Private Labeling vs. White Labeling
What’s The Difference When It Comes To CBD?
With over 2,000 CBD brands and counting, what are the differences between private label and white label CBD products? Both have their advantages but depending on which you choose it may come down to your business plan.
First let’s start off with the basics, what do the two have in common? Both describe products branded by a reseller. Both are great options for start-ups that are trying to enter the market with various CBD products.
Private Labeling: A private label product is sourced from a manufacturer and then sold under a retailers brand. Private label brands are usually less expensive than name brand products and sold exclusively through the retailer.
White Labeling: A white label product is sourced by a manufacturer and sold to brands that wish to relabel the product under their own brand. The product is already being sold to retailers under the manufacturers brand, however, since it has been white labeled to various brands the same exact product is now available under different brands.
There are advantages to both strategies. Private labeling depends on two main factors; distribution and minimums. As a retailer do you have enough retail outlets to justify having your own brand ? Do you have enough buying power to reach the minimums of the manufacturer? The main advantage for private labeling is exclusivity and pricing. If quantities are large enough, many manufacturers will not only change the labeling but will also customize product specifications for you. Sizing, packaging and formulation, are customized changes that differentiate your product from the existing name brand products that share the same shelves. Since the retailer has developed their own “house brand”, they can now afford to lower their price and compete with the name brands.
With white labeling, the product is already being produced and sold by a manufacturer or “Brand A”. The manufacturer then resells the same exact product to other brands who simply relabel the product under their own brand. In this case, it becomes a question of marketing and branding. Does your brand have more awareness than “Brand A” and can you justify a higher price based on brand loyalty alone? This option is also great for brands that are looking to expand their product line without investing in the cost of manufacturing. Let’s say your brand currently has a great reputation for CBD tinctures, yet you want to start testing the waters for CBD edibles. Why not team up with an existing manufacturer and have them produce the edibles for you?
Both options let you focus on marketing, branding and sales without going through the costs of manufacturing. The manufacturer has already gone through all the trials and tribulations and is an expert in production. The entry is less expensive and you can lean on their expertise for product knowledge.
Partnering with the right manufacturer is key. You depend on your manufacturer for quality, relabeling and delivery. Here are some tips to look for when working with a manufacturer.
· Request samples of existing products that are on the market.
· Request references of companies they already work with.
· Take a tour of the manufacturing facility whenever possible.
· Get in writing how they handle defects and damaged goods.
· Find out how their CBD is sourced and processed.
· Get Certificates of Analysis.
Many CBD brands use the private label and white label options as part of their product lines. These options are a convenient and affordable way to diversify product offerings without investing in manufacturing costs. If you’re looking to develop a brand and not the product, then white labeling or private labeling may be a great option for you.
For resources you can check out our CBDFollow Business Directory.