Some of the world’s most iconic brands sell items that might not be as unique as you think. Their branded products are actually manufactured by an outside company that makes identical products sold under multiple brand names. This widely recognized business model is called white labeling, and it is used in many categories of consumer products.
What is white label?
White label refers to the process of manufacturing generic products and selling them under multiple brand names.White label products may have different logos, branding, packaging, and even different prices, but the basic construction is identical.
White label products are sold through various channels, including retail stores, e-commerce platforms, and direct-to-consumer models. They help brands to reach diverse customer segments without the need for extensive distribution networks.
White label manufacturers may offer limited product customization options, such as the application of a brand logo or graphic to a product’s exterior. They may also offer discounts to retailers for bulk orders. Other white label services, such asprint on demand companies, will ship products directly to consumers after purchase.
Who uses white label products?
Multiple companies across various industriesuse white label products to expand their offerings quickly and cost-effectively, allowing them to compete in diverse markets without significant investment in product development or manufacturing.
White labeling is prevalent across industries because it's efficient. It’s popular in sectors where manufacturing is complex, as well markets in which branding and marketing determine consumer decision-making.
Some key businesses that use label products are:
- Food and beverage:Grocery stores and supermarkets offer their own branded products. Retailers like Walmart and Costco rely on white label products to offer a range of affordable, quality goods under their store brands.
- Skin care:Many beauty brands source products from specialized manufacturers then rebrand and sell them under various names. Both new and established brands use white label products to enter the a market quickly.
- Fashion and apparel:Retailers can offer a variety of clothing and accessories without in-house design or manufacturing. This approach allows brands like Zara and H&M to adapt to fashion trends and expand their product offerings.
- Home and personal care:There's a lot of white-labeling in cleaning supplies, personal hygiene, and home products. White labeling lets retailers like Target and Amazon give consumers a wide selection of products at a lower price than national brands.
White label examples
You can find white label branding across industries. From fashion to technology, products made and sold in bulk by manufacturers are branded and advertised by many retailers.
Coffee
The coffee industry offers a real-world example of white labeling. A number of large-scale coffee producers roast beans in industrial facilities and ship batches of those beans—each of them containing an identical product—to retailers. Some of these retailers sell them via online businesses. Others grind and roast the beans in local coffee shops. The coffee is presented to consumers as custom products, but it all originates from the same white label manufacturer.
Skin care
Skin care is another sector where white label brands are prevalent. Moisturizers, serums, and other skin care products are produced by a single manufacturer and then packaged and branded differently by various skin care companies. Depending on their relationship with a supplier, skin care companies may incorporate a unique ingredient to differentiate their product, but the base formula remains the same.
Similarly, many cosmetics brands use white label manufacturers for their makeup products, allowing them to offer a wide range of colors and formulations without investing in extensive research and development or manufacturing facilities.
Software
White label software is a common practice in the tech industry. Companies add their branding to a software application made by third-party programmers and sell it as their own. This is particularly common in theSaaS (software as a service) industry, with core features developed by a single company, then rebranded and sold by various other companies that may add additional features or services.
White label benefits
White label branding has benefits for manufacturers and sellers. Each can focus on their area of specialization (product production, product marketing) and leverage the other’s expertise.
Some of the main advantages of the white label business model include:
- Low barrier to entry. Sellers can enter new markets without knowing the intricacies of producing aniche product.
- Lower cost per unit. A white label manufacturer can bring down per-unit costs with large production runs, selling in batches to many retailers.
- Increased product appeal. While a generic product may function well, branding the product may boost its perceived value.
- Consistent quality control: White label manufacturers often have established quality assurance processes, ensuring consistent product quality across different brands.
- Market adaptability: White labeling allows businesses to quickly respond to consumer trends and changing economic conditions, benefiting from distributional economies of scale.
When is white labeling a good idea?
White label companies can set up a business around an existing product without investing in product development. That means skipping a costly retail process and moving straight tobuilding an online store orselling on social media.
Selling white label products might be a good option if you want to:
- Sell atrending product
- Start a business quickly
- Start a business with little upfront investment
- Add a branded product line to your retail store
- Capitalize on a prominent market position
- Monetize your blog or social media accounts
What are the drawbacks to white labeling?
With other brands selling the same product as you, one drawback to white labeling is pricing competition. There may be little to differentiate products besides retail price, leading topricing wars where sellers decrease their profit margins as much as possible to win consumers.
This challenge extends to packaging and branding as well. White label sellers must carefully navigate the fine line between creating appealing packaging and avoiding legal issues related to "copycatting", or using designs too similar to established brands, which can be illegal in some cases.
While efficient, white labeling is also a restrictive retail model. White label sellers work within the constraints set by white label suppliers, which often means limited opportunities to fully customize products. For more extensive customization, retailers commissionprivate label products.
White label vs. private label
Private label is a similar manufacturing method to white labeling, but allows for more complex product customization. Private label product manufacturers can accommodate bespoke recipes, formulas, and designs to produce unique items for specific retailers.
Similarities
At their core, private labeling and white labeling use the same business model. A third-party producer makes an item for a retailer, who sells it to a customer under a unique brand.
In most cases, the manufacturer ships the product with a retailer’s branding and customizations applied, leaving retailers to focus on branding, marketing, and maintaining customer relationships.
Differences
Unlike white label products, which are usually the same except for the branding, private label products are unique, tailored to the retailer’s specifications. For instance, a retailer might submit an ingredients list for its skin care product or material and color requests for an item of clothing. This extra level of detail makes private label products distinct.
However, a higher level of customization comes at a cost. The manufacturer needs to adjust production processes to meet the retailer’s requirements. As a result, private labeling is typically more expensive than white labeling (a cost that may be accounted for by setting higher retail prices).
A blank canvas
White labeling is a powerful business model that lets retailers put their brand on proven products. It offers a low barrier to entry and lets you leverage the manufacturing resources of others.
If you can avoid pricing wars and reach customers before competitors, white labeling is one strategy for building a thriving retail business.
White labeling FAQ
Why is it called white label?
White label products are made by manufacturers who specialize in creating generic goods that can be customized and sold under different brand names. The name suggests a blank label that’s ready to be personalized.
What is white label vs. black label?
White labeling is where one company manufactures a product, but another entity adds its own branding and sells it. Black label refers to premium or exclusive products branded by the original manufacturer or company.
Is white labeling illegal?
White labeling isn't illegal. It's when companies rebrand and sell existing products under their own brands, provided they follow the relevant regulations and intellectual property laws. For example, you must be mindful of trademarks and patents, and cannot infringe on existing brand names or technologies.
How do I start a white label business?
Starting a white label business involves finding a reliable manufacturer and developing your brand. You’ll also need to create a strategy for reaching customers before other white label businesses, as you’ll be competing to sell the same products.
Can I white label services instead of products?
Services can also be white labeled. This is common in industries like digital marketing, where agencies will label services such as SEO or social media management. The agency provides the service under their own brand, while the work is done by white label providers.
 - Shopify (2024))
