked about what private label and white label are as well as an array of attributes that these two types of branding strategies have. When asking the question of which type of branding works better it really depends on you and what your overall goal is. Both have a lot of similarities and it might be hard to tell the difference at first. There are several pronounced differences that you need to focus on to maximize for yourself. For example, in white labeling your entire brand has been revamped and changed. Therefore, although it is your own work (i.e. you came up with this piece of technology, or bought the cereal etc), you will not gain the same explicit recognition that you would if you were to sell a private label brand of cereal for Walmart.