White label vs. private label: Which strategy should you choose?
Launching a new product for your brand can be intimidating. There could be several questions that run through your mind:
How do I carry out market research?
What is my R&D budget to get a good product design ready?
How should I position my product while entering the market?
The list goes on, but the way forward depends on the strategy you choose to introduce your product into the market. Among many popular options are white labeling and private labeling.
In this blog, we take a detailed look at white label and private label strategies, including the pros and cons of each. We then answer which one you should choose and provide a solution to how you can easily implement that strategy.
White label products
White label products are produced without any branding or company logos. These products are then branded and sold by another company. Typically, manufacturers of white label products sell the same product to multiple companies.
For example, consider a manufacturer selling luggage bags as a white label product. The manufacturer could sell this bag in large quantities to a large corporation, which then sells it to an end consumer like you and me under its brand name. However, the same manufacturer could also choose to create its own brand and sell it directly to the end consumer at a higher price point. Or, maybe the manufacturer could choose to sell the bag to multiple large corporations. In any case, the product reaching the end consumer is largely identical, and the only differentiation is the branding and packaging of the product.
So, why do certain companies use white labeling?
Benefits
- Speed up product launches
With a white label strategy, you don’t need to invest any capital or resources in research and development. You have a product ready to be sold and rely on your branding and marketing efforts to sell it.
- Minimize risk
When you purchase a white label product, you buy a product that has been tried and tested in the market. You buy your products from companies renowned for making a particular product while you stick to what you do best: selling.
- Explore new product avenues
Feeling pressure to introduce a new product into the market but unsure about what to sell? It may not be the best strategy, but white labeling can help by allowing you to choose from a wide variety of products to sell.
A white label strategy can work great for giant corporations that can purchase white label products, brand and package them, and then sell them by means of their easily-recognizable brand name. However, if you’re an SMB or Fortune 5000 company, you may want to consider these drawbacks before adopting a white label strategy.
Drawbacks
- Zero defensibility
When you rebrand and sell white label products, there’s a genuine possibility that your competitors might be selling the same product. And with nothing unique about your product compared to your competitors, it’s only a matter of time before they begin eating into your market share.
- Inconsistent quality
Your supplier of white label products may not have good quality control measures in place. Hence, customers might have different experiences every time they buy your product. Moreover, what do customers see every time they receive a poor quality product? Your precious brand logo.
- Less production control
With white label products, you can’t control or specify how your product needs to be manufactured. You can only control your product’s marketing, distribution, and sales.
For a business to have long-term viability, it is crucial to have differentiated products. You need to have trade secrets that only you know. And that is where private label products come in.
Private label products
Private label products are products that a company produces to sell exclusively under its brand name. While the company may still get the product manufactured by an external manufacturer, it controls product specifications, quality standards, and everything else. Unlike a manufacturer selling white labeled luggage bags to multiple retailers, a company that develops luggage bags with unique specifications to be sold exclusively to the end consumer would be an example of its private label counterpart.
Benefits
- Competitive edge
Private label products are unique products in the market that only your brand can sell. This enables you to stand out from your competitors. Moreover, with greater control over production, you can ensure that your customers get a consistent experience every time they buy your product. Ultimately, this translates to increased brand loyalty.
- Easy customization
You know your customers’ needs better than anyone else, right? After launching a product, it’s easier and quicker to make improvements on your products if you have control over production. Subsequently, you are in a better position to launch the next version of your product.
- Better pricing control
As we’ve already seen above, private label products are differentiated products that help you stand out from the competition. As a result, you can charge higher prices for your product, which in turn leads to higher margins.
If you want to retain a competitive advantage and build a long-term business, selling private label products is the way to go. More so if you plan to manufacture your products too in the future. So then, what stops a business from building private label products?
Well, developing a private label product from scratch can be pretty daunting. For instance, you might not be experienced in market research to figure out your target audience. Or, maybe you face difficulties in hiring the right people to get your product design ready. Essentially, there might be multiple roadblocks in the journey to sell a private label product. But not anymore. Not when you have Gembah.
Private labeling made easy with Gembah
Gembah is the first global marketplace for product development that empowers SMBs and Fortune 5000 companies to bring their product vision to reality. Gembah makes creating a private label product easier by:
- Being a one-stop-shop solution to help you at each stage of the product development process, from research to supply chain and logistics.
- Gaining access to a vast vetted network of product designers, manufacturers, and logistic partners to build your product efficiently and quickly.
Differentiate your brand by building private label products and explore how Gembah can help you in that journey.
