Why you can buy the same product at different retailers for vastly different prices

Earlier this year, I was shopping online for an outdoor table. I found a round wooden one. It looked nice and was around $300, so I texted the link to my husband, Mike Biondi. Then I found another one — also round, same kind of wood, from a different retailer. $479. I sent him that link too. 

He texted me back: “This is the same table.”

And when I looked at it, he was right. The only differences were the retailer and the significantly different prices.

“What I found deeply funny was that you apparently did not notice when you sent me these links that they were the same table,” he said.

I’d been confused by what’s known as white labeling. This is when a retailer buys a product off the shelf from a manufacturer as is and slaps its own label (and its own price tag) on it. Many retailers may be buying the same product and doing this.

“It’s more common than you think it is,” said Natalie Kotlyar, who follows retail trends for the advisory firm BDO.

White labeling happens across vastly different categories: clothing, packaged food like ketchup, soap, as well as furniture and household items. Kotlyar said this is different from private label products, where a product is made specifically for a retailer.  

“That retailer has input on the design, on what goes into that product,” she said. “Whereas white labeling, what you see is what you get, and you just wrap your label around it.”

Kotlyar said white labeling is a way for retailers to add products — say, an outdoor table — to their inventory without doing the work of actually developing one. 

“They didn’t spend the money or the time from an R &D perspective,” she said. “They can design the label the way they want to. So, this way it looks like one of their own products.”

But in these cases, the retailer doesn’t have any control over the quality of what they’re selling. 

“There is a risk, if the product isn’t any good, that can damage your brand,” Kotlyar said.

There can be advantages to scale, though. Because the manufacturer is making a whole lot of tables, it can sell them to retailers at a lower price. The retailers can then pass those savings on.

“They can offer a less expensive alternative to their customer base,” Kotlyar said.

That is, if they want to. Stores set prices based on what their customers are willing to pay, said Suresh Acharya, who studies pricing and retail operations as a professor at the University of Maryland.

“What is the customer’s perception of the value of what you’re selling? And depending on the store, the consumers may have a different perception of the value,” Acharya said.

And for purchases like furniture, which are meant to last a while, he said people are more willing to go with a brand they associate with being high quality.

“For things that you don’t buy very often, you don’t want to not buy the right thing. And so the brand can then carry a premium,” Acharya said.

A couple years back, when Dane Hurtubise found he’d paid a premium for a bunch of white labeled furniture, he couldn’t stop thinking about it. 

“Because now all of a sudden, everything I see, I’m wondering, ‘Is this something that was white labeled? Something that I can get someplace else for less?'” Hurtubise said.

Hurtubise was already an entrepreneur, and he decided to create a business, called Spoken, to help people figure that out. His startup’s website is spoken.io. It lets users enter a URL or upload a picture of a product — a piece of furniture or home decor — and if it’s white labeled, it’ll show different retailers selling the same item.

“You see these really wild price spreads. You’ll see a couch that retails for $4,000 one place and $1,500 at another place,” Hurtubise said.

Sometimes, he said, shoppers will end up buying a more expensive option, even if they know they could get it somewhere else for less. 

“They might have a better return policy, or their shipping and handling might be smoother. They might have better customer support,” he said.

And, Hurtubise added, sometimes shoppers prefer to buy from a retailer they’re familiar with.

“Maybe the least expensive option is a store they haven’t heard of yet,” he said.

As for me and my husband and our table search, we decided on our own to go for the cheapest white labeled option we could find. It’s been a good table — though a few months after we bought it, it was damaged by termites.

That would have happened no matter what label was on it.