A white label product is any that is manufactured by one company and sold under a different brand name by another company. Services can also be white-labeled. In this case, the company purchases a service from another company and then sells the service as its own. White labeling, therefore, involves the production of a good or service that is rebranded and sold under the name of another company. The strategy is named after the white label on a product’s packaging that can be customized with the selling company’s trade dress.
Understanding the white label business model
Some key components of white labeling:
- The white label business model involves a company selling products with its own branding that were manufactured by others.
- The white label business model has been successfully implemented in many industries. These include coffee, pet accessories, fitness apparel, website hosting, and accounting.
- The white label business model reduces costs for the reseller and allows them to rapidly expand their product range to take advantage of market trends. The model also facilitates a long-term relationship between both parties.
The white label business model is a business-to-business (B2B) approach involving a manufacturer and a reseller.
There are three core components of the model:
- First, a manufacturer creates a white label product that has no name, label, logo, or branding.
- The manufacturer then sells the unbranded product to a reseller who is free to customize the product to suit their brand. In some cases, the same white label product may be sold to multiple resellers.
- The reseller then sells the now branded product to its customers. For the white label business model to be effective, it is important customers are unaware of this process.
White label business model product examples
White label products tend to be concentrated in banking, retail, eCommerce, and digital marketing, among many others.
With that in mind, here are a few profitable white label product examples:
Some coffee producers work with other businesses to produce custom blends and branded packaging.
White label coffee beans normally require a significant investment, but many have found success dealing with reseller Dripshipper which is also fully integrated with Shopify.
The online pet care market is worth around $232 billion, so there is an opportunity for eCommerce pet accessory companies to profit.
White label products are well suited to pet service businesses that may need to secure alternative revenue streams because of COVID-19.
White label products and services are also offered to accounting companies.
Businesses such as BooXkeeping offer accounting-as-a-service, while others such as Bean Cruncher Accounting offer white-label API integration to create more robust and diverse client-facing products.
Fitness apparel and accessories
The pandemic also caused an increase in home fitness items.
Multiple print-on-demand manufacturers are now producing white-label fitness equipment, t-shirts, socks, yoga mats, and water bottles.
Social media fitness influencers can strengthen their brands and make money at the same time by selling customized, white-label goods.
While hosting is an extremely competitive market, it is also very lucrative with Business Insider expecting it to be worth $154 billion in 2022.
New entrants can still enter the market by bundling multiple white label products together, including hosting, design, SEO services, and add-ons such as live chat software, form builders, and appointment software.
Benefits of the white label business model
The white label business model is a win-win situation for the manufacturer and the reseller. To see what we mean, consider the following benefits:
The most obvious benefit for the reseller is that the white label business model saves time, money, and effort.
It is ideal for companies with no manufacturing experience or those who want to avoid the expenses associated with product development.
The model also allows a company to rapidly expand its product offering to take advantage of market trends and boost brand visibility.
Since the product is already manufactured, more resources can be directed toward marketing and distribution.
Provided consumers remain unaware of the agreement, the while label business model promotes a sustainable relationship between the manufacturer and the reseller.
Both parties share mutual business interests and both have well-defined roles and responsibilities.
Understanding white labeling
The so-called “store brands” found in supermarkets and other retail outlets are in the majority of cases white-label goods.
In this situation, the manufacturer produces the good for the retailer because the latter has an established presence in the marketplace and can sell the good for a more attractive price.
In essence, white labeling allows the manufacturer to leverage the brand awareness and distribution channels of other companies to increase its sales volume.
For the retailer, avoiding the manufacturing process means more resources can be directed toward marketing.
Businesses types that utilize white label products
White label products tend to be concentrated in the following business types:
Companies such as Walmart and Whole Foods offer an extensive range of white label products in various categories.
Walmart in particular has found success selling these products in collaboration with celebrities and social media influencers.
One example is actress Drew Barrymore, who has released a line of cookware in addition to clean beauty products.
Manufacturers of smartphones, computers, and other electronics also participate in white labeling with affiliated retailers.
The approach has been effective in the electronics industry since many consumers are sensitive to price and look for cheaper alternatives.
Mass merchandisers and multinationals
Big-box retailers such as Target are also proponents of white labeling.
The company uses white-label goods to target specific customer segments across various categories such as clothing, home décor, art and craft supplies, family-friendly food staples, and homeware basics.
The difference between white labeling and private labeling
White labeling is often used interchangeably with private labeling, but there are subtle differences between the two strategies.
As we noted earlier, a white label strategy involves the brand being removed from a product or service and replaced by the brand of the purchasing company.
For example, Walmart’s Great Value white label brand is produced by manufacturers willing to display that company’s brand instead of their own.
The retailer of a white label product only has control over what the label looks like.
In other words, the manufacturer determines how the product is made, how it is packaged for sale, and what ingredients it contains.
For this reason, the manufacturer may also sell the same product to multiple retailers to be on-sold under multiple brand names.
A private label strategy also involves a retailer contracting another manufacturer to produce goods on their behalf.
However, the retailer of a private label product has control over every aspect of the process except the manufacture of the product itself.
This means they control the product ingredients, packaging, distribution, and even production volume.
In addition to being sold directly to consumers, private label products can also be on-sold to wholesalers.
- White labeling involves a product or service that is sold and rebranded under the name of another company. Manufacturers produce goods for the retailer because the latter has an established presence in the marketplace and can sell the good for a better price.
- White labeling is common amongst retailers, electronics companies, mass merchandisers, and multinationals. Walmart and Target are two examples of companies with a diverse white label product range.
- White labeling is often confused with private labeling, but there are subtle differences between the two approaches. White-label product retailers have control over the product label, with the manufacturer controlling all other aspects and potentially selling the same product to multiple companies. Private label product retailers have much more control over product development and the product itself may be on-sold to other wholesalers.
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