What Is Private Labeling and How Does It Work?
A private label is a brand of products that is contracted by a third-party manufacturer and sold under the brand name of a retailer. The private-label owner independently shapes the product, including the quality of components, the product appearance, and packaging, and oversees its own way of private-label marketing.
Quite often, private-label products are compared to OEM or original equipment manufacturer products. Although in both cases the product is produced by a third party under a contract, in the case of an OEM product, its quality, functionality, and appearance are fully consistent with the same product sold under the manufacturer's brand.
Private labels are common in the retail, catering, and hospitality industries, while OEM products are mostly used in technically demanding industries.
For OEM products, you can guarantee that the OEM spare part or the entire unit will be the same as the original. For example, you can buy an SSD drive for a computer under the manufacturer's brand, or you can find the exact same drive that is installed in the PC at the factory, but it will be labeled under the brand of the PC manufacturer. In both cases, it is important for the SSDs to be completely identical, except for the sticker with the brand name.
People also often ask about the difference between private labeling and personal labeling. Personal labeling means branding a name of a highly professional or popular person. For example, show biz stars often start to sell cosmetics and wear apparel under their name. In this case, the private labeling and the personal labeling are identical.