White labeling and private labeling are two different ways to sell products to customers. Any business that buys or sources products to sell to customers should know the difference between the two. Every item on the market is white-labeled or has a private label. Based on this, retailers take this product and sell it to final customers.
As a dropshipping business, you sell products from different marketplaces on your website. You need to know the difference between white labeling and private labeling to know which products you can sell and which you can’t.
So, in this article, we’ll talk about how white labeling is different from private labeling.
Understanding White Labeling
We use the term “white labeling” to describe products that can be sold by many different stores. Once a product is made, the company that made it sends it to distributors so that it can be sold. From this part of the chain to the final customer, any retailer or small seller can rebrand the product and sell it under their own brand name.
This format gives many businesses power because they don’t have to make the product themselves. The only things they need to worry about are branding, marketing, and packaging. There are a lot of big companies that use this model to rebrand products and sell them under their own brand name. This doesn’t mean, though, that the model won’t work for small businesses. The structure works best for small businesses and dropshipping because they don’t have to spend money on manufacturing.
The term “white labeling” was first used in the music business, which is an interesting fact. The term was given to releases that were open to the public and could be used by anyone. But later, the term was used a lot in other fields to describe similar ideas.
Understanding Private Labeling
Now it’s clear what private labeling means. Private labeling is used when a company’s products are unique and can’t be sold or used by any other store or business. When a product is made and designed based on the specific needs of the seller, it is called a “private label.” Then, only this seller can change the product’s name and sell it.
With private labeling, there are a lot of ways to make more money and it costs much less. So, the market for products with private labels is also very big.
Many stores have products made and give them a brand name so they can sell them. In this case, manufacturers can easily make two similar products and sell them to different brands for private labeling.
Differences Between White Labeling & Private Labeling
What is the most important difference between private labeling and white labeling?
How do we know which one is best for our business?
Here are some important differences between white labeling and private labeling. Read carefully to find out what kinds of products businesses that dropship can use.
The exclusivity of the product is the most important difference between white labeling and private labeling. For example, if a store uses private labeling, the product may be a bit different from what other stores sell.They have fewer competitors, so they can better show off what makes their product unique.
White labeling, on the other hand, just means that the product is made by the manufacturer and sold by many different stores. In this situation, it is definitely easier for the retailer or dropshipping business to choose good products and draw in a crowd that is already there. White labeling, on the other hand, doesn’t let retailers stand out based on design and features. They can only make a difference through marketing and brand building.
Customization is another big difference between white labeling and private labeling. Any company that sells products under its own label can change the product in some way. They can talk to the manufacturer about specs and design needs even before production starts. This lets them tailor the product to the people who will be buying it.
With white labeling, retailers or dropshipping businesses can’t change the product in any way. They can buy generic products already on the market, change the name of the product, and sell it. Dropshipping businesses that sell white-labeled products, on the other hand, are free to change the way the product is packaged, which has something to do with how the product is marketed.
There are many physical products with private labels, such as household items, cosmetics, clothing, and so on. This is because companies that want to build a name for themselves in this field prefer to make the product themselves. So, they put their own brand name on the products and sell them. Also, this gives the chance to customize and improve the product based on what the customer wants.
This doesn’t mean, though, that these physical products don’t have white labels. White-labeled cosmetics aren’t very common, but you can still find white-labeled clothes, home goods, etc.
Also, white labeling is often used for tech products, where the company that makes the product lets businesses sell it under their own brand name.
There’s no doubt that private labeling costs more money. You’re getting products that are made to fit your needs, which costs money. So, you need a good budget to research, find, and make products with your own label. But the return on investment (ROI) usually shows this.
On the other hand, products with a “white label” cost less. The cost of making something is less because the maker is doing a lot of work at once. So, you can also buy their products at prices you can afford. This is likely to give you a higher return on investment if you know how to:
- Look into popular products.
- Sell things well.
- Use the right tools to reach more people.
- Learn how important packaging is.
- Check how good the products are.
- Which Should You Choose?
- You may be wondering which one to use for your dropshipping business.
Based on what we’ve talked about so far, it’s clear that dropshipping businesses can use white labeling for their products. The reason why is:
When you use privately labeled products, you customize the way they are made and get only one type of product for your business. First, the cost of sourcing is too high, and second, you need to make an inventory for the same. No company would keep an order in their warehouse and only ship it when it was needed. You must pay more for a bigger order.
Because of these things, private-label products don’t help dropshipping businesses.
But we might be able to keep our dropshipping model going if we work with a brand that sells privately labeled products.
On the other hand, white-labeled products are better for your business because they are easier to use. You can easily put your business name on these generic products and sell them. There may be a lot of businesses selling “white-labeled” products on AliExpress, which you can use as a place to get products.
If you want to sell products on your website, you need to know the difference between white labeling and private labeling. In some cases, you can’t use a dropshipping model with products that have their own labels. So, you should check with the brand or seller to find out more.
But in general, white labeling seems to be a popular choice because it costs less money and needs a lot of marketing. These needs match the needs of your dropshipping business, which makes things easier for you.
Before you put a product on your website, you should do research on it and check the labeling.