Let’s cut to the chase: If you want to start selling products online, white labeling can help save you an enormous amount of hassle.
Because when it comes to ecommerce, there’s a lot of activities you need to juggle.
To name just a few, you need to work with manufacturers, ship and store products, manage your inventory, and market your brand – and each of these aspects of your business has a lot of moving parts.
Thankfully, white labeling allows you to avoid reinventing the wheel when sourcing products.
In this article, you’ll learn how white labeling works, compare white labeling vs. private labeling, explore its pros and cons, and more.
In This Article
- 1 What is White Labeling?
- 2 White Labeling vs. Private Labeling
- 3 3 Famous White Label Examples
- 4 White Label Advantages and Disadvantages
- 5 3 White Label Solutions to Kickstart Your Online Business
- 6 Summary: The White Label Business Model
What is White Labeling?
What does “white label” mean? White labeling is the process retailers use to brand and sell products manufactured by third-parties. For example, many supermarkets and big-box stores sell other companies’ products under their store-brand.
To consumers, white labeled products look like the retailer has developed them. However, in reality, the manufacturer has just applied the retailer’s labeling to their product.
White Labeling vs. Private Labeling
Is white labeling the same as private labeling? In short, no.
Although similar and often used interchangeably, the terms white label and private label refer to different processes.
So, let’s explore white labeling vs. private labeling:
Here’s how white labeling works: It’s simply the process of selling another company’s existing product under your brand. For this reason, many businesses will often sell identical products made by the same manufacturer – only the packaging changes.
For example, a soap manufacturer may also allow big-box retailers to sell the same soap under the store-brand. As a result, the soap manufacturer and multiple retailers will be selling the same bar of soap – just with different branded packaging.
Private labeling goes one step further.
Instead of just white labeling products, retailers will also customize or improve products in some way to differentiate them from competitors. Manufacturers will then produce these new product variations exclusively for the retailer.
For example, a retailer may ask a soap manufacturer to customize one of their standard soap bars by adding pistachio nuts. The soap bar is the same, but there’s an extra ingredient that the retailer can use to differentiate the soap from competitors.
Both white labeling and private labeling benefit from custom branding. However, private labeling allows businesses to customize products. White labeling is typically faster, easier, and cheaper to do.
3 Famous White Label Examples
To help illustrate how white labeling works, let’s look at some famous white label examples. Each of these brands sells thousands of white label products.
1. Costco’s Kirkland Signature
Costo is a large U.S.-based big-box retailer that sells white label products under it’s Kirkland Signature brand.
Costo contracts with various product producers who place their products in Kirkland Signature branded packaging.
Often, the name-brand that makes the product will sit on the shelf next to a Kirkland-branded version.
For example, many people choose to avoid store-branded batteries, thinking they won’t last as long as the name-brand. However, Costco CEO Craig Jelinek revealed Costco’s Kirkland Signature batteries are actually white label products made by house-hold name Duracell.
It’s also been confirmed that Kirkland Signature white labels products from other big-name brands such as Huggies, Reynolds Wrap, Niagara bottled water, and Ocean Spray cranberry juice.
2. Whole Foods Market’s 365 Everyday Value
Whole Foods Market’s 365 Everyday Value is another famous white label example. It sells healthy food products, from olive oil and chips to tea and spices.
This product line is often referred to as a private label brand. However, it’s highly likely to include a few generic white label products.
3. Amazon Basics
AmazonBasics is a white label brand that sells thousands of products, from kitchen gadgets and luggage, to tech accessories and pet products.
It’s clear to any experienced ecommerce seller that many of these are white label products produced by third-parties manufacturers.
White Label Advantages and Disadvantages
If you’re considering white labeling products, it’s a good idea to understand the pros and cons. So, here are some white label advantages and disadvantages.
White Label Advantages
- Save Time: It takes time to source a manufacturer, develop new products, and bring them to market. White labeling shortcuts this process and allows brands to get up and running very quickly.
- Save Money: Creating and producing original products costs money. Why reinvent the wheel? White labeling products allows businesses to free up capital they can invest elsewhere.
- Branding: Although businesses are selling another company’s products, white label products allow them to differentiate from competitors and improve brand equity.
- Quick and Easy Expansion: White labeling products makes it very simple to expand product lines because retailers can tap into an existing supply of products.
- Price Competitiveness: Retailers selling white label products can usually offer lower prices than the name-brands who create them and need to maintain their premium brand positioning.
- Quality: Retailers can white label products made by top brands, allowing them to offer high-quality products at a lower price point.
White Label Disadvantages
- Lack of Product Differentiation: Selling the same product as competitors can make it challenging to stand out.
- Copycats: The term “copycatting” refers to retailers who white label the same products and use very similar packaging. Remember, the packaging is the only differentiator. So, copycatting can signal to consumers that a brand is purchasing a white labelled product, and devalue the brand.
- Monopsonies: This is a fancy word that refers to a buyer’s monopoly – when one large company controls the market. When this happens, it can become difficult for smaller retailers to compete.
3 White Label Solutions to Kickstart Your Online Business
If you’re interested in sourcing white label products to sell online, you’ll need to find suitable suppliers. To help get you started, here are three white label solutions.
1. Print on Demand
Print-on-demand is an ecommerce model in which you don’t need to purchase any inventory upfront, but you can still create custom clothing and merchandise.
Instead, you simply create mockups of your products for your online store. Then, when you make a sale, some of the money will automatically go to your supplier. Then, the supplier will print the product and send it to your customer for you.
With most print on demand companies, you can start selling branded white label products through your Shopify store such as clothing, accessories, and homeware.
If you’re looking for something a little bit more specific, look for dropshipping suppliers that provide white labeling.
Once you provide your branding your supplier will design and ship your product, straight to your customer’s door.
3. Wholesale White Labeling
(Alt tag. White Label Solutions on Handshake)
If you’re looking for more flexibility and control, you’ll need to source your own manufacturer and handle shipping, storage, and fulfillment yourself.
In this case, you may want to research white label options on the largest B2B marketplaces, like Handshake. This platform lists an enormous number of suppliers worldwide, with products in almost every niche imaginable.
However, beware of fraudsters and unscrupulous sellers. Make sure to do your due diligence and verify that suppliers are trustworthy and reputable before handing over your hard-earned cash.
Summary: The White Label Business Model
White labeling is the process of branding and selling another company’s product as your own.
The method is often used by supermarkets and big-box stores to offer store-branded products, such as Costco’s Kirkland Signature brand, Whole Foods Market’s 365 Everyday Value, and AmazonBasics.
However, white labeling products is also an effective way to start an online business.
By white labeling products, businesses can save the time and money it takes to develop new products, yet still differentiate from competitors through branding.
If you’re looking to start a white label brand, consider a print-on-demand, dropshipping, or wholesale white label suppliers.
Remember, the key to success with the white label business model is effective branding. So, concentrate on your market positioning, and differentiate your brand from competitors.