What Does the Term 'White Label' actually mean?
From time to time you hear many business expressions, some abbreviated, some just acronyms and you nod accepting the term, not really understanding what is meant. In this blog I will be explain what the term 'White Label' means (in business), discussing some examples and highlighting the benefits of this type of business model.
A white label product or service is something that has been produced by one company (the producer) that other companies rebrand and sell as their own. The 'white label' business model can be very successful if applied correctly.
White labelling, effectively refers to goods or services where the producers only bear the product manufacturing costs. It obviates the distributor the need to invest in infrastructure costs. It splits the functions between, the production and its inherent costs to the distribution and market penetration.
The distributor will be able to sell the finished product, branding it as their own goods, since the finished product will not have been branded as it is effectively 'white' (unbranded).
This form of business model is possibly most prevalent in:
- The food industry, where a product can be manufactured at one facility and then packaged and branded in a number of ways. Drinks are common white label products.
- The computer services industry, where a service or website generic to a particular industry is the front or face of the company. A good example would be a payment system.
- Computer parts which are then available to many reputable brands. An estimated two thirds of all motherboards are manufactured by one business. 'Made in China' but rebranded and sold throughout the world by non-chinese brands.
Revenues generated by the 'no name' goods supplier can supplement those from branded products. This therefore opens up access to many more markets and also lower income customers via alternative distribution channels. Very little extra work or development, needs to be done to any product to modify it or tailor it to any specific needs.
For the white label product to work it is important that customers do not realise that ostensibly different offerings are actually the same; this does allow price differentiation.
This all sounds very simple however, the original product which is to be white labelled does have to be robust, well thought through, finished and of course, attractively priced. The distributor will need to add their own margin.
For the distributor this is an excellent way of proving excellence in an otherwise competitive marketplace with a very low point of entry. Payments will be by way of monthly subscription or 'pay as you use' to the provider. No upfront investment nor testing will be required.
If you have any questions relating to White Labelling then please get in touch. My next blog will be discussing 'Ways to Create a Thriving Workplace'. In the meantime, please share any comments you have on this blog post below.