White and Private Label Sourcing | The Fulfillment Lab

Table of Contents:

1. What is a Private Label Product?
2. What is a White Label Product?
3. Great Examples of Private Label and White Label Products
4. Private Labeling and White Labeling: What’s the Difference?
5. Can White Labeling be Co-Branded?
6. What Customers are Saying
7. How to Find White Label Products to Sell
8. How to White Label a Product
9. Private Label and White Label Products at The Fulfillment Lab

Private label and white label brands are big business! Today, these products generate billions in sales for U.S. retailers; in 2021, Americans spent over $40 billion on private label refrigerated goods alone. 

That’s not all. Nielsen data shows that across more than 60 countries, these products are gaining ground, while manufacturer-branded products are witnessing a decline.  

As Rick Nelson, CEO of The Fulfillment Lab states, “Private label and white label goods are becoming the norm for many shoppers. People want premium goods but don’t want to pay premium prices to acquire them. Private and white label allows suppliers to develop and sell high-quality products faster and for less cost - savings they smartly pass on to their consumers.” 

So, how do private labeling and white labeling work and how can you take advantage of them? Let’s dig and find out.

What is a Private Label Product?

Private labeling is when a retailer has goods made by a third-party manufacturer that they will then sell as its own unique brand. This could be any type of physical goods, such as clothing, food products, personal care items, or almost anything else. The manufactured product being privately labeled is then sold exclusively to that retailer.  

With private labeling, a retailer can develop and design a product without having extensive knowledge on how the product is made; then enlist 3PL manufacturers for production. 

An example of this would be Great Value products sold exclusively by Walmart. Walmart pays a food manufacturer to make products under the Great Value name, and they are sold exclusively through Walmart.  

Why wouldn’t a retail giant like Walmart just manufacture their own product, you may be wondering.  

Rick Nelson chimes in, “The truth is retailers often pay less for their products when they use private label manufacturers rather than producing all their own goods, with some estimates saying they receive about 10% higher profit margins.”  

A few other things to understand about private label agreements: 

1. The retailer defines any changes or variations they want to make to the product (e.g., ingredients, composition, package quantity, etc.) to differentiate it from the manufacturer’s generic version.
2. The retailer controls the design and packaging of the product (the manufacturer often provides this as a service).
3. The retailer owns the trademarks and brand identity associated with their private label products.
4. The manufacturer controls the production process but cannot sell an identical product to other retailers, keeping it unique in the marketplace. 

What is a White Label Product?

With white labeling, a manufacturer creates a generic product designed to be used by multiple retailers. Each retailer can then brand the product as their own, even though it’s the exact same product as other retailers are selling. 

An example of this would be Kirkland-branded products at Costco. Unbeknownst to many people, there are a lot of Kirkland products white-labeled by popular brands. So, if you’re willing to buy in bulk, you can save by buying Kirkland batteries (made by Duracell), Kirkland tuna (made by Bumblebee), Kirkland vodka (made by Grey Goose), and so on.  

While white labeling may be used by large retailers like Costco (their Kirkland white label products are valued at a whopping $75 billion). However, white labeling is also a great way for small startups to quickly get products to market or expand upon their core line of products without making a large investment.  

A few other things to understand about white label agreements: 

1. White label manufacturers controla product’s characteristics, components, ingredients, and manufacturing details.
2. The retailer controls the design of the packaging and branding of the product (which the manufacturer may provide as a service)
3. The retailer owns the trademarks and brand identity associated with the white label products they purchase.
4. The manufacturer controls the production process and may sell an identical product to other retailers, which could increase competition in the marketplace.

Great Examples of Private Label and White Label Products

We’ve included some examples of private label and white label products in the sections above, but let’s take a closer look at some really great examples of these models.

Amazon Private Labels

Amazon is a great example of the benefits of using a private label manufacturer. The company’s top five private label brands are AmazonBasics (home goods and office supplies), Amazon Collection (jewelry), Amazon Essentials (affordable clothing), Pinzon (bed and bath), and Solimo (personal and pet care).  

Their portfolio of private labels makes them highly competitive in search results, as the company regularly gives space to its own merchandise over sponsored ads and organic search.  

In 2023, Amazon decided to reduce its private label offerings to less than 20 brands due to disappointing sales and antitrust issues.

Technology White Labeling

White labeling is also becoming increasingly popular in the technology space, where “software-as-a-service” is all the rage.  

In this white label model, tech companies wanting to offer a particular software without the expense of manufacturing or coding it in-house can outsource to a white-label software company. 

They get to put their logo and trademarks on it and treat it as their own, but the software's IP is owned by another business and identical software can be sold to other companies. 

Examples of white label software ideas include: 

1. Email marketing
2. Social media scheduling software
3. CRM
4. Chatbots
5. And others.

Private Labeling and White Labeling: What's the Difference?

We’ve laid out the differences between private labeling and white labeling in the sections above, however this handy chart breaks down the differences in an easy-to-view format. 

Can White Labeling Be Co-Branded? 

Sometimes, you may see a product with two sets of brand names. This is an example of co-branding, not white labeling. 

So come on back to Costco. While you can’t tell that most Kirkland Signature products are made by another company (many of these companies don’t want it known), Kirkland Signature Coffee displays their logo plus the Starbucks logo, the original manufacturer. 

This method effectively leverages the brand power of the more popular brand to drive sales for both the retailer and the manufacturer.

What Customers Are Saying...

Customers love private label brands and white label products because some of the retailers’ savings are often passed on to them. And, perceptions of these products are changing. Today, many consider the quality to be as good as manufacturer-branded products—and getting better.  

Here’s a look at statistics about private labels as of early 2024: 

1. Private label brand sales rose 6% in 2023, totalling $217 billion.
2. 64% of GenZ shoppers buy store brands, “always/frequently.”
3. 51% of Gen Z shoppers choose the stores they visit based on in-store brands.
4. 24.7% of all unit sales in 2023 were private label brands.

How to Find White Label Products to Sell

Now that you have a better understanding of the differences between private label vs. white label products, are you ready to get in on the action? Your next step will be to source the product and a reputable manufacturer.  

Ultimately, you need to be able to find a manufacturer that understands the product(s) you intend to sell, and can produce them cost-effectively while maintaining a high standard of quality.  

One of your first considerations may be whether to go with a domestic or overseas manufacturer. While many companies like to keep their operations within the United States (and “Made in the USA” is certainly a big selling feature for some products), it’s often cheaper to source products overseas than with private label suppliers in the USA.  

However, cheaper isn’t always better, as you’ll also need to consider shipping time, quality control, cultural differences affecting business practices, tax implications, and importing and exporting laws and regulations. 

Whether you stay local or go global when sourcing, you need to be sure you can trust your white or private label product suppliers.  

So, you’ll want to do each of the following:

1. Request a product sample to determine quality
2. Verify acceptable delivery time and product condition
3. Consider total manufacturing costs (and check for any hidden fees)
4. Review policies on management of product defects and damaged goods 

To begin your search, you may want to try online directories like Alibaba, Sloan Health Products, Wonnda, or ThomasNet.  

You might also check out websites like Quora and Reddit to find referrals, reviews, and conversations surrounding manufacturers to verify their reputation. Of course, a referral from someone in the industry is often your best bet!

How to White Label a Product: 9 Steps

Once you’ve decided that selling white label products is right for you, there are several steps to take next. Before beginning, remember, white labeling is different from private labels – you can’t customize a white label product, and your store may not be the only one selling it. However, it’s cheaper and faster to get a white label product to market and you can brand it anyway you’d like. 

Here are 9 steps to get you from just thinking about becoming an entrepreneur to actually becoming one! 

1. Research and Identify the Product: First, identify the product you want to sell. It should be in demand within your target market, and ideally, it aligns with your current brand's values and market position. A great place to start researching is with Google Trends. 
2. Find a Manufacturer: Look for a reliable manufacturer that produces the item you want to sell. This could involve domestic or overseas manufacturers. Ensure the manufacturer offers white labeling services, which means they are willing to produce the product without their branding. 
3. Evaluate and Test the Product: Before committing, it's crucial to evaluate the product's quality. Request samples to test the product thoroughly, ensuring it meets your standards and those of your potential customers. 
4. Negotiate Terms: Once you’ve selected a product and a manufacturer, negotiate the terms of your agreement. This includes minimum order quantities (MOQ), prices, delivery schedules, payment terms, and the scope of customization allowed for the product. 
5. Customize the Brand: Customize packaging according to your brand requirements. This typically includes packaging, labeling. Ensure your brand's identity is well-represented in the final product. 
6. Handle Legalities: Make sure to take care of any legal requirements, which might include contracts with the manufacturer, registering your brand, and ensuring the product meets all relevant regulations and standards in your target markets. 
7. Develop a Marketing and Sales Strategy: While your product is being manufactured, work on a marketing and sales strategy. Since the product is not unique to your brand, focusing on how to differentiate your offering through marketing, customer service, and additional services or guarantees can be beneficial. 
8. Partner with a Fulfillment Provider: To ensure that your products are stored safely and shipped to your customers promptly, partner with a reliable fulfillment provider. They can manage inventory, process orders, integrate fulfillment marketing into packaging, and handle shipping.  
9. Launch the Product: With everything in place, launch your product to the market. Use your established sales channels or create new ones to reach your target audience. Monitor sales and customer feedback closely to make adjustments as needed.
   
   

Private Label and White Label Products at The Fulfillment Lab

If you’re wondering how to find a private label manufacturer or a white label manufacturer and searching directories isn’t your thing, then look no further than The Fulfillment Lab. Our unique global on-demand fulfillment portal allows you to quickly add new white and private label products to your line without any upfront costs or wait time.  

With The Fulfillment Lab, you can create your product offering, instantly add complementary products, build a customized label, and start selling right away. This can save you from investing thousands of dollars into a product before you ever know if it will take off, and you won’t have to worry about fulfillment—we do it all!  

Plus, we rely on overseas manufacturers to save you money; however, we know the ins-and-outs of intellectual property rights, product certification, customs procedures, and product quality, offering you peace of mind.

Read more about our on-demand private label and white label fulfillment services and view a quick video on our website. Then, contact us to get started!