You’ve always dreamed of starting a business. Maybe you’re passionate about a certain soap, lotion, vitamin, or favorite go-to-snack. Imagine your friends, family, and fellow people around the world buying YOUR products! Loving them! Raving about them to others! Oh, the joy! You can hear the celebratory music in your head!
But, shoot! You haven’t been to any business schools. You certainly don’t know how to start up a manufacturing company or have the millions it would take. Is your dream crushed? Nope!
If you’re looking to develop a brand and marketing strategy, and not the product, white labeling or private labeling may be a great option for you. With either business model, you won’t have to go through the trials and tribulations of manufacturing a product. Without the investment of product design and creation, you’ll save a ton of time and money. Each retailer (that’s you) is allowed to resell the product under its own name and branding by a manufacturer.
So, what’s the difference between the two and which option fits your vision and needs best?
Private label is a brand sold exclusively in one retailer, for example, Equate (WalMart). White label is a generic product, which is sold to multiple retailers like generic ibuprofen (Advil).
Let’s talk white labeling first. White labeling is when you take someone else’s product as is, so you don’t make any modifications to it, and then put your name on it. You are directly selling a product that is created by a manufacturer. Ultimately, the only thing you worry about is the brand name.
White labeling is cheaper than private labeling because it doesn’t take as much time to produce and plan, given that the product is already developed and manufactured, so no additional research is needed from the retailer and the potential profits are higher.
For example, a white label manufacturer would sell a generic body wash to 10 different retailers. Each retailer is able to rebrand the product as their own. With a white labeling business, each retailer is selling the same body wash with no modifications. They are simply rebranded and marketed as the retailer’s own product.
For many companies, this is a good deal, as they don’t have to create the actual product and can focus essentially on branding and marketing.
White labeling gets even more promising if you already have an established client base because different retailers can even charge different prices for the products of the same origin, because of their position on the market.
The only thing you have to worry about is a good marketing strategy and the rest is done for you by the manufacturer.
This is a fast way to get to the market, but a downside is your product will be the same as other retailers without much to discern your product from others out there. With white labeling you are competing with several buyers.
So, something to keep in mind is you will need to work hard to create your product to stand out from the rest. However, not only does white labeling save you time and money, it can improve your client loyalty. Customers constantly ordering the product with your name on it, shows that you have repeated success with your products!
So, it’s easy to see that such a business model works exceptionally well for companies with already established and popular brands. Moreover, this model also offers a lot of benefits to little-known startups, as it doesn’t require huge investments or experience.
Ok, now let’s get into the ins and outs of Private Labeling.
Private labeling is buying your product or service from one manufacturer, enhancing, modifying or changing the product in any way, then putting your brand on it and selling it.
Going along with the body wash example from earlier, the private label retailer would have the option to modify it to fit their selling requirements and brand. The modified body wash is exclusive to that particular retailer, and comes complete with their logo, name, and brand identity. This will take more time than the white label solution, but it will allow you to create a product that is unique to your niche.
Nike, for example, is a private label company. They buy bulk from a manufacturer, switch up a few things, put their name on it and sell it.
Private labeling can be a long process due to marketing expenses, hiring a developer to enhance or make changes to your product, finding a niche target market and creating brand awareness.
Although it is harder, it can be better than white labeling because you get more control of your product. Not only can you control the production of the product, but you can control the pricing as well.
The goal here is to create a brand that your customers are eager to buy and tell people about. When you take the time to properly source your products, create a brand you love, and learn how to sell it effectively, then you have a great business on your hands!
There is a lot of confusion about the differences between white label and private label products. When you talk to suppliers, always confirm that their definition matches up with your understanding. This will prevent a lot of confusion in your career selling your awesome products! It’s always best to invest time and energy into partners that have a clear understanding of your needs.
Moe's group Inc. is an experienced manufacturing company that will consult you on which business model is best for you. They offer both private and white label options and will take the time to listen to your specific needs. They will help you to find success in your dream business! You can contact them here: www.moesgroup.org
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