What Is a White Label Product?

White label products are sold by retailers with their own branding and logo but the products themselves are manufactured by a third party. White labeling occurs when the manufacturer of an item uses the branding requested by the purchaser or marketer instead of its own. The end product appears as though it's been produced by the purchaser.

Key Takeaways

White label products are made by one company and packaged and sold by other companies under various brand names.

Big-box retailers have been successful in selling white label items that feature their own branding.

Private label branding is a worldwide phenomenon that has been growing steadily since the late 1990s.

White label branding saves companies time, energy, and money in terms of production and marketing costs.

White label products are manufactured by a third party, not the company that sells them or necessarily even markets them. The advantage is that a single company doesn't have to go through the entire process of creating and selling a product. One firm can concentrate on producing the product, another on marketing it, and another can focus on selling it, each according to its expertise and preference.

The major benefits of white label branding are that it saves companies time, energy, and money in terms of production and marketing costs.

Another big advantage of private label brands is that the average transportation expenses might be lower than usual and the company would benefit from distributional economies of scale if a supermarket has an exclusive deal with a manufacturer. The retailer could sell the product for less and still reap a bigger profit margin because of lower transportation costs.

White label products may technically appear in any industry or sector but large retailers have done quite well with them. Companies like Whole Foods and Walmart have benefited by selling their own branded products that have been created by other manufacturers. This strategy allows retailers to maintain control over branding, packaging, and pricing while offering consumers exclusive products that align with their brand identity. 

Private label branding isn't limited to the supermarket segment. Major electronics manufacturers of top-tier mobile phones and computers often put their brand names on cheaper-priced white label products to expand their offerings.

Important

Private label brands have become increasingly popular, suggesting that consumers are becoming more sensitive to price and less loyal to their favorite traditional brands. The growth of private label brands is hurting national brands’ and the manufacturers' market share in many countries.

Beauty and cosmetics brands usually leverage white label products. These brands can collaborate with manufacturers to customize skincare, makeup, and hair care products under their branding. For instance, skincare companies may white label anti-aging serums or moisturizers, tailoring formulations and packaging to appeal to their target demographics. However, the skincare company itself would not be responsible for manufacturing the product.

Health and wellness companies often utilize white label products to offer a broad range of dietary supplements, vitamins, and herbal remedies under their own brand names. By partnering with reputable manufacturers, these companies can ensure the quality and efficacy of their products.

Food and beverage brands often utilize white label products to offer a wide array of private-label goods such as snacks, beverages, condiments, and packaged foods. By partnering with manufacturers, these brands can maintain control over product quality as more stringent health-code compliant production plants can generate the food items.

White label products don't always have to be tangible items. Service offerings have also adopted white labeling. Some banks use white label services like credit card processing when they don't have these services in-house. Businesses that have no banking operations often extend branded credit cards to their customers and this is also a form of white labeling. L.L.Bean Inc.offers its consumers a branded Mastercard, and Macy’s (M) offers its customers a branded card. Theirs is provided by American Express (AXP).

The concept of white labeling comes with numerous considerations, both positive and negative.

The U.S.-based warehouse club operator Costco (COST) is one large retailer that's being creative with branding with its Kirkland brand of private-label products. Does this mean that Costco makes all the Kirkland products you see on the shelves? Not at all. They simply contract with various producers that have agreed to put their products into the Kirkland packaging.

A Kirkland-branded product often sits next to the national brand that makes the product on the shelf: identical products, different names, and the national brand selling at a higher price. Costco sells Saran Wrap. Saran is a trade name owned by S.C. Johnson & Son but Costco also sells its own Kirkland Signature stretch-tite plastic food wrap.

Costco has further blurred the line between national brands and private labels by using premium offerings and co-branding strategies with the likes of Starbucks (SBUX), Quaker Oats, a subsidiary of PepsiCo, Inc. (PEP), and Tyson Foods, Inc. (TSN).

What Are White Label Products?

White label products are manufactured by one company but branded and sold by another company as their own. This arrangement allows businesses to offer new products without having to invest in the production process.

Where Does the Name "White Label" Come From?

The term "white label" suggests a blank canvas that can easily be converted to a personalized label.

What Is a Tangible Product?

A tangible product is something you can touch and see before you commit to buying it, unlike an idea, concept, or service. You can gauge its quality by examining it. You generally can't assess the quality of an intangible product like a service until after it's completed.

How Do White Label Products Differ From Private Label Products?

White label products are generic and sold to multiple retailers who rebrand them. In contrast, private label products are made exclusively for a specific retailer, often with customized specifications and designs.

What Are The Costs Involved In White Labeling Products?

The costs of white labeling products vary depending on the product type, customization level, and order quantities. Initial costs typically include product development fees, sample costs, and packaging design. There are also production costs, which can include manufacturing, packaging, and labeling expenses.

A white label product bears the branding and logo of a retailer although it’s manufactured by another party. The manufacturer labels the product according to the retailer’s wishes rather than using its own brand or logo. These products are commonly labeled with the retailer’s name although the retailer didn't manufacture them. Both consumer product executives and retail executives tend to believe that co-branding between retailers and traditional national brands is a win-win situation.