Private Label & White Label – Understanding the Difference

The ongoing debate between the White-Label and the Private-Label warrants a comprehensive understanding of the nuanced differences between the two concepts. Also, knowing the correct use of the terms will help you find exactly what you and your business need. 

Frequently used interchangeably, these terms possess different meanings that often elude many. People often incorrectly assert that “Private Label” solely relates to products, while “White Label” pertains exclusively to services.

The terms are easy to mix up, and often, it is hard to know what you are specifically looking for when it comes to wanting a product or service for your business or clients.

To start us off, let’s look at a quick way of determining the difference between white label and private label. 

Private Label:

• Buyer Specifies: In a private label setup, the buyer gets to decide what the product or service will include.
• Design Control: The buyer specifies the design, parts or offerings according to their preferences.

White Label:

• Provider/Manufacturer Specifies: In a white-label arrangement, it’s the provider or manufacturer who determines what the product or service will contain.
• Customisation Options: While the provider can offer some customisations to meet the buyer’s needs, they have the authority to decide the main aspects like design, parts or offerings.

In short:

• Private Label: Buyer/procurement team decides the majority of details about the product.
• White Label: Provider/manufacturer decides on most details about the product.

But let’s get into a little more detail and explore what this can look like.

What is a Private Label product?

An external manufacturer creates a private-label item that can be sold and marketed under your brand. 

As the purchaser, you can decide and create the aspects of the product. whereas, as the purchaser, you can play a role in determining things such as the colour, the material, packaging, and label design. This means the product will look truly your own. 

Generally, the purchaser/buyer covers the costs for production and transportation to your facility, business or warehousing, although arrangements for drop shipping can sometimes be made. The last step is that the buyer distributes the product directly to other distributors, staff or consumers.

An example of a Private Label product: 

For instance, you (Mrs Jones) possess a unique need to meet specific CSR (corporate social responsibility) goals within your business. One way you will achieve your CSR goals is by introducing reusable packaging into your supply chain.

You identify a manufacturer capable of mass-producing reusable packaging according to your needs. The manufacturer then creates the drawings, tools and products and organise to have them packed and dispatched to you.

Now, you can use this specifically designed reusable packaging in your supply chain and show the benefits of reducing waste in your business. Further to this, you could consider extending the range to staff or customers as branded merchandise.

What are the benefits of private-label products: 

• As the buyer, you have authority over the specifics of the product, such as material/composition.
• The product adheres to your exact specifications – you can create something fit for purpose to meet your needs.
• Control over packaging, i.e., you can choose if it is made locally or overseas or if it is recyclable. 
•  The product will align with your branding guidelines and is a great way to highlight your brand.

What are the shortcomings of private-label products:

• You need to have a product in mind or a goal in mind that a product could help you achieve, i.e. waste minimisation targets.
• There will be increased R&D (research and development) costs.
• Extended time is required before having a final product as there are processes before manufacturing, such as ideation and creating tooling.
• It tends to cost more than White Label Products as it is not a part of an existing range.

What is a White Label Product?

A third-party manufacturer produces the White Label products, and then, as the buyer, you place your brand name on it and sell it or distribute it as your own.

In this case, the buyer’s involvement is limited to specifying the existing product’s visual elements. This is due to the manufacturer possessing expertise in producing the desired item and takes charge of other crucial aspects involved in producing the product. 

An example of a white label product: 

For instance, you (Mrs Jones) want to gift your staff a reusable cup they can use every day when they get a coffee at the staff canteen. To do this, you find a reputable business specialising in reusable cups that meet your needs. The company has a range of colours and sizes for you to choose from that are a part of their existing range.

Than, you work with the producer to incorporate your logo onto the product for brand recognition. The producer manufactures your cups, prints your logo on them, and delivers them to your office for your staff to enjoy.

What are the advantages of white-label products?

• No product expertise is required from your end. 
• You do not need to create your own design or tool for the manufacturing process.
• This is a more budget-friendly option than private-label
• Great for brand recognition
• A more time-friendly option than private-label. 

What are the disadvantages of white-label products?

You choose your product from a selection of existing products and, therefore, do not have control over changes such as materials/parts.

Why do Private Label Products tend to cost more than White Label Products?

Private-label products are generally more expensive because they are created to suit the buyer’s needs and have yet to be created/manufactured. The exclusive nature of a Private-Label product with its specifications necessitates the development of a unique manufacturing process for each product, leading to heightened costs.

However, this can change if the buyer wants to purchase large volumes or place ongoing orders. 

How do you choose if Private Label or White Label Products are the right option for you and your business?

We would suggest that buyers/procurement teams choose a Private Label product when they’ve conceptualised a product that surpasses others in terms of superiority. Further to this, private-label is also best if there isn’t a product that meets their needs, or they want to be seen as a leader in new product innovation.

Alternatively, opt for White Label when there is an existing product that meets your needs, the goal is a swift market entry, limited R&D budgets, or the presence of brand demand only.

In conclusion, whether opting for Private Label or White Label, a prudent decision aligns with specific needs, expertise, and market demands.  Are you ready to create your own White Label or private-label product with a leading reusable product manufacturer? If so, get in touch below and lets talk.