Why Are Businesses Turning to White Label Branding?
Last update: 23 September 2022 at 03:31 pm
Probably each one of you has already bought a white label product at some point without realizing it. Maybe you’ve even bought the same product one-to-one from two different brands at different prices.
What exactly is white labeling, where does it come into play, and how can you take advantage of it? We’ll clarify all that in this article.
What Does White Label Mean in Business?
White label products are articles of a manufacturer which are not sold under its own house brand. They appear in stores as the product of an apparently different retailer or manufacturer under a different brand name. White label goods are usually mass-produced, which can be easily adapted for third-party distribution.
This adaptation can be done by adding a logo, brand name, or slightly altering the product. White label products can be ordered in often large quantities.
The term white label is often equated with private labeling, but this is not entirely true. Although both involve goods intended for sale by another company, there are differences.
In most cases, “private label” refers to products that are prepared in a brand-specific way so that they can then be sold exclusively. In addition, private labeling is more specific and more expensive than white label products. There are no minimum requirements here.
Manufacturers produce white label products if they:
- do not want to build up their own distribution,
- do not want to become dependent on a single distribution provider,
- want to sell only part of their products under their own brand,
- want to reach different customer groups (those with and without brand awareness),
- want to serve different price segments.
In the latter case, it is speculated that the customer groups are so different due to different prices, distribution channels, and names that it is not noticeable to anyone that the same product is nevertheless consumed.
Accordingly, the same product is offered in stores both under the manufacturer’s brand and as a no-name, private label, or house brand. The latter is noticeably cheaper but often has the same quality.
How Does White Label Branding Work?
White label branding works in the same way as white labeling described above. The only difference is that the products are sold under one roof.
White label branding is supported by the branded products because they create trust, strengthen customer loyalty and save time and resources for new developments.
What Are the Advantages of White Labels?
White label branding brings benefits to both new entrants and established market players. You can contact an e-commerce agency to find out if white labeling is an option for your distribution.
Start-ups and manufacturers
Marketing new and even existing products is a lengthy process. Especially in markets that are already saturated, it is difficult to successfully sell products from unknown companies or brands. Entering the market with white label products could be a practical solution here, as the costs for an own production are saved and risks are minimized.
The distribution of white label products offers the following advantages for start-ups or manufacturers:
- White label articles are possible for products and services from all sectors
- Without production one saves time and costs
- Product technical obstacles are mostly solved by the manufacturer
- Focus on core competencies becomes possible
- Higher customer satisfaction
- Easy to implement
The ease of implementation is especially visible on white label websites. Modular systems like Wix for the corresponding systems make it relatively easy to create online stores. You create a great e-commerce opportunity and thus satisfy your customers.
This allows you to focus on your own core business or product and not also lose valuable time that creating a website would otherwise cost. Expert support is available from the software provider.
With the brand company, the articles are already well known and placed on the market. This company can now focus on sales, marketing, and brand maintenance.
Once it has adapted the white label product to its brand, it can start marketing directly via the set sales channels.
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Where Can You See White Labeling?
White labels can be found in a wide variety of industries. Only a few are described below:
Here, for example, records are labeled white. These are usually unauthorized publications, for example, test pressings or releases in minimal editions.
DJs refer to promo records as a white label. This is useful when a new record is to be released, but one is uncertain about its success. DJs, therefore, receive the record without a label imprint to test it on the audience.
If the record is not a success, the record label behind it suffers no image damage. If it is a success, the record is released with the name of the label and artist.
Hardware and software
Blank CDs or DVDs are often produced en masse. The various retail chains then sell them under their own name and label. In this way, you can buy the same product at a lower price as well as at a higher price.
However, in order to justify the price difference, customer service cuts have to be made. For example, cheaper blanks have less packaging and accessories than their more expensive counterparts. These attributes are then no longer decided by the manufacturer, but by the name giver.
Significance in e-commerce
Providers of a website often link to an article or service of another website. Visitors to the website regard the embeddedWhiteLabel as the site’s own product. For transactions, which are transacted over its web page, the offerer receives then usually a commission.
An important factor for white label products on the Internet and in e-commerce is the sales channel provided. Technical support is usually provided by the manufacturers themselves.
Industrial manufacturers can sell their goods independently and/or have them distributed by discounters, private labels, or third-party suppliers. These offer it under their own brand name.
The advantage of this is that the same product becomes accessible to different target groups (brand buyers and discount buyers). In addition, the resulting higher number of units means that production capacity is better utilized.
Significance for the financial market
White label funds stand for financial instruments or funds that are launched and distributed via a sub- or third-party company. Nevertheless, the responsibility remains with the original company.
This approach is useful if the competitive situation is not favorable, for example, if there is a temporarily bad image or various other reasons that result in a block.
If the actual fund company cannot launch the fund in its own name, a white label fund launched by a subsidiary can help to bridge the situation.
Examples of White Label Products
- The power tool manufacturer Bosch sells its goods under both the primary brand (Bosch) and the secondary brand (Skil).
- BSH HausgeräteGmbH is Europe’s largest manufacturer of household appliances. In addition to Siemens and Bosch, it also sells the Neff, Constructa, Gaggenau, Thermador, Junker, Viva, Ufesa, and Zelmer brands. Siemens ceded its shares in BSH Hausgeräte GmbH to Bosch in 2014. Although Bosch is now the 100% owner of BSH, its appliances may continue to be sold under the Siemens name.
- Promotional platforms are often white label products. This is plug and play software that other companies adapt to their own corporate design.
- Coffee producers collaborate with suppliers of other brands, which create individual blends and packaging. With the help of coffee white label provider Dripshipper, which can be integrated into one’s Shopify store, one can create and sell coffee of one’s own brand.
- Essential oils, cosmetics, and bath products can be prepared and marketed as white label products.
Should I Rely on White Labels?
White label products have many advantages for both the manufacturer and the provider. While the manufacturer focuses on the development, the supplier deals with sales and marketing.
Selling white label products often provides a quick entry point into self-employment by adding your own design to the products. This allows you to jump on trends without having to invest too much.
White labeling offers many opportunities if you:
- is looking for a trendy product,
- wants to start a business,
- lacks a unique product idea
- does not want to make a big investment,
- has no interest in its own production
- wants to minimize its own risk.
Are White Labels Worthwhile?
Whether the distribution of white labels is worthwhile varies from individual to individual. Their distribution can be just as profitable as that of other commercial goods. It is important that the product fits well into the market and that the distributor manages to generate enough traffic on the website or in other trading places.
In addition, the right pricing strategy and effective management of finances in the company are other factors of entrepreneurial success. Therefore, one should not sell any products naively but should take a close look at the market as well as the competition.