White-Labelling
In business, when a problem or opportunity arises, applying a customised or do-it-yourself solution often seems like the best approach. Approaching something from scratch involves a lot of time, work, money and mistakes to get the solution ready and right. Opting for a white labelling solution can avoid these, and has proven so in many instances.
This article will explore what white labelling is, its uses and how it can help your business.
What is it?
White labelling occurs when a company sells a product with their own branding and logo labelled, but the product itself has been manufactured by a third party. In other words, producing company’s agree to have the product rebranded. The company seeking to have their brand on the product (the marketers) is trying to make it appear as if they have made it.
A good example of white labelling is the Dollar Shave Club. The Dollar Shave Club sells millions of razors a year without producing a single one. This is because of their effective use of white labelling. Where other producers manufacture the razor, the Dollar Shave Club labels its own famous brand and logo to the product.
The main reason for using it is that since the products are manufactured by a third party, different parties can focus on their expertise and preferences. One party focuses on producing the product, one on marketing it, and another on selling it. Additionally, significant costs are saved on the technology and infrastructure created for a new product. White labelling allows existing brands to offer a service or product without having to invest deeply in these aspects.
Who uses White Labelling?
The most common use of white labelling is seen in supermarkets, where store branded products are provided by companies that sell to multiple supermarkets, changing only the labels. For example, Woolworths sell Essentials or Macro branded items, while Coles use Coles Brand labelled items.
White labels are also applied to services, the products don’t always need to be a tangible item. A good example of this is between banks. Some banks white label their credit card processing because they do not have the means to do this in house. In the United States, City National Bank is one of Southern California’s largest check processors. While on their own they have a number of checks processed by its own customers, City National Bank also handles the check processing of over 60 other smaller banks in the region, through the white labelling of their services.
How can White Labelling help your Business?
There are number of key advantages of utilizing white labelling within your business. Its use can prove to be advantageous in a range of aspects including quality, cutting costs and saving time. Some examples include:
- Expanding Product Offerings – offers your business the opportunity to strategically expand its product range and target markets.
- Quick and Easy Branding – White label solutions are fully integrated and ready-made. Saving time and money on research and development or marketing.
- Saves Time and Money – Creating a new product offering can require a large amount of human and capital resources. A new product means planning, designing, building and testing it.
- Lower cost, lower price – in saving on costs, the ends product can be sold at a lower price, allowing for a competitive advantage
- Quality – White label brands often use the same producers, so they can be just as good as national brands.
Potential Disadvantages
While white labelling is a great strategy, it can have some disadvantages, particularly for a business’s wider industry.
- Monopsony – Larger retailers could push out smaller competitors, resulting in a market condition where there is only one buyer.
- Barriers to entry – The growth of white label brands could make it hard for new firms to enter the market, reducing overall competition.
Conclusion
White labelling can be a good way to sell products, whilst focusing on what makes your offering different. Doing this means you have to be able to effectively brand your business and not breaching any patents or intellectual property protection which may in place.
