Private label and white label refer to products branded by a reseller for sale to the general public. Although many people think these terms describe the same thing, there are some distinct differences between them that affect quality and pricing.

The Meaning of Private Label and White Label

Grocery stores and supermarkets often carry recognized national brands that are sold under the manufacturer’s brand name. For example, Pepsi is always sold under its brand name because consumers have developed trust in that name. Private label brands, however, are either made by the retailer or purchased from a manufacturer with exclusive resale rights. Once a retailer buys a private label brand, it can alter or enhance that product to suit a specific marketing goal.

The term "white label" derives from an old music industry practice in which radio station DJs would place white labels on promotional records to prevent competitors from knowing which artist performed the songs. In business and marketing, white label brands are generic products and services manufacturers create and sell to a retailer. This gives retailers the freedom to repackage the products under their own labels.

The Differences Between Private Label and White Label

One of the main differences between private label and white label brands is that private label brands are made for exclusive sale by a specific seller, and that seller can alter or enhance a product any way it wants.

That freedom doesn’t exist with white label brands, because manufacturers sell these products to multiple retailers, who then repackage the product under their own brand name without changing it, and sell it to consumers.

The Advantages of Private Label and White Label

Private label brands are often less expensive to buy and generate greater profit margins than national brands, which are more expensive to acquire from manufacturers. Private label brands are also exclusive to a retailer, which can help target a specific audience. For example, Market Pantry is Target’s white label brand that has helped the retailer carve out a niche among consumers that recognize it as a Target-specific brand.

White label brands are even cheaper for retailers to buy than private label products, and can generate higher profit margins. Retailers can still use their own specific packaging when they sell white label products, so they don’t lose that all-important customer recognition.

The Disadvantages of Private Label and White Label

One of the disadvantages of private label products is that if a retailer alters them in a way that confuses consumers, those products could become loss leaders.

A major disadvantage of white label brands is that their packaging and appearance are often generic and unappealing, which could make customers think the product or service is of lower quality than private label brands or national brands.

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