Understanding Private Label: A Comprehensive Guide 2025

Blue30
Nov 20, 2024
7 min read

Updated: Aug 22

Private label is a term that refers to products manufactured by one company but sold under another company’s brand name. This practice allows retailers to offer exclusive items, expand their product catalogues, and often provide more competitive pricing than branded counterparts.

What is Private Label?

Private label products are those that are produced by a manufacturer for a specific retailer. The retailer then sells these products under its own brand name. For example, a grocery store might sell cereal produced by a third-party manufacturer under the store’s brand. This model has become increasingly popular among retailers looking to differentiate their product offerings and increase profitability.

Private Label vs. Branded Products

To understand private label, it’s essential to distinguish it from branded products. A traditional branded product is manufactured and sold by the same company. These companies spend years developing a strong brand identity and ensuring their products meet established quality standards. Examples include Coca-Cola, Nike, and Apple.

In contrast, the private label business model involves a product being made by one company but branded and sold by another. While these products may not inspire the same brand loyalty as traditional brands, they offer unique advantages, such as exclusive product lines and competitive pricing.

Private-label products are designed to be similar to existing items on store shelves but with unique formulations. For instance, a private-label chocolate chip cookie will have a distinct recipe that won’t be found under any other brand. This concept applies to various goods, including consumer electronics, jewellery, clothing, and more.

How Does Private Labelling Work?

The private-label business model involves collaboration between two types of companies:

1. Private-Label Manufacturers: These companies design and produce products according to the specifications of the retailer.

2. Private-Label Retailers: These companies brand, market, and sell the products to consumers under their own brand name.

A successful private-label partnership ensures a profitable pricing model for both parties involved. The manufacturer benefits from producing large quantities of products, while the retailer benefits from selling unique items under their own brand.

Private Label vs. White-Label Products

Private-label products are often confused with white-label products, but there are key differences. Both involve third-party manufacturers, but the main distinction lies in customization and exclusivity.

White-label products are generic and not custom-designed for any specific retailer. Manufacturers produce large quantities of these products, which are then sold to multiple retailers. Each retailer can rebrand these products under their own name. In other words, white-label goods are not unique to any single retailer.

Conversely, private-label products are unique and sold exclusively through a single retailer. Think of Costco’s Kirkland Signature or Amazon’s Basics range—these are private-label products, custom-designed and exclusive to those retailers.

5 Benefits of Private Labelling

Private labelling offers numerous advantages to both manufacturers and retailers, such as increased profit margins and greater control over branding. Here are five key benefits:

1. A Unique Value Proposition

Private labellers can design and sell their own products that stand out from established brands, store brands, or other private-label brands. This allows them to develop original product ideas and become known for signature items. Larger retailers might use private labelling to create value product ranges and undercut competitor pricing, while smaller businesses might focus on developing premium products they couldn't produce independently.

2. High Profit Margins

Private-label products often yield higher profit margins than resale products. Retailers can set higher price points for their unique private-label items or leverage their existing brand power to cut marketing costs. Depending on the level of customization and production scale, manufacturers might offer private-label products at lower costs than resale items.

3. Customized Pricing Control

Private-label sellers and producers can adjust manufacturing costs and price points on their product lines. This flexibility allows them to experiment with different pricing strategies to maximize profits.

4. Customized Marketing Control

Private-label retailers have the freedom to choose the marketing campaigns that promote their products. They are not bound by the sometimes rigid and outdated campaigns run by national brands.

5. Adaptability

Established brands may take months or years to change their product formula, pricing, or marketing strategy. In contrast, private-label sellers can pivot quickly, responding to negative reviews or low sales and adjusting their products and strategies to optimize performance.

Popular Private-Label Products

Private labelling spans across various industries. Here are some popular private-label products:

1. Coffee

The private-label coffee market has seen significant growth, especially online. Many coffee brands use coffee drop shippers that send out freshly roasted batches as soon as they are ordered.

2. Pet Food

Many pet stores, both physical and online, sell private-label pet foods produced by large manufacturers serving multiple clients. This approach is particularly common in the online pet food market.

3. LED Lights

Online marketplaces are flooded with private-label LED lights. While these products may have slight design variations, they often come from a few key manufacturers.

4. Phone Accessories

Many third-party phone accessories, such as chargers and phone cases, are produced by private-label manufacturers and sold under various brand names.

5. Apparel

Numerous online clothing retailers use private-label garment manufacturers for their products. These manufacturers can print custom designs on apparel and may also offer custom tailoring and leatherworking services.

6. Personal Care Products

A wide range of personal care items, from mouthwash to makeup, are produced by manufacturers that cater to private-label sellers. Although the formulas are customized for specific clients, these products are often made on the same production lines.

Getting Started with Private Label- Step By Step

1. Understand the Costs of Private Labelling

Private labelling requires an upfront investment, often more than new sellers expect. Be prepared to budget at least £1,000 to cover essentials such as:

Ordering and testing product samples
Setting up logistics and warehousing
Building an ecommerce website or Amazon listing

The bulk of your costs will come from:

Manufacturing – per-unit costs and minimum order quantities (MOQs)
Branding – custom packaging, labels, and design work
Marketing – product photography, social media, influencer outreach, and advertising campaigns

Knowing these costs upfront helps you calculate profit margins and avoid unpleasant surprises. Use a private label product cost calculator to track expenses and understand your breakeven point. If selling on Amazon Profit Runner is a great provider for this

2. Choose the Right Private Label Product

Your product is the cornerstone of your private label business. Select something that is:

High-margin – aim for at least 30–50% profit margin
Lightweight and easy to ship – reduces logistics and storage costs
Scalable – a product category where you can later expand (e.g., start with candles, then add room sprays, wax melts, or warmers)

If your first product doesn’t succeed, pivot quickly. Flexibility is key to long-term success in ecommerce.

3. Define Your Target Customer

Successful private label brands are laser-focused on their ideal customer. Ask yourself:

Who is buying this product?
What problems does it solve for them?
What emotions drive their purchasing decisions?

Clear answers will help you craft effective product descriptions, advertising copy, and social media content that resonates.

4. Make Your Brand Stand Out

In a crowded marketplace, differentiation is everything. To create a competitive edge:

Offer a unique feature or niche variation that competitors lack
Build a cohesive brand identity your packaging, website, and social media should all tell the same story
Position your private label products as premium, eco-friendly, or innovative where possible

A strong brand is a mix of product quality, target market insight, and clear positioning.

5. Create a Memorable Customer Experience

Great products attract customers, but great experiences keep them coming back. Focus on:

Engaging and educational content (how-to videos, blog posts, tutorials)
Consistent communication and follow-up emails
Packaging that surprises and delights customers
Loyalty programs or bundle discounts to encourage repeat purchases

Turn one-time buyers into lifelong fans.

6. Find Reliable Private Label Manufacturers

Choosing the right supplier is critical to building a profitable business. You can source manufacturers through:

Online directories – Alibaba, ThomasNet, and Faire are excellent starting points
Trade shows – meet suppliers face-to-face and inspect products firsthand
Google searches – include terms like “private label manufacturer [product type]” to find niche producers

When evaluating suppliers, ask about:

Quality assurance processes (look for ISO or GMP certifications)
Production lead times and MOQs
Available customization options
Equipment and manufacturing capabilities

7. Order and Test Samples Thoroughly

Never skip the sample stage. Before committing to bulk orders:

Request samples made with the exact materials and processes intended for production
Order from multiple manufacturers to compare quality
Test for durability, functionality, and packaging presentation
Confirm that what you see is what your future customers will get

8. Negotiate Clear Terms and Contracts

Once you choose your supplier, it’s time to negotiate:

Pricing tiers and payment schedules
Production timelines and delivery methods
Quality control expectations and return procedures

Put everything in writing. Contracts should also cover:

Intellectual property rights (your logo, brand, and packaging)
Confidentiality agreements
Dispute resolution procedures

💡 Pro Tip: For large or overseas orders, have a legal professional review your contract.

9. Build and Protect Your Private Label Brand

Your private label brand is your most valuable asset. Protect it by:

Registering your business (LLC)
Copyrighting your name, logo, and product designs
Creating a professional ecommerce website
Setting up social media accounts for brand awareness

Think of this as building a digital storefront that’s just as real as a physical shop.

10. Set Up Your Online Store or Sell on Amazon FBA

Whether you use Shopify, WooCommerce, or Amazon FBA, presentation matters. Ensure your listings include:

Keyword-rich product descriptions for SEO
High-quality, lifestyle-oriented product photos
Clear value propositions highlighting what makes your product unique

Once everything is ready, launch your private label product and start marketing to your target audience.

Conclusion

Private labelling offers a lucrative business model for both manufacturers and retailers. By understanding the differences between private-label and branded products, as well as the benefits and popular product categories, businesses can better leverage private labelling to enhance their product offerings and increase profitability. Whether you’re a large retailer looking to create value product ranges or a small business aiming to develop premium items, private labelling provides the flexibility, control, and adaptability needed to succeed in today’s competitive market.

Enter Blue30, a distinguished UK-based Amazon Prep Centre, specialising in comprehensive product preparation services for Private label sellers.

Our services encompass everything that you could need for your private label prep and logistics. We offer full fulfilment services for DC2 and B2B. With 60+ integrations and live time tracking and data points with our WMS. We can support with Amazon Vendor shipping and drip feeding. We also have the ability to ship FTL directly into Amazon FCs with our own ISA code. Find out more about our service here or request a free quote.