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When selling on Amazon, choosing the right business model is crucial. White label and private label are two popular options, but which is best for your brand? While product quality is undeniably important, it’s not the sole factor in determining success. The choice depends on many factors, including your target audience, business goals, and available resources. What works for one seller might not work for another, even in the same product category.
Amazon has over 2 million active independent sellers and that number is growing—which means your competition is constantly replenished with fresh energy and novel perspectives. To stay ahead, your marketing and product strategies must be aligned. Making the right choice between white label and private label is a critical first step.
With consumer preferences inclined toward branded products—and Amazon increasing its emphasis on brand protection—it’s crucial for sellers to understand the differences between these two models. This post will help you make an informed decision that best aligns with your long-term business goals.
Selling White Label: What is it, and how does it work?
White label products are sourced from third-party manufacturers and sold as-is, but under the name of the seller’s own brand. Unlike selling under a private label, the seller has no control over the manufacturing or customization of the product. But they can order in bulk, get inventory delivered fast, and make use of dropshipping and other fulfillment options, such as Amazon FBA.
If you search a popular consumer product category on Amazon, such as phone chargers, you might see a lot of identical products offered by different sellers under different names. These are good examples of white label products.
Pros and Cons of Selling White Label
Pros:
- Lower Upfront Costs – You can start selling without having to invest in product development first.
- Launch Products Faster – White label products have already been developed and manufactured and can be purchased for resale immediately.
- Less Risk – You don’t have to invest your own money in testing the marketability of white label products or working the kinks out of their manufacturing process.
- Scalability – As your business grows, you can easily add more white label products to meet increasing demand without having to invest in production capacity.
Cons:
- No Uniqueness or Exclusivity – Nothing will stop your competitors from offering the same white label products. Your ability to brand your products is limited to post-production activities like labeling and packaging.
- Lack of Control – As a white label seller, you depend on third-party suppliers to maintain your inventory at the levels your customers demand, and any quality control issues will be out of your hands.
- Low Profit Margins – With multiple sellers offering the same white label products, there can be a great deal of incentive to lower prices, bringing profit margins down.
Selling Private Label: What is it, and how does it work?
Private label products are manufactured according to your branding and specifications. They may be coming from manufacturers that are producing goods for other sellers, but you get input on the design, materials, packaging, and other key details. Sales of private label products grew 6% last year, buoyed by the fact that consumers find them both trustworthy and a good value.
In the search for phone chargers mentioned previously, many of the results would be for Anker products, a private label brand that got its start on Amazon. Many Amazon sellers choose the private label FBA strategy to have maximum control over their brand and logistics.
Pros and Cons of Selling Private Label
Pros:
- Total Control – Private label products can be customized at the manufacturing stage, allowing for the development of unique and strongly branded products.
- Higher Profit Margins – With a unique product to offer, you have more options for how to market and price it—and fewer direct competitors.
- Access to Amazon Resources – Private label sellers can qualify for the Amazon Brand Registry, which includes a variety of tools for protecting and building your brand.
- Long-term Potential – Unique, branded products can build a loyal customer following that will provide you with repeat business if you can maintain quality and grow to meet demand.
Cons:
- Higher Upfront Costs – Launching a customized private label product means spending time and money on development, design, and production before you’ll have any inventory ready for sale.
- Supplier Issues – Private label sellers dealing with production and quality control issues must negotiate directly with their suppliers.
- Challenges with Brand-building – Many of the benefits of private label sales hinge on establishing positive recognition for your brand, which can be an uphill battle in competitive markets.
How to Choose Between White Label vs Private Label
There are many factors to consider when weighing these two options. We’ve put together a comparison chart to highlight the key differences:
| White Label | Private Label | |
|---|---|---|
| Products | Products are purchased as-is from the manufacturer, greatly limiting customization options. | Products can be customized to the seller’s specifications. |
| Branding | Branding can be applied to the labels and packaging. | Branding can be incorporated into the product design itself. |
| Upfront Costs | Initial costs are relatively low. Finished products can be purchased in bulk from the manufacturer. | You’re investing in the development and production of custom-made products, which means your upfront costs will be comparatively higher. |
| Time to Market | Finished products are received directly from the manufacturer and can be resold immediately. Dropshipping options are often available. | Products need to go through the full development cycle of design, production, and testing before they can be sold. |
| Exclusivity | Other brands can purchase and resell the same products from the same manufacturers as you. | You can design customized products that can’t be found anywhere else. |
| Quality | The manufacturer oversees quality control. | When working with private label suppliers, sellers often have some oversight over the production process and can be directly involved in quality control. |
| Profit Margins | With many competitors selling the exact same products, you’ll be under a lot of pressure to keep prices (and margins) low. | Having a unique product allows you to market it under premium branding and set higher prices. |
| Supply Chain | For any given product, the seller only has to deal with a single third-party manufacturer. | Private label product development might involve any number of suppliers for individual materials and parts, each with their own potential issues. |
| Scalability | Many manufacturers will already be producing in bulk, and can easily accommodate larger purchases as your business grows. | Private label manufacturers might (or might not) have production capacity for larger quantities. |
White Label vs. Private Label: Who’s it best for?
When choosing between the white or private label models, it’s essential to understand that neither model is objectively better. The best choice for you depends on a variety of factors, including your goals, growth plan, and vision for your business.
White label is the best choice for sellers who want the fast and easy route to getting an Amazon store up and running. If you’re trying to launch or expand on a tight budget or a short timeframe, white label is the way to go. White label is also the most cost-effective option if you have a following or customer base that will purchase a similar existing product that does not require customization.
The private label model is the best choice for sellers who want flexibility, uniqueness, and exclusivity. If you’re going to target a particular niche audience—or if you’ve got a brilliant idea for a product nobody has ever seen before—you’re going to need to go with a private label. With a private label, you can take on the risks and rewards of building your brand identity on the merits of a high-quality product line.
Labeling Makes the Invisible Visible
The choice between white label and private label is pivotal in shaping your brand’s identity and your journey as a seller. Both models offer unique advantages tailored to different business objectives. The goal of any product label is to increase your brand’s visibility—and choosing a suitable labeling model will help you build strong customer relationships and get the maximum value for your marketing dollar.
Whether you choose a private or white label, Noogata can help you conduct the market research and analysis that will uncover top-selling products with high-profit potential. Our AI-powered Amazon Assistant enables you to find winning product opportunities, create optimized product listings, and choose keywords that boost your conversion rate.
To experience the difference Noogata’s insights and analytics can make for your private or white label brand, book a free demo today.
