What Is White Labelling?

by | March 12, 2019 | Business

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White-label services (or white-labelling) are becoming increasingly popular among young entrepreneurs to begin making money from home. Being an entrepreneur can be quite a challenge, it can be a huge hassle learning the ins and outs of any given business and how to tackle certain issues. It is for these reasons that many entrepreneurs fail, and why many successful entrepreneurs use white-label services to bolster their business. A clear understanding of what white-labelling is, what it entails, and how to utilise it will let you see for yourself if it’s the right choice for your business.

What Are White-Label Services

White-label sounds intimidating but is actually rather simple. Basically, white-labelling is when one company sells a product produced by another company but using its own brand. This can be applied to a wide variety of products including things like clocks, toys, furniture, software etc. White-labelling can also be used with services. White-labelling is a symbiotic partnership that benefits both of the businesses involved. The seller gets access to high-end products with little to no fuss, and the producer makes more money than they would be trying to sell the products on their own.

White-labelling is so effective that many large businesses also use the strategy to their benefit. Companies like Costco and Kroger use white-labelling for some of their products. Now that you know that white-labelling is effective and helpful you might be wondering, how can it help you?

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Top 3 White-Labeling Companies

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Benefits of White-Labelling

White-labelling can offer a whole host of benefits to young entrepreneurs. These include:

  • It provides you with a consistent supply of high-quality products to sell on to other people. You do not have to worry about the production of your items which lets you simply focus on the selling.
  • You get some third-party support from the company that you are white-labelling from. If for some reason the product in question is inadequate or is faulty, then they will handle it. As long as you go with a reliable white-label company then you will be free from worrying about troubleshooting for customers.
  • It helps establish your brand and spread the word about your company. Whilst you are a fledgeling business it can be quite tricky to spread brand awareness past a certain point. Often young companies are heavily reliant on word of mouth from satisfied customers. With white-labelling, you have access to high-quality products that can spread the word for you. By the time you’ve expanded and are making your own products, you will have a loyal customer base that associates your brand with quality.
  • White-labelling allows you to have high-profit margins. Due to cheaper manufacturing techniques employed in making the products, you aren’t spending a lot of money for each item and can subsequently make a huge profit on each individual product. This is especially helpful during the early days of your business where you aren’t selling a lot of products. If you were paying someone in-house to develop your products, it would cost you significantly more.

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Limitations of White-Labelling

While white-labelling does offer a lot of benefits it is not always the correct choice for your business. It does have some limitations which might make it unsuitable for you. These limitations include:

  • Less control over the production process. While avoiding the costs of manufacturing is nice, not having control over how the product is produced can be a concern. It is a necessary concession for the business relationship.
  • The upfront costs of employing this strategy may be too much for some businesses to handle. You will recuperate the cost eventually from saving on production costs, the initial investment is higher than other strategies. This is due to the initial acquisition of the first load of products along with establishing facilities to rebrand and repackage your items.
  • This strategy is much less effective in new markets. The reduced brand visibility of newer markets with fewer customers makes white-labelling much less likely to have the desired effect. Some well-established companies end up falling into this pitfall and suffer for it.
  • Inconsistent quality. Ultimately, you are putting your faith into the hands of the producer. You have very little control over the production process. If something happens like a change in materials being used, new machines being employed in the production process, or anything that could affect the quality of the product, you can’t stop it. This is why a reliable white-label company is necessary for the strategy to work but finding someone that you can truly trust can be quite a feat, especially starting out.

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When Is White-Label Appropriate For You

The white-label strategy has two key goals:

These are two things that every company in the world is interested in, growth is good and white-labelling promises growth. The issue with this is that you can’t start out with white-labelling as your first strategy. The effectiveness of white-labelling comes from having a brand presence already established so that you can expand upon it and grow. The upfront costs also act as a roadblock preventing brand new businesses from effectively using it. You will need to have the necessary resources to afford the costs of implementation.

So brand new businesses that can’t safely implement the strategy or have enough of a following to build off should steer clear of white-labelling. In that case who should use it? First of all, if you are a more established business and can stomach the start-up costs you have passed the first major hurdle and white-labelling may be appropriate for you. After this, you then need to ask yourself how you would implement it into your business strategy. If your aim is to enter a new market, then white-label is not for you. You won’t have the necessary brand awareness to properly utilise it. If you are planning on using it to be more competitive with other brand label companies, then you could find a lot of success within this strategy.

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Alternatives To White-Labelling

If white-labelling isn’t the right solution for your company’s growth, then what alternatives should you seek out? Here are a few alternatives that you can look into for your business:

Dropshipping

Dropshipping is another strategy that is similar to white-labelling but slightly different. It follows the same basic principle of selling products that other companies have produced, however with this strategy you do not purchase the product until you made a sale on your online store. This circumvents the cost of buying a large bulk of product at the start of the strategy and is a much safer strategy as a result. However, since the other company handles every aspect of the product except for selling it, you don’t get to rebrand it as your own.

Social media advertising

Social media advertising is a way to more directly interact with your customer base and help your organic growth. Basically, it involves creating marketing campaigns on sites like Facebook, Twitter, and Instagram. These platforms are incredibly effective places to advertise on due to their popularity. It can be difficult to effectively utilise these places however, as more and more consumers are growing weary of companies on social media. Your business will also most likely require a skilled social media manager to ensure the campaign runs smoothly. It also affords the opportunity to get a better understanding of your target audience. If you successfully develop a strong reputation, then word of mouth will spread your brand awareness for you. This can be a difficult feat though and could backfire if handled poorly.

Affiliate marketing

Affiliate marketing is yet another way of using products that other companies have made in order to grow your business. The way it works is that you market the products of another company and earn a commission off each sale. This strategy is unique as, unlike other strategies, you do not handle the selling process. This is handled via an affiliate link, which tracks which sales came directly from the affiliate. There is a lot of variation in Affiliate marketing, so it has a lot to offer.

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Best White-labelling companies

If you have decided that white-labelling is for you but are unsure where to go next, here a few companies to consider for your white-labelling needs:

Ecwid

Ecwid allows you to build a white-label store from scratch. Most other store builders let you build an online store with e-commerce support. However, Ecwid lets you add white-label functionality into any pre-existing stores that you already had. Ecwid has numerous benefits including:

  • Ecwid offers something called point-of-sale functionality. This allows you to extend your white-label products into physical stores as well as digital stores.
  • In addition to creating a new website, they are especially suited to adding a white-label store to websites that you have already built.
  • Ecwid storefronts are automatically translated into nearly 50 different languages. This makes it ideal for global storefronts.
  • Ecwid also offers a basic plan for completely free. It is missing features such as coupon support, but it is a great starting point for those inexperienced with e-commerce. If you wish to start selling more than 10 products you will need to expand into one of their paid plans.

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Shopify

Shopify is one of the most popular e-commerce platforms. With over 1,000,000 active users they must be doing something right. It lets you build your own online store with or without white-label functionality. Here are a few reasons to consider using Shopify.

  • Shopify offers very strong security for your online store. They handle all of the security of your store, so you don’t have to worry about hackers.
  • Shopify also offers stellar marketing for your store. They will help you out with your SEO by providing a ton of options for your products. Meta descriptions, tags, keywords and more are supported by Shopify.
  • Ease of use. Creating an online store can be quite a daunting task if you are inexperienced. In these kinds of situations, any and all help is greatly appreciated. Shopify goes the extra mile to provide a clean, easy to navigate interface for users to create their online store. It is easy to create exactly the store that you want to make using Shopify’s shop builder.
  • Shopify offers fantastic customer support. This further adds to their beginner friendliness. Knowing that someone can always help if something goes unexpected or out of control is comforting. Shopify will answer your queries quickly and clearly so that you can sort any problems out quickly. For those inexperienced in running an online store, this can be a lifesaver.

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Squarespace

Squarespace is a website creation platform designed for people with little to no coding ability. They are another beginner-friendly option for when it comes to creating your online store. The reasons why you would use them include:

  • Squarespace offers a 14-day free trial. Unlike Ecwid the free trial offers you all of the platform’s features in exchange for a time limit. This lets you fully explore the possibilities of the website before deciding if they’re right for you or not.
  • Squarespace offers a variety of templates to use for your website’s design. If you are lacking a particular creative vision the templates can allow you to find a concise theme for your website. Alternatively, they can help you find an idea for a design.
  • Useful customer service support. Following in the footsteps of Shopify’s user-friendliness, Squarespace offers excellent support. Any problems you might run into during the creation of your website can be answered with minimal fuss. The high degree of help that they offer may be perfect for the less confident.
  • Managing and swapping out images is simple and painless. Images will be a major factor in the success of your store. Clearly presented images that show off your product in just the right way can be the difference that nets those crucial sales. With how easy it is to manage these image you’ll be able to put your best foot forward.

 

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