It’s not surprising that the terms private label and white label would often get used interchangeably. Although these two concepts are not exactly synonymous, their subtle differences can make them difficult to tell apart.
In a previous blog post, we dove deep into white label marketing — what it is all about, why it is advantageous for businesses of all sizes, and how a partnership with a white label marketing agency such as yourlabel will take your business to new heights. This time, we’ll take a closer look at private label and see the distinction and similarities between the two business models.
How Are Private Label and White Label Different?
A clear contrast can be drawn when you consider the type of solution that is being offered (product or service) and the type of business entity that acquires and uses it (retailer or reseller).
Private label is commonly used to refer to physical products that a retailer acquires from a manufacturer and sells to consumers under the retailer’s brand. On the other hand, a white label solution can either be a product or a service that’s produced by one company and is subsequently obtained, re-branded and re-sold by another. In the case of a white label marketing firm such as yourlabel, our solutions are productized digital marketing services.
Also worth noting is that private label companies predominantly create consumer packaged goods, whereas white label companies mainly provide solutions in the software and technology fields. A private label product may be unique in that it can be developed, customized, branded and sold exclusively by a retailer. White label solutions are versatile and may be repackaged and redistributed by more than one reseller.
What Is Private Label?
Private label products are generally manufactured and supplied by one company to another, to be sold under a brand name of the latter’s choosing. What makes this business model effective is that it enables the manufacturer and the retailer to concentrate on their specific specialties within the value chain. It essentially helps minimize costs and ensure better handling of every activity that goes into creating and delivering a valuable product.
How Does Private Label Work?
A retailer acquires a product from a manufacturer who may customize it or build one that’s entirely new, depending on the retailer’s specific requirements. Retailers and wholesalers with existing manufacturing facilities may also develop their own in-house private label brand—also known as a store brand—to be sold exclusively in their stores. This allows them to target new and emerging markets as well as compete with more established regional, national or international brands.
Quite notably, large name brand manufacturers have been known to use their expertise and excess resources to supply store brands. Some smaller manufacturers have also gone a similar route, using their specialty in certain product lines to produce store brands exclusively.
A good private label product that’s promoted through careful, strategic marketing can have enormous profit potential for both the manufacturer and the retailer. This shows that private label products and white label marketing are complementary and would go hand-in-hand quite well.
What Is an Example Of a Private Label Brand?
Loblaws Inc., a Canadian supermarket chain, operates an in-house private label program that includes grocery and household items, baby products, apparel and pharmaceuticals, just to name a few. The well-known store brands that they developed include President’s Choice, No Name, Joe Fresh and T&T, all of which have played a major role in the supermarket chain’s growth. Creating private label brands, whose products they then promoted and sold at competitive prices has helped them to grow in Canada and in the United States, and to go toe-to-toe with more recognized brands in markets where the latter already had a foothold.
Can You Private Label Anything?
Everything from foods and beverages to clothing and accessories can be “private labelled”. As evident in the example of Loblaws Inc., private labelling encompasses a wide range of goods across many industries. In most cases, these goods are meant to be lower-cost options opposite their more extensively advertised counterparts.
Even private label brands that are considered premium brands—because they’re in direct competition with big names—are generally less expensive. That’s because retailers are able to make adjustments to their private label offerings, such as minimizing advertising costs in favour of optimizing the production process, and accommodating the preferred price range of consumers.
How Do You Get Private Label Product?
If you are a start-up or a seasoned business that aims to drive growth through private labelling, working with a reputable manufacturer is a must. Once you’ve decided on a specific product or product category, find a manufacturer that specializes in it and has a track record of providing quality results complete with competitive pricing, prompt delivery and accessible customer service. Ideally, all of these boxes should be ticked before committing to a manufacturer.
How are Private Label and White Label Similar?
Private label and white label solutions can save businesses from the trials and tribulations of crafting new solutions from the ground up. Both up-and-coming entrepreneurs and established agencies can take advantage of these business models to gain valuable resources, reach new markets, bring more variety to their offerings, and increase their revenue stream.
Private label products, in particular, make it possible for businesses to quickly enhance their product offerings without having to worry about all the costs and infrastructure requirements that come with establishing their own production line. Similarly, partnering with a white label marketing firm will give you a turnkey solution for broadening your spectrum of services and streamlining your workload. All this while reducing your overhead expenses.
The terms white label and private label may be used interchangeably when talking about the act of rebranding products and services. But the difference becomes apparent when you consider certain stages of the solution’s value chain—how the product or service is created and delivered.
If the product is designed and customized to fit a retailer’s specific preferences, that’s private label. If the product or service is already developed and allows for easy re-branding, re-selling and seamless integration into the existing solutions, that’s white label.
These two business models are vital in an industry as competitive and constantly evolving as digital marketing, where using innovative solutions that provide long-lasting value to your customers will impact your continued success. Whether you are planning to use private label to sell new products or integrate white label marketing solutions into your growing list of services, the key is to choose an experienced, dedicated and trusted firm.
When you partner with yourlabel, you will have access to a team of experts and the most advanced tools. With us handling the logistics of it all, you can focus your time and attention on what you do best — building a thriving company culture, creating more value for your customers, and exploring more novel ways to expand your business.