What is White Labeling? How Does It Differ From Private Labeling?

on under Digital Strategy.

root beerWhat is White Labeling?

A white-labeled product is something produced by one company and then sold under a brand name by somebody else. For example, "store brands" are almost always white-labeled products. A manufacturer with no consumer branding sells the product to the retailer, who can sell it for a higher price than the manufacturer due to their position in the marketplace.

Is White Labeling Your Services a Good Idea?

Short answer:

  • The primary reason not to white label your products or services is because it can make it difficult to get the word out about what you do.
  • The primary reason to white label your products or services is to capitalize on the branding and distribution channels of other brands.

Another way to answer the question is to ask yourself how similar your white label work is to the work of the brands you're selling to. For example:

  • It makes sense for computer part manufacturers to white label their services, because the work they do is very different from the branding and design work done by companies like Apple (although by now we're all aware of the humanitarian downside this kind of white-labeling can lead to).
  • It rarely makes sense for a marketing firm to white label their services, since they would be white labeling for other marketing agencies who do (or are supposed to do) essentially the same work. There are exceptions for more specialized work, of course, but this is the exception that proves the rule.

Is Buying White Label Services a Good Idea?

Once again, it depends:

  • If your business focuses primarily on brand building and innovative ways to use existing technologies, buying white labeled products is almost certainly a benefit.
  • If you can handle both production and branding yourself, for example, as a software company, white labeling probably isn't going to benefit you.

Is White Labeling a Good Idea for Startups?

It's a great idea for startups to buy white label products and services for anything that isn't core to their business.

It's a terrible idea, for the vast majority of startups, to try to start a white label business, or especially to pivot into one. Successful white label businesses have a reputation in the business community for providing consistent quality at a consistent price. The key word here is "consistency," not "quality" or "price." Most either focus 100% on building a white label business from square one, usually with quite a bit of existing capital, or build a reputation for themselves selling direct to consumer, then branch out or pivot into white-labeling after they've already found success.

What's the Difference Between White Labeling and Outsourcing, or Hiring Agency Work?

We'll use ourselves as an example. Northcutt is a marketing agency. Yes, much of the work we do is under the brand names of our clients. But we are not a white label business.

Why?

Because white-labeling is about buying a product or service with no brand name, and selling it under your brand name. When clients buy our services, they don't "sell" them to consumers. Consumers don't buy marketing, businesses do. When we sell our marketing skills to businesses, we are not white labeling.

Let's use a more complex example: software agencies. Is a software agency a white label business? It depends. If you are buying software from a software agency, and selling it to consumers under your brand name, then the software agency is doing white label work.

If, on the other hand, the software agency is building some back end interface for your employees, they are not doing white label work. They are selling to you, the business, not the consumer.

What about outsourcing?

Outsourcing is often white labeled, but not always. If you outsource a business process that you don't sell to consumers, it's not white labeling. If you outsource a product that you sell to consumers, but use their brand name as well as theirs, it's not white labeling either. It's only white labeling if you buy something and then sell it to others exclusively under your brand name.

What's the Difference Between White Labeling and Private Labeling

The only honest answer to this question is that you need to ask the person who is saying it if they think there's a difference.

Many (and probably most) people use the terms interchangeably.

Some consider private labeling to refer to an exclusive deal, where the products are white labeled for use by only one retailer or business. This would make private labeling a subset of white labeling, except that these people sometimes use "white labeling" to refer only to a product or service that is available to multiple buyers.

Others consider white labeling to refer only to services (thus being similar to "white collar"), and consider private labeling to refer strictly to products.

For the purposes of this FAQ, we are using the terms interchangeably, since there is no widely agreed upon difference between the two.

White Labeling Vs. Co-Branding

By now it's probably obvious that the difference between white labeling and co-branding is that co-branding means both brands make it onto the finished product.

Which is better? The smaller you are, the more likely co-branding is to help build your own brand, provided you pair up with a well-known brand that is also a good fit for your brand's message.

The bigger you are, the more co-branding can confuse your message if you aren't careful.

In general, it's difficult to co-brand with any business whose brand has a much wider reach than your own, unless it's a good fit and there is little chance of you becoming competitors.

Image credit: Roadsidepictures

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  • The last point about co-branding got me to think about how to relates to writers. For instance, most writers don't have the reach of major on-line publications so pitching their article to one of these bigger sites would be the equivalent of co-branding, correct?

  • Great article! I never knew there was such a contrast to white labeling vs private labeling. We've been restructuring our White Label Program in the Content Shop, but don't really like the stuffy web 2.0 verbiage. We want to venture our with some more friendly, trendy marketing terms if you will. I like the term: "Agency Reseller". What do you think?