Whether you’re a content creator selling merch or a business owner looking to expand your product offerings, two product sourcing options can help bring your vision to market: white labeling and private labeling. Major international and national brands—like Zara, Ikea, and Aldi—use these techniques.
“White label” and “private label” are sometimes used interchangeably, as both involve selling third-party manufacturer products with your business’s logo. But the similarities largely end there. The key differences between private-label products and white-label products—along with their respective pros and cons—can shape your business strategy. Here’s what you need to know about both, and how to choose the right option for you.
What is private labeling?
Private labeling is when a company partners with a third-party manufacturer to create a product that is exclusive to their brand, often with custom formulations, features, or packaging. You can encounter private-label brands everywhere, from convenience marts to clothing retailers to furniture stores. Private-label contracts often have exclusivity agreements that restrict private-label manufacturers from selling your product to other brands.
Private labeling offers a way to build a product under your own brand name while outsourcing manufacturing to a third party. You’ll have control over size, materials, and other product specifications while avoiding the costs of handling the manufacturing process yourself.
This level of customization can offer a competitive edge in your target market. The specialized manufacturing process can justify a higher price point for your products not only because it costs more but also because it produces more specialized products. Plus, the ability to improve products based on customer feedback and maintain quality control can strengthen customer loyalty.
Examples of private labeling
Say you run a snack company and want to add a unique nut-based snack to your product offerings. You reach out to a snack producer and work with them to develop a special nut-based snack. You choose the type of nuts, the kind of chocolate, and whether it’s gluten-free or vegan.
For another example, Warby Parker designs its own glasses at their company headquarters in the United States, but partners with third-party manufacturers in China to manufacture the eyewear, which it exclusively brands under its name. With its private-label process, the billion-dollar brand has built a reputation for unique, high-quality products at reasonable price points. Ray-Ban, on the other hand, owns its own manufacturing under its parent company, EssilorLuxottica, which also has manufacturing licenses to produce eyewear for brands it does not own.
What is white labeling?
White labeling involves purchasing pre-made products from a white-label provider—typically with minimal or no customization—and rebranding them with your own logo packaging. Your company has no hand in the design, development, or production process. You are solely responsible for marketing and distribution. The generic products you purchase from these third-party manufacturers can be sold by multiple retailers, including competitors.
If your focus is on quickly expanding your product offerings, a white-label agreement may be the right path for your business. It’s particularly effective for established categories like office supplies and beauty products, which offer high margins and scalability.
Examples of white labeling
If you’re working with a tight deadline to bring your nut-based snack to market and are more focused on speed than customizing the ingredients and contents of your snack, you might opt for white labeling. You partner with a third-party provider already offering pre-made, white-label nut-based snacks for other brands and simply add your own branding.
Brands like Target and Amazon frequently use white-label manufacturing to expand their product lines and edge out their competition without reinventing the wheel. If you’ve ever gotten deja vu in the furniture section at Target, it’s probably because you’ve seen those products at other furniture retailers like Wayfair.
Private label vs. white label: What’s the difference?
The main difference between white label and private label is that white-label products are generic products often sold by multiple retailers and private-label products are not. But the differences don’t stop there. Here are a few more key differences between private- and white-label approaches:
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Customization. Private-label products offer a higher level of customization, giving you the opportunity to differentiate your product from competitors—especially advantageous in a crowded market.
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Speed. You can typically get white-label products to the market faster than private-label products because they’re often pre-made by manufacturers who are already experts in producing that specific item.
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Product prices. You can often pursue a more aggressive pricing strategy for private label products because: 1) they have a higher level of customization, and 2) no one else is selling your product. This may enable you to target niche markets where consumers are willing to pay more for specific features or product specifications.
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Quality control. With private-label products, you have complete control over the quality of the product. With white-label products, you're restricted by the manufacturer’s preexisting offerings.
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Upfront investment. With private-label products, you need more upfront investment to fund research and development (R&D) than you do with white-label products.
How to choose between private labeling and white labeling
Here’s how to decide whether to go with private labeling or white labeling:
Determine your budget
If you don’t have an R&D budget, white labeling is likely the path for you. You can then dedicate a bigger budget toward branding, marketing, and distribution, since you are not financially investing in the actual design or development of the product.
Consider your time constraints
Is speed a priority? For example, maybe you just launched a fledgling fashion brand and you want to add sunglasses to your inventory, but summer is right around the corner. Or maybe you’re struggling to meet your annual revenue goals and need to quickly add a high-margin item to your product line. A white-label process may be a better option because you can get white-label products to the market much faster than private-label products. But if you have time for R&D, you may want to invest in private-label products.
Validate demand
White-label products are often tried-and-true. By contrast, introducing a new private-label product to the market carries higher risk due to the greater level of customization involved. Validate demand before investing resources into developing a private-label product that might not resonate with your target audience.
One way you can do this is with some competitor analysis. Is there room for another white-label product with your branding on it? For example, you may conduct a survey of all the makeup brands currently on the market and notice that none of them are yet marketed toward Gen Alpha. You may determine that there is room on the market for a makeup brand with fun, Gen Alpha–targeted branding.
Free: Competitive Analysis Template
By evaluating the strengths and weaknesses of your competition, you can begin to formulate how to give your company an advantage. Download our free competitive analysis template and gain an edge over the competition.
Private label vs. white label FAQ
Is private label the same as white label?
No. Private-label products are produced by a third-party manufacturer and sold by one company. White-label products are produced by a third-party manufacturer and can be sold by multiple companies.
What is the difference between private-label and white-label clothing?
Private-label clothes are branded and sold by one retailer. White-label clothing—like generic bras and t-shirts—can be sold by many brands. Sometimes, white-label products are identified as “dupes” or “duplicates” of more well-known brands when they are sold by multiple companies.
What is a private label with an example?
Apple is a private label company; it designs proprietary electronics that are manufactured by third-party providers internationally.
