What Is a Private Label? How Private Labels Work (2026)

The private-label market is estimated at $277 billion in 2025 according to the Private Label Manufacturers Association, growing at four times the rate of national brands. For merchants, this shift represents an opportunity. By outsourcing inventory management and product manufacturing to an established supplier, entrepreneurs can focus on other aspects of the business.

This guide covers how private labeling works, how to find a supplier, and how to launch a private-label product line on Shopify.

What is a private label?

Private labeling is a business model in which a retailer sells products manufactured by a third party under the retailer’s own brand name. These products are also known as store brands, house brands, or private brands.

Retailers provide specifications to a third-party manufacturer to make the products, which they then market and sell under their own brand.

Retailers use private labeling to:

• Sell exclusive products unavailable elsewhere
• Avoid brand markups on inventory
• Differentiate their product offering from competitors
• Sell branded products without investing in manufacturing

It’s worth noting that private labeling is different from reselling branded products. When you resell, you’re offering items made and branded by another company, often at prices set by the brand itself. With private labeling, however, you own the brand, control pricing, and shape product marketing. Reselling means selling someone else’s brand; private labeling means building your own, without building a factory.

What is a private label product?

A private-label product is an item made by a third-party manufacturer but sold under your brand.

The product itself already exists in some form, but you customize key elements, including:

• Ingredients
• Materials
• Features
• Packaging
• Labeling

In practice, private labeling varies by product category:

• Beauty and skin care. You work with a cosmetics manufacturer to create a moisturizer using a custom formula, fragrance, or ingredient mix, then package it under your own brand name.
• Supplements. You adjust a supplier’s base formulation by modifying dosages, flavors, or delivery formats (e.g. capsules vs. powders).
• Food and beverage. You introduce a unique recipe or flavor profile to an existing production process, such as cookies or sauces.
• Electronics. You sell wireless earbuds with customized features, branding, or accessories produced by an established factory.
• Apparel and accessories. You customize fabrics, cuts, colors, sizing, and labels while outsourcing manufacturing.

What distinguishes a private-label product isn’t a new invention. It’s a proven product customized to your brand specifications.

Private label vs. white label vs. dropshipping

Private labeling, white labeling, and dropshipping are three models that let retailers sell products without manufacturing them. Where they differ is in how much control retailers have over the product, how much inventory investment is required, and how exclusively the product is tied to one brand.

Private label vs. white label

Private-label goods are often confused with white-label products. While white labeling also involves third-party manufacturers making products on behalf of retailers, those products aren’t custom-designed like they are with private labeling.

A white-label manufacturer produces large quantities of generic items and sells them to multiple retailers. Each retailer sells those products under their own brand name. Whereas, private-label product lines are unique and sold exclusively through a single retailer.

Private label vs. dropshipping

Private labeling and dropshipping both let you sell products without manufacturing them yourself. They differ in inventory investment, brand control, and product exclusivity:

How to decide which model is right for you

The model that fits depends on your goals and where you are in your business:

Dropshipping requires little upfront investment and no inventory management, making it a common starting point for new store owners. Private labeling requires sourcing, customization, and inventory investment—but it gives you full control over branding, pricing, and product exclusivity.

Consider dropshipping if you want to:

• Test product demand with minimal upfront costs
• Launch without managing inventory
• Move quickly to market

Consider private labeling if you want to:

• Sell products exclusively under your own brand
• Control pricing, packaging, and positioning
• Build a differentiated product line

How does private labeling work?

In the first half of 2025, private-label dollar sales rose 4.4%, compared with 1.1% for national brands, according to the Private Label Manufacturers Association. The model involves two types of companies:

• Private-label manufacturers, which design and produce products based on a retailer’s specifications
• Private-label retailers, which brand, market, and sell those products directly to customers

As the retailer, you partner with a supplier that already produces similar products and customize elements like ingredients, materials, packaging, or features.

The private-label process typically covers these stages:

• Research. Identify a product category, assess demand, and review competitor offerings.
• Supplier sourcing. Find and vet manufacturers that produce your target product type.
• Product customization. Define your specifications: formula, materials, packaging, and labeling.
• Sampling. Request and evaluate product samples before committing to a production run.
• Production. Place your first order and confirm quality control processes with the supplier.
• Branding and listing. Finalize packaging, photography, and product listings.
• Launch. Make the product available in your store and across any additional sales channels.

5 benefits of private labeling

NIQ reports that 75% of consumers say private-label products offer good value, 72% view them as strong alternatives to national brands, and 59% of US consumers trust store brands because they’re endorsed by the retailer. For store owners, the model offers distinct advantages:

1. A unique value proposition

Private labelers design and sell distinct products unavailable elsewhere. In a 2025 Shopify survey of store owners, 48% cited product quality as their most common competitive advantage.*

Private labeling supports differentiation at both ends of the market. Some retailers use it to create value-priced product lines that compete on cost, while others use it to develop premium offerings under their own brand.

2. High profit margins

Private-label products can deliver higher profit margins than resale products. Buying directly from manufacturers removes brand markups and intermediary costs, and selling under your own brand reduces competition from retailers selling the same product.

Because retailers have control over their own private-label brands, they also have greater flexibility to set their own prices based on the product’s value and positioning rather than competing against the same SKU sold elsewhere.

Factors affecting private label profit margins

Several factors influence how profitable a private-label product can be:

• Product category. Profit margin potential varies by category. Beauty, supplements, and specialty foods can support premium pricing. Commoditized products compete more heavily on price.
• Order volume. Per-unit production costs decrease at higher order volumes, which affects the margin available at a given retail price.
• Customization level. Basic customization keeps production costs lower. Advanced formulas, unique materials, or premium packaging increase costs but can support higher retail pricing.

3. Customized pricing control

Private-label sellers set their own prices rather than following those suggested by a brand. This gives store owners more flexibility to adjust pricing based on production costs, positioning, and sales channel, within the constraints those factors create.

4. Customized marketing control

Private-label retailers own their brand narrative and run their own marketing campaigns, independent of any national brand’s messaging or positioning.

5. Adaptability

Private-label sellers can adjust formulas, materials, packaging, and pricing without going through a national brand’s approval or licensing process. Changes are negotiated directly with the manufacturer, which keeps the decision within the seller’s own operations.

Private label drawbacks

Private labeling comes with trade-offs. Common challenges include:

• Dependence on third-party manufacturers
• Less flexibility for innovation
• Lack of established brand recognition

Dependence on third-party manufacturers

Private labeling means relying on an external manufacturer for production. Delays, quality issues, or changes on the supplier’s end—including price increases, ownership changes, adjusted minimum order quantities, or discontinued products—can affect inventory availability and product continuity.

Store owners can reduce exposure by requesting samples before committing to production runs, maintaining a small inventory buffer, and establishing agreements with backup suppliers.

Less flexibility for innovation

These manufacturers work from an existing range of formulas, materials, and components. That range defines what’s available for customization, which means product changes are constrained by what the manufacturer can produce.

In regulated categories, product changes may also require additional steps before launch:

• Beauty and skin care. Formula changes can require safety assessments and updated ingredient labeling under FDA cosmetic regulations.
• Food and beverage. New recipes or ingredients may need updated nutrition facts panels, allergen disclosures, and facility registration review.
• Supplements. Changes to ingredients or dosages may require new Certificates of Analysis, updated labeling, and review against FDA current good manufacturing practice (cGMP) standards.
• Electronics. Hardware modifications may need retesting for FCC compliance and safety certifications such as UL or CE marking.

Lack of established brand recognition

Private-label products launch without the recognition that national brands have built over years of marketing spend. In a 2025 Shopify survey of store owners, 43% cited brand reputation as their second most common competitive advantage, reflecting how central trust is to purchase decisions.*

First Insight’s 2025 study on private-label consumer behavior found that 45% of surveyed consumers permanently switched from a national brand to a private label when the product met or exceeded expectations. That switch depends on getting a first purchase—something new private-label brands have to earn without existing recognition to draw on.

Building that trust requires investment in packaging, product quality, and consistent brand presentation across every customer touchpoint.

Is private labeling right for your business?

Private labeling requires upfront investment before the first sale. Minimum order quantities, sampling costs, packaging, storage, and launch marketing all land before revenue arrives. In a 2025 Shopify survey, 79% of store owners reported using profits to self-fund growth, and 20% said they wished they had waited for consistent cash flow before scaling.*

The model fits stores that have proven demand and enough margin to fund inventory in advance. Store owners without that foundation may find dropshipping or Shopify Collective a lower-risk starting point. Shopify Collective lets store owners sell products from other Shopify brands without holding inventory, which keeps upfront costs low while demand is still being established.

Private labeling may be a good fit if:

• Demand for the product category is already validated
• Upfront capital covers inventory, samples, packaging, and launch marketing
• The product category’s quality and compliance requirements are understood
• Sourcing and manufacturing timelines fit the business’s operational capacity

Dropshipping or reselling may be a better fit if:

• The store is pre-revenue or early stage
• Product-market fit hasn’t been confirmed
• Upfront inventory investment isn’t available yet

How to choose the right private label manufacturer

Finding a manufacturer involves researching the market, vetting suppliers, and confirming product quality before committing to a production run.

• Research your market and product needs
• Find private label manufacturers and suppliers
• Evaluate manufacturers
• Request samples
• Negotiate terms

1. Research your market and product needs

Start by reviewing competing products in the category:

• Features customers respond to positively
• Commonly reported complaints or gaps

From there, define product requirements. This includes materials, design features, and any category-specific manufacturing processes (such as fabric treatments for clothing or flash freezing for food). Also establish an initial order quantity and budget that accounts for per-unit costs, warehousing, shipping, customs fees, and any required testing.

2. Find private label manufacturers and suppliers

Online sourcing platforms, trade shows, and search engines are common starting points for finding private-label manufacturers:

Alibaba

Alibaba.com is a global B2B sourcing platform covering categories such as apparel, electronics, beauty, and home goods. Supplier profiles include verified credentials, minimum order quantities (MOQs), and transaction histories.

ThomasNet

ThomasNet is a directory of North American manufacturers and industrial suppliers. It covers categories including electronics, packaging, and regulated product types, and lists suppliers by location, certifications, and capabilities.

Faire

Faire is a wholesale marketplace for independent brands. It lists suppliers across lifestyle, home, beauty, and gift categories—with some that offer private labeling or product customization options.

Trade shows

Industry trade shows connect retailers directly with manufacturers. Category-specific shows bring together suppliers familiar with the relevant product standards and compliance requirements.

Search engines

Searching for a product type alongside terms like “private label manufacturer” or “contract manufacturer” returns direct supplier results not always listed on sourcing platforms.

3. Evaluate manufacturers

Review certifications relevant to your product category when evaluating manufacturers. The International Organization for Standardization (ISO) and Good Manufacturing Practice (GMP) certifications indicate a manufacturer meets defined quality and process standards.

Finding the right manufacturer often requires contacting many before committing to one. “We sent probably, no joke, 500 inquiries on Alibaba,” said Dan Demsky, co-founder at Unbound Merino. “From that, let’s say a hundred got back to us. And from those hundred, maybe 20 seemed like we could even talk to them. And from those 20 that we started talking to, five of them we really liked and we got samples. From those five, three of them seemed good. And we ended up working with two of them,” Dan told Shopify Masters.

Must-have conversations

Have detailed discussions about:

• Their ability to meet your design requirements
• Typical production volume and lead times
• Available customizations
• Manufacturing processes and equipment
• Quality control checkpoints

Common red flags to watch for

Be cautious if a manufacturer:

• Avoids sharing certifications, test results, or quality control details
• Refuses to provide samples or pushes for a large order without sampling first
• Communicates inconsistently or gives vague answers to specific questions
• Can’t clearly explain lead times or production capacity
• Offers pricing significantly below comparable suppliers without explanation

Manufacturer due-diligence checklist

Use this checklist to compare potential manufacturers:

• Samples meet your quality standards
• Relevant certifications for your product category are in place
• MOQs and lead times fit your current order volume
• Communication is clear and responsive
• Pricing structure accounts for quality and reliability alongside cost

4. Request samples

Samples confirm whether a manufacturer can meet your product specifications before a full production run. When requesting samples:

• Ask for samples made with the exact materials and processes intended for production
• Order from multiple manufacturers to compare quality
• Test samples for durability and functionality
• Check packaging, if relevant to your product

5. Negotiate terms

Once a manufacturer is selected, negotiate pricing tiers, payment schedules, delivery time frames, and what happens if products don’t meet agreed quality standards.

Manufacturing contracts typically cover:

• Pricing and payment terms
• Production timelines
• Quality standards
• Intellectual property rights
• Confidentiality requirements
• Dispute resolution procedures

A legal professional can review contracts before signing, particularly for overseas manufacturers where jurisdiction and enforcement vary.

Private label packaging and logo basics

Packaging serves two functions. It protects the product during shipping and storage, and it communicates the brand to customers at the point of unboxing or purchase. 

Decisions made at the packaging stage affect product presentation, fulfillment requirements, and compliance obligations.

Packaging format

Packaging format depends on the product category and sales channel. Common options include:

• Boxes and cartons. Used for electronics, cosmetics, and food products requiring structure and protection.
• Pouches and bags. Common in supplements, snacks, and personal care, where flexible packaging reduces shipping weight.
• Bottles and jars. Standard for liquids, creams, and powders across beauty, food, and supplement categories.
• Poly mailers and wraps. Used for apparel and soft goods sold directly to consumers.

Logo and branding placement

Manufacturers typically print or apply branding directly to packaging rather than the product itself, though some categories support both. Confirm with your manufacturer which surfaces are available for branding, what file formats they accept, and whether dieline templates are provided.

Regulated product labeling

Some categories carry mandatory labeling requirements beyond branding, such as:

• Food and beverage. FDA nutrition facts panels, ingredient lists, allergen disclosures, and net weight.
• Supplements. Supplement facts panels, FDA disclaimer language, and facility registration details.
• Beauty and skin care. Full ingredient lists (INCI format), net weight, and country of origin.
• Electronics. FCC ID, certification marks, and safety warnings where applicable.

Confirm labeling requirements with a compliance professional or the relevant regulatory body before finalizing packaging artwork.

How to sell private label products online

Getting products to market involves setting up a store, listing products, and building the marketing and operational infrastructure to support sales. In a 2025 Shopify survey of store owners, 37% reported that marketing is the top year-one challenge.*

Set up your online store

An online store is the foundation for selling private-label products direct-to-consumer. Shopify’s store setup guide covers the steps to configure your store, including domain, payment methods, and shipping settings.

Create product listings

Product listings require:

• A product title and description that accurately reflects specifications and intended use
• Product photography displaying the item from multiple angles
• Pricing that accounts for production costs, shipping, and target margin
• Inventory quantities, entered in the Shopify admin under Products

Configure shipping and fulfillment

Shipping setup covers carrier selection, rate configuration, and label printing. Shopify Shipping lets store owners buy and print labels directly from the Shopify admin, with pre-negotiated rates from USPS, UPS, and DHL Express depending on plan. 

Configure shipping zones and rates under shipping and delivery in your Shopify admin.

Build your marketing

Marketing private-label products requires building brand awareness without the recognition that established brands carry. Core channels include:

• Email marketing. Shopify Email lets store owners create and send campaigns directly from the Shopify admin. Set up Shopify Email to reach customers after purchase and recover abandoned carts.
• Paid social and search. Connect ad accounts under Marketing in the Shopify admin to run campaigns on Meta, Google, and other channels.
• Organic search. Add meta titles, meta descriptions, and alt text to product pages and blog content via Search engine optimization in the Shopify admin.

Manage inventory

Track stock levels and set low-inventory alerts in the Shopify admin under Inventory to avoid stockouts between production runs. Private-label inventory planning requires accounting for manufacturer lead times when reordering.

6 examples of private-label products

Private-labeling spans most consumer product categories. Six common examples include:

1. Coffee

Private-label coffee is produced by a contract roaster and sold under a retailer’s own brand. Retailers customize the roast profile, blend, packaging, and format (such as whole bean, ground, or pods). Major retailers price private-label coffee 20% to 30% below branded alternatives, according to Market Data Forecast.

2. Pet food

Contract manufacturers produce pet food formulations for multiple retailers, who sell the products under their own brand names. According to Future Market Insights, the global private label pet food market is projected to grow from $2.5 billion in 2025 to $12.2 billion by 2035, at a compound annual growth rate (CAGR) of 17%.

3. LED lights

LED lighting components are produced by a small number of manufacturers and sold by many retailers under different brand names. Retailers customize housing design, packaging, and product specifications. The global LED lighting market was valued at $106.9 billion in 2025, projected to reach $197.03 billion by 2033, according to Grand View Research.

4. Phone accessories

Cases, chargers, and cables are among the most common private-label electronics products. A retailer works with a manufacturer to produce accessories with custom branding, colorways, or packaging while the underlying components remain standardized. The global mobile accessories market was valued at $84.06 billion in 2025, projected to reach $118.43 billion by 2029, at a CAGR of 8.5%, according to MarketsandMarkets.

5. Apparel

Clothing retailers work with garment manufacturers to produce items under their own label, customizing fabrics, cuts, colorways, sizing, and labeling. The private-label apparel market is projected to reach $147.5 billion by 2033, growing at a CAGR of 8.9% between 2024 and 2033, according to HTF Market Insights.

6. Personal care products

Manufacturers produce personal care formulations, including skin care, hair care, and cosmetics, for multiple private-label clients. Retailers customize ingredients, fragrance, packaging, and labeling. Grand View Research estimated the global private label cosmetics market at $10.64 billion in 2024, projected to reach $14.39 billion by 2030.

3 examples of private label brands

Three retailers with established private-label brands:

1. Kirkland Signature

Launched in 1992, Kirkland Signature is Costco’s private-label brand spanning groceries, apparel, household goods, pet food, and more. Products are manufactured by third-party suppliers and sold under the Kirkland name exclusively at Costco.

According to Costco CEO Ron Vachris, Kirkland Signature accounts for about a third of Costco’s total sales. The brand generated $90 billion in sales in 2025, according to a report presented at Costco’s 2026 annual meeting of shareholders.

2. Amazon Basics

Amazon launched Amazon Basics in September 2009 as a private-label collection of consumer electronics accessories. The line has since expanded to include home goods, office supplies, pet supplies, and travel products.

Amazon Basics products are priced to compete with national brand equivalents in the same categories on Amazon’s marketplace. Charging cables, batteries, and bedding are among its most-purchased product lines.

3. Harrods label

London department store Harrods sells products under its own brand across food and beverage, fashion, accessories, and home goods. The tea range, for instance, is packaged in Harrods-branded tins and sold in-store and online.

Unlike Kirkland Signature and Amazon Basics, which position on value, the Harrods label is considered the premium end of its categories.

* Disclaimer: Based on a 2025 survey of 500 Shopify merchants conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established merchants with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all merchants.