Ecommerce
White Label vs Private Label: Which One is Best for Ecommerce?
- Written by Jana Gentry Smith
Sometimes, we all wish we had a Magic 8 Ball to make our decisions easier. If you’re here, you’re likely choosing between the familiar territory of reselling or the shimmering potential of private or white labeling.
Reselling is your tried-and-true method, but you heard white and private labeling promise higher profits. You know you want to try one, but which is the best choice?
Consider us your crystal ball. Let’s break down the differences between white labeling and private labeling, weigh the pros and cons, and help you land on your next big ecommerce decision.
What is private labeling?
Target has Up & Up. Costco has Kirkland Signature. Ecommerce is packed with private labeling. After all, Amazon has AmazonBasics.
Private labeling is when a company makes products for a specific store, and that store sells them with its branding.
It's like getting someone else to do the hard production work while the store gets to pick all the fun parts: how it looks, its materials, and all the other cool details. Think of it like the difference between home construction and interior design.
These products are sold only by that store and are made to look like they belong to the store's brand—thus, the “private” label.
Since the store controls how good the product is, how much it costs, and how it's branded, it also takes on the risk if the product isn't a hit with customers. It's a bit of a gamble, but it's worth it when it pays off.
What is white labeling?
If you search for Kindle covers on Amazon, you’ll notice identical cases with different brand names and prices.
That’s white labeling.
A retailer can buy products or services, slap its brand name on them, and sell them as if they were their own.
That company doesn't make these products. They simply buy them from a third-party supplier who makes generic, mass-produced items.
One of the perks of selling white-label products is that they can be ordered in bulk, dropshipped, or printed on demand. The seller doesn't have to worry about making the product and can expand its offerings fast.
But there's a catch: They have less control over the quality and uniqueness of the product, and you have more competition. It's a trade-off, but it can be a smart move for businesses looking to grow fast.
Face-off: Private labeling vs. white labeling
When choosing between white labeling and private labeling, ecommerce businesses should consider these eight criteria:
Product customization
Brand control
Time to market
Cost
Product exclusivity
Quality control
Supply chain management
Scalability
Here's a table comparing how white labeling and private labeling stack up:
Criteria | White Labeling | Private Labeling |
Product customization | Limited customization options because products are sourced from a third-party supplier | More opportunities for customization as products are designed and manufactured specifically for your brand |
Brand control
| Branding opportunities are limited to labeling and packaging because someone else designs the product | Complete control over branding, product design, and features |
Time to market | Faster time to market because products from suppliers are easy to source
| Longer development time as products need to be designed, manufactured, and tested |
Cost | Lower upfront costs because manufacturing and development are outsourced | Higher upfront costs due to product design, tooling, and manufacturing expenses |
Product exclusivity
| Limited exclusivity because the same products may be white labeled by other brands, too | Higher product exclusivity because the products are designed and manufactured specifically for your brand |
Quality control | Reliance on the supplier's quality standards, with limited oversight of manufacturing processes | Greater control over quality because your brand oversees the entire production process |
Supply chain management | Simpler supply chain management because products are from a single supplier | More complex supply chain management involving many suppliers for components and manufacturing |
Scalability
| It is easier to scale as products can come from various suppliers
| Scaling may be more challenging due to limited manufacturing capacity or supplier constraints |
What are the pros and cons of private labeling?
According to Jungle Scout’s 2024 The State of the Amazon Seller report, finding a high-demand, low-competition private-label product to sell is one of the top five indicators of success.
Like a double-edged sword, private labeling presents risks and rewards for ecommerce businesses. Let's dissect these aspects piece by piece to get a clearer picture.
Pros:
Unique products: You can set your brand apart by creating unique products. Private labeling offers the flexibility to cater to niche markets or address specific customer needs through customized products
Brand control: You guide product design, features, and branding
Customer loyalty: You can offer exclusive products to build a loyal customer base
Long-term growth potential: You can scale production to see higher profit margins and long-term growth by building a stronger brand identity
Amazon benefits: You could qualify for brand protection and marketing tools from Amazon's Brand Registry
Cons:
Higher upfront costs: Product development, design, and manufacturing aren’t free
Slow to market: Launching takes more time compared to white labeling or dropshipping
Higher risk: You face a more significant financial risk If your product doesn't take off
Better for established brands: Newer or smaller brands might struggle with the higher investment requirements
Marketing challenges: Private label products need strong branding, marketing, and promotion efforts to get established
In short, private labeling offers product differentiation and control, but expect higher upfront costs, longer development times, and increased supply chain complexity. Established brands might have more resources to invest in product development and marketing.
Further reading: Ecommerce Retailers Guide to Private Label Products
What are the pros and cons of white labeling?
White labeling can be a boon for ecommerce businesses because getting pre-existing products on the market is faster.
You can even attend the White Label World Expo to get a feel for all the different white-label products available for you to sell.
But just as it has its advantages, there are also some challenges that you should consider. Read on to learn more about both.
Pros of White Labeling:
Low upfront costs: You can list new products without much investment or research
Quick to market: Products are ready-made and available from suppliers
Scalability: It’s easier to grow your business because you can quickly add more inventory from the suppliers you already use
Lower risk: There's no need for costly product development
Variety: You can source a wide range of products
Cons of White Labeling:
Limited uniqueness: It’s hard to stand out when products are just like competitors'
No exclusivity: There’s nothing stopping other businesses from offering the same thing
Brand dilution: Your brand reputation may be tarnished if products get bad feedback
Lower profit margins: Suppliers can raise prices because the products are common
Supplier dependency: Supply chain disruptions can impact your business
Quality control issues: You're relying on your supplier's standards
While white labeling can be a great way to scale, you should consider these factors against your specific business goals and resources.
Is private labeling or white labeling better for my ecommerce business?
There is no definitive "best" choice between white and private labeling for ecommerce sellers. Your ideal choice depends on your business goals, resources, and priorities.
For example, private labeling is typically preferred by ecommerce sellers who:
Accept higher costs and longer times for potential profits
Seek distinct products with design and branding control
Can invest in product development and manufacturing
Have strong brand recognition and loyal customers
Value exclusivity to outshine competitors
And white labeling is often considered better for ecommerce sellers who:
Want fast expansion without development and manufacturing costs
Lack funds and resources for product design and manufacturing
Are new or testing products before private labeling
Value quick market entry and easy scalability
Maybe you could start with white labeling to increase your product range, then slowly switch to private labeling for your top sellers or products you want to be known for.
In the end, the option between white and private labeling hinges on the specific business model, objectives, resources, and competition your ecommerce business faces.
Both types of labels can work well. Ultimately, you’ll make the best decision by evaluating your ecommerce business’s current situation and expansion plans.
As your business grows, you'll need a robust plan for order fulfillment that includes inventory management and efficient warehouse operations. That's where Veeqo comes in. With Veeqo, you can scan and pick your orders, print your shipping labels, and find the lowest shipping rates to delight your customers. More than mere shipping software, Veeqo automates these processes, letting you focus on what you do best—running your business.
One of Veeqo's sellers, eChapps, recently moved their $8.5million a year business into their first warehouse after scaling their business with the help of their private label brand, HatchKinz, and using Veeqo to manage both HatchKinz and their regular eChapps products.
By using Veeqo they were able to make efficiencies and lower their costs, and put that money towards the new warehouse. Ben Chappell, eChapps' co-founder, says: “Immediately when switching to Veeqo we probably saved $15,000 over the year, and that’s just money straight back into our pockets.“ he went on to say, “It’s just all consolidated in one easy page. Our previous software wasn’t able to do that, so it saves my team many hours.“
Ready to manage your new white or private label products efficiently? Sign up for your free Veeqo account today and see how effortless inventory and shipping management can be.
