A private label product is a product manufactured by a factory that is sold under a different company’s brand.As the brand owner, you provide the factory with your product specifications, your logo and your packaging and the private label manufacturer produces and delivers the goods to your doorstep.Private label manufacturers are not retail stores and they don’t sell to the general consumer. Instead, they work with brands who are willing to purchase goods in quantity.In fact, every private label manufacturer has an MOQ or minimum order quantity.
The Difference Between Private Label And White Label Products
The terms “private label” and “white label” are often used interchangeably but they mean different things.
White label products are products produced by a company or factory that are rebranded under a different company’s trademark without any changes.
Typically, white label products are generic products made by a single manufacturer. This manufacturer allows businesses to use their own packaging and place their own brand on the product.
For example, XYZ corp sells generic unbranded USB sticks. Companies like IBM, Apple and Microsoft purchase these USB sticks from XYZ corp and place their own brand on the product.
The primary distinction between private label vs white label is that private label products are based on your own design and no one else can sell the exact same product.
Meanwhile, white label products are typically sold by many brands where the only differentiation is the brand label and the packaging.
Private Label Examples
If you look around, there are private label products sold everywhere. In fact, practically every brand that you see on the Internet is a private label brand.
For example, our online store, Bumblebee Linens, sells our own private label handkerchiefs and linens.
Nike sells their own private label shoes. Lego sells their own private label toys. Amazon sells their own private label knockoffs of popular selling products on their marketplace:)
There’s nothing really special about a private label product except that it’s a product that you own under your own brand and you get to call the shots.
How Profitable Is Private Label?
Compared to every other ecommerce business model, selling private label products carries the highest margins.
Here are some typical margins for dropshipping vs wholesale vs private label.
- Dropshipping – 10-30% margin
- Traditional Wholesale – 50% margin
- Private Label – 66%+ margin
It’s quite common for private label products to carry margins of 66% or higher. In fact, some of our private label products have margins greater than 90%!
As a result, private label is easily the most lucrative way to sell physical products online. In addition, you have full control over your branding, your packaging and your supply chain.
If you sell on Amazon, selling private label products also means that you will own the buy box nearly 100% of the time!
