Amidst the cut-throat business competition today, the prospect of slapping your brand’s name on third-party merchandise and later on presenting it as your own can be irresistibly endearing. White-labeling, as it’s widely known, is sometimes the perfect way of killing off competition and gaining a competitive edge. And legal as this is, the norm is entirely acceptable in business.
What is a white-label product?
White-labeling isn’t something new in the business world, although it doesn’t mean that such products are of inferior quality. In the food industry, Costco’s Kirkland and Kroger’s Value brand are some perfect examples, similar to Target’s Up & Up Brand as well as a host of products in business marketing. The practice is experiencing a resurgence of some sort given that its popularity had dipped in the recent past.
A white label product is an item, lawfully re-packed and rebranded, even though someone initially manufactures it. White-labeling is a term, mostly reserved for generic commodities that are produced en-masse for a broader market. You just remove the brand and logo from the end product, replace it with your own and resell.
How the concept of white labeling works
You are probably wondering why a manufacturer would find it great to settle for little profits and ‘feed’ its competitors with a constant supply of the items to be white-labeled. Well, as would any distinguished white label marketing solutions expert would tell you, the whole art is beneficial for both parties. Ideally, white-labeling a product presents a win-win situation for both the original manufacturer and whoever accepts to resell them.
By instantly selling its products rather than spending time and money designing and developing it further, the manufacturer recoups its investment quickly. The third-party dealer who then repackages and rebrands the commodity earns its profits while avoiding the costs and hassles of manufacturing it.
If you are keen when doing your shopping, then you must have noticed some products sold under the retailer’s own brand. Most of them are white-labeled and sold as store brand goods and thus offered at a discount relative to other popular brands.
But, here’s how it works.
First, the original manufacturer undertakes to produce the commodities in massive quantities. The intermediary comes and buys the readily produced goods, under an agreement that they will repackage them. And the cycle continues that way!
Through this arrangement, more goods are produced faster, and both parties save a lot in manufacturing and processing costs. And this division of labour tasks the manufacturer with producing the items while the intermediary does the marketing aspect of it. Sadly though, it is the customer who meets the costs of all additional expenses incurred by the reseller.
The glaring truths about white-labeling
Aside from the fact that the intermediary pushes the eventual costs to the consumer, there are some truths about this whole arrangement.
- Lots of items we buy on a day-to-day basis are white-labeled, even when they may not have such a tag. From foodstuff, programs and software, wearables, electronic products and lots of others, most of them fall under this category. But white-labeled products aren’t restricted to the manufacturing world alone since digital services are also available in white-labeled packages.
- White-labeling is rife in the digital space, especially in the digital marketing space: one handles the massive back-end work while another independent agency does the marketing bit. The final customer gets quality services while the two collaborating parties share the costs paid for the services rendered.
- The arrangement is acceptable and legally permissible in the business world. The pact between the manufacturer and the reseller, however, is mostly shrouded in anonymity. This serves to protect the integrity of reseller parties and ensure the buyer doesn’t suspect that the alternative products are mainly from the same manufacturer.
White-labeling isn’t without some remarkable benefits though!
White label partnerships are in different forms, although it is the advantages that matter in the long run. The benefits are mutual, regardless of whether it’s a B2B white-label, B2C white-label or White-label SaaS type of arrangement. Developers prefer to engage white-labelers as a way of growing their revenues with minimal outlay.
With that, the following are some of the benefits of white labeling a product:
1. Would you like to publicize your product? White-label it
That’s right – the best way of boosting the visibility of a commodity and acquire customers while at the comfort of your office is to allow white-labeling of it. By so doing, the product seamlessly broadcast its brand name without making the commodities appear obnoxious in the market. All you need is to find the most suitable third-parties to team up with.
2. It’s easy to be a reputable dealer of top-quality commodities
When you know the quality of a particular product is incomparable, you will be interested in white-labeling it. By investing in it, you will be confident that your customers will not hesitate to buy it. The main benefit here is that such a product could have undergone thorough beta tests, revisions, troubleshooting, and lots of other fine-tuning processes. And all you’ll need to do is to just repackage and sell as your own!
3. Technically, it’s likened to hiring an expert in-house developer, for a fraction of the typical costs
Developing your own products from scratch would cost a fortune, even before you set out to market them. If you channel such massive investment to packing and selling someone’s exact-same product, you will be retroactively paying the developer while earning your share from it. In short, white labeling is akin to hiring the same producer and entrusting them everything, only to come and sell the final product at a profit.
4. It is the best way to strengthen the loyalty of clients
When the product starts to earn a positive image and reputation from its users, the customer loyalty starts to solidify. The customers will, however, rate it highly if they find the product to be of dependable and satisfactory quality. So, for it to earn the loyalty of customers, you might have to white-label it!
5. White-labeling equals getting commodities of incredible quality
The expertise employed by the manufacturer, whose only focus is to produce, means the item churned out is of the best quality. The manufacturer will not have a reason to dedicate its resources to marketing the item, leaving that to those who white-label it. It is a perfect arrangement that ensures that goods of excellent quality are white-labeled.
6. Great money and time-saving hack
It is perfectly okay to manufacture, market, and sell your commodities on your own. However, if you choose to either build alone or white-label other companies’ products, there’s no doubt you will have a bigger profit margin. You will also avoid the hitches and bottlenecks that come with being a ‘Jack of all trades.’ After all, why waste time and resources reinventing the wheel, yet benefits abound when you white-label.
7. You set your own profit margins
Having agreed to white-label a product, your focus automatically shifts to earning profits from it. And because the item is of excellent quality and the relevant regulatory authorities have already approved it, nobody will point a finger on what price you choose to sell it for. That’s why white-label dealers enjoy huge profits, despite incurring no donkey work.
8. The luxury of choice
You can easily give your customers a set of alternative products, all serving the same purpose, by white-listing them. Essentially, this is what many do and end up not losing a single customer to their next-door competitors. Instead of wasting time dwelling on a single product, most of them create white label commodities, under different names and price them differently.
9. All blame goes to the manufacturer
The business world isn’t all smooth, especially in the digital space. As a business owner, however, if you deal in white-listed commodities, you’ll be immune from all the blames and complaints when things go awry. It is the manufacturer who often takes responsibility for any glitch and works on fixing or updating the problem.
Be wary though – It Has Some Downsides
It’s undoubtedly true that this whole concept is beneficial. You stand on the skilled and super-talented individuals, pack and deliver items of unsurpassed quality and earn your ROIs, hassle-freely. While at it, the image of your brand keeps growing.
But away from the benefits above, the concept of white-labeling products has some demerits. First, you can’t white-label a product without agreeing with the original manufacturer. Doing so is unlawful as it’s tantamount to stealing another company’s products.
The manufacturer also has to develop the product with you in mind. This means, there could be a distortion of information, which may jeopardize the quality of the final item. It may also result in over-the-budget pricing, deadline prolongation and loss of business.
These demerits, however, are nothing compared to the perks of white-listing. Thanks to white-listing, customers get to use top-quality products and services. The competitive prices also ensure that customers use products of exceptional quality without paying over their noses!
