When it comes to launching products, one of the most effective and popular strategies is using white label products. White label products are products that can be rebranded and sold by other companies. In this article, we’ll explore how this concept works and why it’s such an effective strategy for launching your products and services quickly and efficiently.
Definition of a White Label Product
A white label product is a generic product created by one company that is then rebranded and relabeled by another with its own brand identity. The original manufacturer of the product allows other companies to purchase and resell the product under their own branding and labels without having to worry about developing or manufacturing the actual item.
White-label branding offers various advantages as companies can utilize their expertise in a specific area, such as marketing, and sales, while relying on an existing product. This is a great way for companies to expand their product line and enter new markets without investing in research, development, or manufacturing.
Moreover, opting for a white label branding strategy can help cut down on transportation costs and leverage economies of scale for manufacturers who have an exclusive agreement with a retailer.
Provided Services Through White Label
White-label products are not limited to physical goods. Different services can also be offered under a white-label arrangement. Banks needing the necessary in-house capabilities for credit card processing may turn to white-label services. Additionally, businesses without banking operations may still provide branded credit cards to their clients.
A variety of services such as customer support, web design and hosting, software development, and more can be provided through white labeling. Companies will purchase these services from other vendors but market them under their own name. This allows businesses to provide a full suite of products without having to develop every aspect in-house.
Pros & Cons of Using White Label Model
The practice of white labeling has many potential advantages for companies, as well as disadvantages.
White Label products can help companies broaden their product line and better target certain customers. Contracting with external producers can ensure sales and revenue. By offering White Label products at a lower price than national brands, revenue can be increased, while the quality of these products can be just as good as national brands because they come from the same producers.
The main downside to using white-label products is that the company cannot differentiate itself from its competitors. Companies that use white-label branding may struggle to stand out in a crowded marketplace, as their products are indistinguishable from those of their competitors. They also don’t have control over quality and can be left with compromised standards if the original producer makes changes.
Who Can Benefit From White Label Products
Collaborating with third parties can bring numerous advantages for various businesses, especially those that provide online services and aim to reach as many audiences as possible. Let’s highlight three company directions that can benefit from utilizing white-label products.
Private label branding extends beyond just the supermarket industry. Even prominent manufacturers of high-end electronics, such as mobile phones and computers, frequently apply their brand name to lower-cost white-label products to broaden their product lines.
Worldwide & Massive Merchandisers
Large merchandisers with outlets around the world are also great candidates to benefit from white-labeling. Many of these companies partner up with smaller producers, buying their generic products in bulk and selling them under their own brand name. This way, they can provide customers with affordable products while maintaining control over quality and availability.
White Label products can be utilized across various industries, and large retailers have been particularly successful in implementing them. For instance, Whole Foods and Walmart have experienced notable advantages from marketing their brand products, which external manufacturers have produced.
The concept of white labeling offers a diverse range of success stories, one being Costco’s Kirkland brand. The brand has blended national labels with private ones, using top-quality offerings and strategic co-branding with industry giants such as Starbucks, Quaker Oats, and Tyson Foods. Such collaborations are generally beneficial for both parties, resulting in mutual gains.
White label products are a great way for businesses to expand their product range, enter new markets, and increase revenue without having to invest in research, development, or manufacturing. But it is important to consider the risks associated with white label branding as there can be a lack of control over product quality and difficulty in standing out from competitors. Ultimately, companies must weigh both the potential benefits and drawbacks of using a white-label model before making their decision.