If you’re opening a coffee shop or are starting a dropshipping coffee business, you may find yourself asking a few different questions. One question may be, “Should I roast my own coffee or try white label coffee?” To answer this question, you must first understand the difference between white label coffee and private label coffee.
Choosing the right labeling for your wholesale coffee or wholesale coffee beans company is based on what will drive more customer loyalty (see customer loyalty program ideas). Another factor is what product will give you a better edge compared to the competition.
This article will cover white label coffee vs private label coffee and their advantages. This way, you’ll have a better understanding of your options when it comes time to start your dropshipping business and when choosing between wholesale and retail coffee.
White Label Coffee - What Is White Label Coffee?
White label coffee is a coffee product that is created by a manufacturer intended for resale, most often by wholesalers or dropshippers. An example of this coffee distribution process would be the best coffee roasters selling their coffee blends to multiple retailers. Each retailer then rebrands the coffee products as their own using custom packaging and labeling.
It’s common for a new business owner to contract a local coffee roaster to roast coffee for them, and then use their own branding on the packaging. The process involves rebranding and marketing pretested coffee products as your own. It’s a quick way to dive into the market and more cost-effective than private label coffee.
Choosing the white label route is a practical solution for coffee roasters and retailers. Roasters are able to have a consistent and reliable income without the need to worry about branding costs for their products.
For retailers, a white label coffee dropship business is more affordable than a private label. This is because the manufacturer doesn’t have to create a new process to develop the retailer’s desired product. Instead, manufacturers create the same coffee and distribute it to different retailers to sell under their own unique brands and labels.
Are you looking into starting your own eCommerce coffee business? Check out our Comprehensive eCommerce Business Guide eBook to get all of the information you need!
Advantages of White Label Coffee
Choosing to use white label coffee products may result in a fast and less-frustrating process when it comes to creating your own brand. The coffee supplier will do a lot of the heavy lifting while you take care of the sales, eCommerce marketing, coffee marketing, and mastering your eCommerce business plan.
White labeling doesn’t mean that you’re getting a lower-quality product. In fact, in most cases, the product has already been pretested in the market and proven to be successful. Some products even rank next to bigger brands.
Retailers tend to see higher margins with white label coffee compared to larger and more recognized brands. This is also true with dropshipping profit margin numbers. Learn more about the margin definition to understand what this means.
Disadvantages of White Label Coffee
While white labeling coffee products may seem inferior, there are a few downsides to this option. Retailers that find a coffee product that they like, run into limitations regarding the roast, flavors, and different characteristics of the coffee.
Oftentimes, they’re restricted to roasting coffee a specific way. After some time, this may become boring and seem repetitive.
Private Label Coffee - What Is Private Label Coffee?
Private label coffee is a coffee product that is created for exclusive use and sale by a sole reseller. In many cases, there are exclusivity agreements in place to ensure the reseller is the only party that may use and sells the product.
Most private label retailers are involved in a large portion of the product development process, including new coffee blend development. Private label coffee solutions take more time than white labeling. The costs are also greater, but it means that the product will be exclusive to their own brand and company.
Private labeling is commonly seen across many industries from clothing to food and cosmetics. Chances are that you are familiar with Amazon private label, Target private label, and Walmart private labels. Private label products are manufactured by one company and are sold under another company’s brand. Retailers are able to request product alterations in order to suit their needs and make them appeal to their niche market.
Read more about what is private label and private label dropshipping. This way you’ll be able to distinguish between white label and private products.
Advantages of Private Label Coffee
Having custom products that are specific to your brand comes with many advantages. It shows customers that your product is unique and may incline them to choose you over the competition.
The following are advantages of private label coffee:
- Retailers can make custom labels and packaging to meet their specifications. It also gives them inventory control over how much of their product they have in stock and in safety stock.
- Operators have control over the sale of their products, pricing, and marketing efforts. They’re also able to personalize the coffee with unique branding.
- Manufacturing companies make brand differentiation possible because no competitors will have the same label or have their coffee products associated with their brand.
Disadvantages of Private Label Coffee
Private label coffee products aren’t suitable for all business owners and entrepreneurs. There are obvious advantages to the private label process when it comes to revenue, but the limited creativity and lack of control might not appeal to everyone.
The following are disadvantages of private label coffee:
- When the coffee product volume that is purchased from the manufacturer is less than the minimum order quantity or MOQ, the cost savings may not be as much.
- Profit margins may decrease if the packaging designs are too complicated.
- There’s a higher risk with private label coffee because you might end up with a product that is hard to sell due to the customizations. Too many customizations and alterations of the product or packaging may confuse or mislead customers.
Differences Between White Label and Private Label Coffee
The main difference between white label coffee and private label coffee is that white label coffee products may not be altered or customized. While the coffee product itself will remain the same, the packaging, branding, and marketing may be customized with white labeling.
For example, say a coffee supplier creates a single-origin Brazilian blend. The coffee product may be sold to retailers under different identities, but the blend will be the exact same in the packaging.
With private labels, customization is possible. For example, companies may work with a coffee supplier to create a unique coffee blend for their customers. They may be interested in different roasting methods and flavor profiles.
After deciding on the ideal coffee, the product will be sold under a completely new brand and identity. This is similar to white label coffee, but it’s exclusive.
Many white label products won’t promote the source or supplier of the product. However, it’s possible for it to be in the fine print of the packaging. This is done to protect the client from liability. However, private label products carry all the responsibility.
Frequently Asked Questions About White Label Coffee vs Private Label Coffee
What Is the Difference Between White Label and Private Label?
The difference between white label and private label is that with private label, the products are sold exclusively through a single retailer. White labeling refers to multiple retailers selling a generic product under different branding and with different pricing for their niche.
Selling coffee online is possible through either white label or private label. It’s also possible to create a coffee bean subscription or coffee bag subscription business using the private label and white label methods. This may get you to create the best coffee subscription business. Learn more about how to start a coffee company and the coffee industry trends to see if it’s the right business for you.
How Do You Label Coffee?
A coffee label should include the following characteristics:
- Name of the coffee product
- Company information (including name and address)
- Net weight
- Ingredients
- Barcode, UPC code, or SKU number
Is White Labeling Profitable?
Yes, white labeling is profitable with the right product, strategy, and management. The product must appeal to customers and the company itself should follow a detailed business plan, similar to a restaurant business plan, and strategy. In order to be profitable, it’s also essential to have proper management of business finances.