Your Guide to White Labelling and how it can help you get started!
Do you want to start your own brand without having to go through the entire process of creating and selling a product? White labelling might just be for you! Here’s why!
What is White Labelling?
A white label product is a product that’s created by a manufacturer for sale by many retailers. Each retailer is allowed to resell the generic white label product under its own name and branding. With white label manufacturing, the retailer is able to charge a premium on the product by attaching their existing brand because of their position in the marketplace.
White label products are sold by retailers with their own branding and logo but the products themselves are manufactured by a third party. White labelling occurs when the manufacturer of an item uses the branding requested by the purchaser, or marketer, instead of its own. The end product appears as though it has been produced by the purchaser.
Important notes to take!
- White label products are made by one company and packaged and sold by other companies under various brand names.
- Big-box retailers have been successful in selling white label items that feature their own branding.
- A major benefit of white label branding is that it saves companies time, energy, and money in terms of production and marketing costs.
White labelling allows you to quickly spin up a business around an existing product. You can add your own touch through branding, a great website, personalised shopping experiences and unique packaging.
Understanding a White Label Product
The advantage is that a single company does not have to go through the entire process of creating and selling a product. One firm can concentrate on producing the product; another on marketing it; and another can focus on selling it, each according to its expertise and preference. The major benefits of white label branding are that it saves companies time, energy, and money in terms of production and marketing costs.
Another big advantage of private label brands is that if a supermarket has an exclusive deal with a manufacturer, then the average transportation expenses might be lower than usual and the company would benefit from distributional economies of scale. Because of lower transportation costs, the retailer could sell the product for less and still receive a bigger profit margin.
Types of Businesses That Use White Label Products
Although technically white label products may appear in any industry or sector, large retailers have done quite well with them. Companies like Whole Foods and Walmart have benefited by selling their own branded products that have been created by other manufacturers.
White labelling might be a great option if you:
- Are looking to jump on a trending product
- Want to start a business quickly
- Don’t have a unique product idea
- Want to start a business without much upfront investment
- Aren’t interested in making or manufacturing products yourself
- Want branded supplemental products for an existing business (say, a service-based business)
- Are looking to monetize a personal or influencer brand with merch
Advantages and Disadvantages of White Label Products
The concept of white labelling comes with numerous considerations, both positive and negative.
- Expanded product lines. Firms can use white label brands to expand their offerings and target customers strategically; in turn, this could bolster their competitive advantage.
- Large contracts. Third-party producers get huge contracts, which could come with guaranteed sales and revenue.
- Discounted sales. Stores can boost revenue selling white label products at a discount relative to national brands.
- Quality. White label brands can be just as good as national brands, as they often use the same producers; high quality creates satisfied customers.
- Copycatting. Using very similar packaging among brands is called copycatting, which can be illegal in some cases. Private label brands must differentiate themselves sufficiently so as not to mislead consumers.
- Monopsony. A powerful retailer could push out smaller competitors, resulting in a market condition where there is only one buyer.
- Barriers to entry. The growing dominance of white label brands could make it hard for new firms to enter the market, reducing overall competition.
When is it the right time to consider white label marketing?
Before deciding on having your marketing efforts white labelled, careful consideration should be done to ensure that the move is for your business’ best interest.
- Your clients require additional marketing services — Instead of taking time to hire people and develop the service, it is more cost- and time-effective to outsource this to a white label marketing agency.
- Past marketing efforts were unsatisfactory — If your past marketing efforts are not reaping the desired results, it may be time to ask help from the experts.
- Sales are declining — Declining sales figures is a red flag for any business. Your leads may not be good, or your marketing strategy is targeting the wrong audience.
- Lack of experience and expertise in marketing — Marketing is a specialised skill that requires years of experience and in-depth training to achieve, and more so to master.
How can Fibr Studios help?
Tech Packs are important and will outline every single detail of your garment which will lead to a smooth production run and who wouldn’t want that! Instead of you and your manufacturer going back and forth trying to communicate on what exactly your needing, let the tech pack speak for you!
If White Labelling is for you – Tech Packs are still essential to ensure that tag and logo details are correct as well as any modifications needed. This allows you to still feel involved in the process making it seamless and for maximum results.