For anyone dealing with purchasing products and services, the terms “private label” and “white label” should sound familiar. Sometimes sellers and marketers might use the terms interchangeably. However, there is a distinction between the two. Let’s have a look at the origin and use of the terms.
What is Private Labeling?
When a retailer gets an unbranded product from a manufacturer, adds a brand and sells it as its own, the process is considered private labeling.
Private labeling is a widely used model in fashion, cosmetics, household products and more. A manufacturer can produce two variations of the same product and sell them to different retailers. The retailers will sell the products under their own banner. So you might be buying the products from the same manufacturer from two different retailers without knowing the origin. Private labeling is mostly used for physical products.
What is White Labeling?
When a retailer takes a generic product or service from a manufacturer and sells it as their own, it’s considered white labeling. The term white labeling first started in the music industry. Promotional vinyl copies of music would be sent to DJs in white sleeves which were called white labels.
White labels are used mainly for software products. The manufacturer provides the same generic white label product to all the retailers who want to rebrand.
Here are the key differences to consider when trying to figure out whether to use the term private label or white label:
Type of product – Private labels are mainly used for physical products while white labels are used for software products. So if you are dealing with software, you are mainly dealing with white labels.
Customization – Private labels provide more customized products. Manufacturers might produce a single version for a particular retailer. So retailers can become the patrons of exclusive items. For white label products, manufacturers offer the same product to everyone. The retailers don’t have the option to customize. It also means they don’t have any extra costs for labeling.
Complexity – The white label model is generally used for more complex products. That’s why software retailers like this model. Compared to physical products, changing a software is more complicated. So retailers prefer the white label model to move the product from the manufacturer to the buyer.
Are you wondering how private labels and white labels affect your purchasing decisions for CRM software? Our experts at AllClients can explain. Contact us today for more information on white label vs. private label.