What are white labels?
White labels are products that are produced without the manufacturer’s logo or brand identity on them. The retailer can customize these products with their brand and resell them as their own.
This method of business makes both manufacturers and retailers channel their resources and time into their expertise. The manufacturer keeps manufacturing products that can be used by various brands, while retailers focus on marketing their customized products and distributing to clients.
Why Do Companies opt for White Labels?
It is almost certain that if a company designs all their product or services themselves, this will suit their businesses needs better as every bit of it is customized just for them. So why do companies opt for white labels? Here are some reasons why they do:
Building a product requires research and development, which involves a few trial and errors. Doing this means you might spend a lot of time reinventing the wheel as you’ll make costly mistakes that have been made by others and improved on.
Business owners who want to stay competitive do not want to miss out on the best expertise, latest technology, and improved versions of their products and services. When these aspects of your business are not your forte it is difficult to stay up to date.
Spending too much time learning the ropes and troubleshooting your products and services, means you are spending less time providing excellent services to your customers.
So, what businesses can use white labels?
White labelling can be found in almost any business. Company XYZ can produce battery cells which would then be rebranded by company ABC as their product and sold to the customers. Software services like records management systems can also be white labelled to resellers who rebrand it as their product, set their pricing and resell to their clients.
White-labelled business is also available in the form of service provision. For example, in the financial sector, we have financial service providers that offer their clients credit cards that are branded in their names, but these cards are manufactured by other banks.
Some Challenges in Dealing with a White Label Partner
There are a few disadvantages you may encounter in dealing with white labels, but they can be avoided.
Service Downtime from Your White Label Partner.
If you provide white-label service to your customers, they will hold you responsible for any challenges that they encounter while using that service, since they believe you are the one providing it. To avoid scenarios where you can do nothing other than to wait on your white label partner, ensure you choose a competent white-label service provider.
They Can Become Your Competitor
Your white label partner may also engage in some direct sales of their services to customers. If they have a unit that is involved in the same business you’re in, they are likely to poach your customers if they have access to them. Be sure to check the reputation of your white label partner and understand their business terms and conditions.
If you need more insight on how you can leverage the benefits of white-label in product branding, contact OctopusLabs HERE.