Is there a battle between private label vs white label companies? Probably more confusion than battle. To explain the difference between white label and private label, we have prepared this article: it will help you quickly understand the topic and discover the details of building relationships between teams in the professional product retail industry.
It is worth noting that white label and private label are similar concepts that have a common core but differ in details. In both cases, we are talking about the resale of goods or services on behalf of the company's brand. And in both cases, the products and services resold under the company's brand are produced by someone else. And that's where the similarities between private label and white label end.
In all other aspects, we are talking about completely different relationships between:
- B2B vendors — owners or producers of the original product or service;
- and B2C/B2B retailers — those who resell the original product or service under the new brand.
Understanding the difference between private label and white label is of great importance for market newcomers. Therefore, this article was prepared specifically for beginners in retail. If you are already experienced in marketing wars, we invite you to explore SmartyAds’ white label ad solutions right away.
What is a white label or a white label product?
What does white label mean in business? The term white label, originally hailing from the music industry, is used to refer to generic products or services created by manufacturers for sale by other retailers.
The resellers can then repackage these products, put their brand on, and sell them as their own. Similarly, white-label ad tech products mean that one can buy an unbranded platform or other solutions, customize it to their needs, and resell it under their brand name.
For many companies, this is a good deal, as they don’t have to create the actual product and can focus primarily on branding and marketing. Interestingly, sometimes different retailers can even charge differently for products of the same origin, because of their position on the market.
So, one can see that such a business model works notably well for companies with already established and popular brands. Moreover, this model also offers a lot of benefits to little-known startups, as it doesn’t require huge investments or experience.
In the IT industry white-label company has a primary focus on developing software solutions that other brands can label and resell as their own. Such white-label software has a lot of benefits. Let's review some white-label examples.
Why do businesses choose white label companies?
Let's review the case with ad tech white label providers; they have an existing product that they sell to other retailers who can capitalize on it. What benefits does a brand receive from it?
Reduced production costs
White-labeled software is pre-built which means it requires less labor to install or deploy (normally software development employs a lot of stages from coding to workflow organization and licensing). Here's an example of white-label DSP:
Reduced risks
Some argue that while labeling, a brand gets a generic product. However, in IT it highly pays off since the software is tested, so it eliminates possible malfunctions, bugs, and other related problems with functioning.
Simpler operation
In ad tech, the major difference between solutions built from scratch and white-label solutions also lies in user-friendliness. Such a solution is not used by one company only. Hence, developers do their utmost to make their technology intuitive and easy to operate: they adjust the user interface, and make important updates, and on-demand integrations.
Faster deployment
With white labeling, the brand can get the desired product much faster in comparison with building an identical product from scratch. Thanks to this retailers normally sell products much faster and thus, achieve profits more swiftly.
In ad tech, a brand adopts the same product and based on the pre-built tech core creates its own brand solution with its own brand name within several days.
What is the private label or private label product?
Now that we’ve clarified the white label definition, it is time to answer the question — ‘what is private labeling?’. One can say that a company uses private label products or services if those were designed and produced for sale by another company for a specific retailer exclusively.
Private label manufacturer or private label brands creates products following the resellers’ specifications, so the product is customized even before it gets labeled. That's called private labeling.
Private-label business models are widely used in the beauty industry, manufacturing, and outfit production. It is often more affordable to get these products via private labeling. This is why private label services have a huge potential.
Because of this, a typical retailer often goes to a private label manufacturer since the final product helps to compete with more recognizable brands.
For example, a retailer gets a private label product to offer a similar style of outfit for a lower price compared to other well-known clothing providers. In this case, the price is a factor that helps a retailer to become more popular than competitors.
As we can see, the concepts of white label vs private label are somehow similar, as the mechanics of how these business models work are very much alike. Nevertheless, the definitions give hints to us that some differences are so significant that they can play a decisive role in your business strategy.
So, let’s start the comparison, what is white label vs private label?
Full Comparison of White Label and Private Label
Okay, so we have come to the white labeling vs private labeling comparison. The table below provides a detailed assessment of both approaches based on the same criteria. We hope that this information is exhaustive for your needs. If not, please contact us for a consultation.
| Private Label | White Label | |
| Exclusivity | A private label manufacturer creates the product exclusively for one specific retailer, so competitive retailers aren’t likely to have similar products. If a reseller chooses to sell private label products, it will most likely have some specific features in its design, texture, or materials that resellers specify before the manufacturing process starts. | A white-label manufacturer creates the same product that can be available for multiple resellers, which means that for new companies in specialized industries, it will be much easier to enter the market with a pre-built solution. |
| Property owning | A private-label product or service is manufactured by a company that does not own the intellectual property rights to the technology. For instance, you contract a factory to produce a unique metal alloy according to a formula that is patented and owned by you. You then sell the metal under your own brand. Private label means that the manufacturer is not the owner of the technology. | A white-label product or service is the property of the company that offers it to you. For instance, you buy hunting knives made by a company utilizing their unique technology. These knives are branded with your logo and other attributes and are marketed on behalf of your company. No one knows that you are not the direct manufacturer of these knives. At the same time, even though you sell these knives under your brand, you don't know how to produce them. White label meaning that the manufacturer is the owner of the technology. However, there is an exception: in some cases, the technology can be bought back, and the ownership of the technology is transferred entirely to the retailer. |
| Industry choice | Private labels are generally more common for physical products, such as cosmetics, household items, outfits, etc. It is usually used by small businesses that focus on specific physical goods that don’t require great complexity in production. Private labeling is especially popular within the healthcare industry and consumable goods like food and beverages. | White label, on the other side, is a widely-used business model within the technology sector, especially branches like IT, marketing, and AdTech. White label can be used for physical products as well, so the scope of this model is somewhat bigger if we compare white label products vs private label. |
| Products’ customization | Private labeling by nature is more customizable than the white label, as this business model implies retailers are sending their specifications to the manufacturer before the actual production starts. | Usage of white labeling gives you the freedom to customize packaging, but usually by the time the deal is closed, products are already finished. However, that does not necessarily mean that resellers of white-label products have no options to change them. |
| Investment and ROI | Private labeling requires more investment, as it implies that a reseller conducts research and product development before the manufacturing process. This will probably take additional costs and require hiring additional professionals, but the ROI will also reflect the effort. This model allows you to sell a unique product, which is something consumers usually like and appreciate. So if you’re interested in selling unique physical products, private labeling can be potentially a more profitable option. | White-label products usually come at a lower cost of production, since it doesn’t require extra investments into the development process. If marketed correctly, white-label products can get you high ROI, but be prepared for stronger competition if it is a physical product. |
| Marketing strategy and pricing | In a private label model, a retail company that sells manufactured products under its own brand chooses an independent marketing strategy and sets the price of the products or services offered based on unique factors. Retailers can give the product any name or image they want. | In a white-label model, the situation is similar: the retailer chooses the marketing strategy and sets the price of the product according to its unique factors. The retailer is the one in full control of the advertising strategy and the whole marketing process, from brand image to customer journey path creation and finally, purchase. |
Taking into consideration previously listed differences, one can make a rational conclusion that private labeling vs white label manufacturing models is suitable for many companies. Still, the choice must be made depending on business goals.
For small businesses focusing on physically customizable goods, a better option is private labeling, while the white label has more advantages for internet-based businesses, especially in the field of digital advertising. We will consider the advantages of private label products vs white label for different businesses in one of the next sections.
Private labeling vs white labeling: software explanation
Many newcomers start to get confused about the possibilities of these two models when it comes to real-life business. Using the example of a demand-side platform, let's understand once and for all what is the difference between white label and private label.
- White-label DSP. It's simple: you pay money for the deployment of the platform, and then you start using it under your own brand and bring other advertisers and agencies to use it. The time to start working is counted in weeks.
- Private label DSP. Everything is complicated: the challenge here is that you need to find a company that will develop a demand-side advertising platform for you from scratch based on your needs, industry achievements, and other aspects. This way requires expertise both from the customer of the private label solution side and the side of the contractor.
As you can see, sometimes white labeling vs private labeling in software development is a choice without a choice. Because a ready-made white-label solution costs thousands for a monthly subscription. While private label will cost millions per year.
Evolving Trends in White Label and Private Label Adoption
Since we at SmartyAds specialize in information technologies and advertising platforms, we will talk about software private label or white label solutions. We emphasize that the situation in the software market may differ from the market of physical goods, as well as trends in the industry.
The main software industry trends include the following.
- Unlimited scalability: development teams create modern software products with the expectation that user workload requests will increase tens or hundreds of times in a short time. Software with limited scalability is a less competitive product.
- Customization and personalization: to meet business needs, the technical team must be able to implement a feature of any complexity on request. So software products become only the first step in the long chain of unique updates
- Niche market expansion: as technologies have become more accessible, it is now possible to promote standalone solutions for small niche needs.
- AI and machine learning: comparing private and white labeling, we have to say that all of them must meet market demands. This means actively involving artificial intelligence and machine learning technologies in the development of software for making data-driven decisions based on self-updating models that improve over time.
- Lowering the barrier of expertise: developers strive to simplify complex functionality with the help of intuitive interfaces and technical options that allow them to integrate features based on constructors and ready-made modules, which are easy to connect and test without the involvement of technical experts.
This list can be continued for a long time, but in general, the product identity of software looks like the above.
Which one to choose: private label or white label provider?
Both private vs white label models ensure that a reseller doesn’t have to put a lot of time and effort into the manufacturing process.
Product design and creation are usually also parts of the job the manufacturer does; although, a reseller can sometimes add specific details to the product or customize it after manufacturing. But generally speaking, both models allow you to focus on other aspects of your business and save time and money.
When to choose private label
The main distinctive advantage of private labeling is uniqueness. With private labeling, merchandisers get an opportunity to sell an exclusive product and worry less about competition. It also has good potential regarding profits, plus, it is easier to start without huge investments, especially when the right target niche is chosen successfully.
Private labeling is a great choice if you want to focus on delivering a specific type of product to a specific audience.
When to choose white label
The white label model is even easier and cheaper, given that the product is already developed and manufactured, so no additional research is needed from the retailer and the potential profits are higher.
White labeling gets even more promising if you already have an established client base, so the only thing you have to worry about is a good marketing strategy, the rest is done for you by the manufacturer. This is especially true for the technology sector, where the process of new solution development may take up months or even years.
With white labeling, you can get a finished solution customized for your business needs within a short time, one month tops.
This way, you can start earning almost immediately and the only thing you’ll have to worry about is building your business strategy and product marketing. Besides, sometimes even already established companies require changes and a shift to white label ad tech platform.
Best white label solutions for digital advertisers
As we have already mentioned in the previous section, white labeling is a fairly popular and beneficial option for digital businesses, including ad-tech and digital marketing.
Private label can also be beneficial for many retailers that strive to easily build their own products. Instead of wasting tons of time and money on developing your own solutions, which can be potentially risky, you can now purchase a pre-built platform tailored to your goals and tested on numerous other businesses.
Our offer includes several programmatic solutions, built by professionals for professionals. Work with publishers using our White Label Supply Side Platform or choose White Label Demand Side Platform if you want to focus on the advertisers’ side of the deals. To launch your own open programmatic marketplace opt for our White Label Ad Exchange SmartHub.
Contact us to jump into the world of programmatic advertising and start growing your business from day one!
FAQ block
AnswerThe difference between white label and private label in programmatic advertising is fundamental: either it is off-the-shelf software with a monthly subscription fee, or it is software designed from scratch by a team of developers under your leadership. The second option, private label, is available only to a few companies with millions of dollars in budget per year.
When considering such options as private label and white label, be sure to pay attention to the implementation budget for the chosen model, the time to enter the market, direct and indirect risks, the complexity of scaling and development, and the payback period.
The SSP + Ad Exchange example: we have dozens of customers who started their journey as a programmatic platform provider using our white-label solution. We also have analogs of private label solution examples, where the platform owner invested hundreds of hours in customizing the platform and then bought back the program code, moved to their servers, and became independent.
