In the advanced technological era, businesses and companies don’t have to invent a solution for every problem and invest a lot of time and resources in research and development. You have got the option of selling the product and services of others under your brand logo. Today, we’ll discuss what is a white label company; how it works, and its advantages and disadvantages.
What is a White Label Company?
A white-label company could be a banking institution, a digital marketing firm, or an e-commerce platform. The white label company is a 3rd party manufacturer that develops goods and services and sells them to resellers without any branding rights. However, it offers them an opportunity to customize the product packaging and paste their logo and resell it to the end customers.
The focus of a white label company is on developing and improving the quality of the product and solution without worrying about marketing, promotion, and branding. The focus of the reseller is on increasing its product portfolio without investing a lot of resources in production and manufacturing. However, it creates a win-win situation for both parties.
How It Works
Some of the key stages involved in the white label concept are as follows;
- The white-label company or the supplier develops the white-label product. For instance, a company develops antivirus software, and the software company doesn’t have a label, logo, name, or brand.
- White label companies or suppliers would sell its product to the other company or resellers, the resellers would customize the product relevant to their branding, logo, place, and other needs.
- The resellers would sell the product directly to the end customers with their brand name and logo
- The key element of white labeling is the anonymity of the white label enterprise and the white label product
Advantages of a White Label Company
Some of the main advantages and pros of white label companies are as follows;
Saving Resources
White Label enterprise doesn’t have to invest a lot of resources in branding and marketing and running advertisement and promotional campaigns. The company should focus on achieving and maintaining efficiency with its production and manufacturing processes; finding a cheaper source of raw materials, and giving training to the employees.
Product Portfolio
When the white label enterprise focuses on research and development, and its production processes, then it has the capability to expand its product portfolio. With more goods to offer, the company would sell more to the resellers, and ultimately it would increase the company’s revenue stream and profitability.
Quality Control
When the white label enterprise focuses on its production processes and delivers quality products to the reseller, then it earns a good reputation in the market. A better reputation as a white label company would help you to win more orders and mega contacts. The cycle of production and distribution would keep on running by following the quality control concept.
Focus on Strengths
Let’s say the strengths of white label companies are manufacturing efficiency, research, and development, trained staff, focused only on production in one category, cost efficiency, access to the cheaper source of raw materials, in-house production, and others. When the company focuses on its strengths, then it could easily overcome weaknesses and face the opportunities of life.
Win-win Situation
The white-label enterprise has expertise in production, manufacturing, and research and development. The reseller has expertise in marketing, promotion, and branding. When they both collaborate with each other, it creates a win-win situation for both parties.
Disadvantages of a White Label Company
Some of the main disadvantages and cons of white-label companies are as follows;
Faulty Product
Since the white label enterprise manufactures products at a mass scale in order to achieve cost efficiency, there is always a risk of fault in the production process. One small error would jeopardize the whole merchandise, and it would cost your reputation in the market. However, if it goes on, then you would lose your reputation in the market.
No Credit
The white label enterprise does all the work of production and innovation of launching new features with the latest research and development. But they don’t earn any credit from the target customer market. In fact, they would remain nameless and have no recognition throughout their production business life cycle. the reseller would take all the credit for your hard work.
Examples of a White Label Company
Coffee Industry
The coffee industry has earned a great reputation for employing the white labeling strategy. Many reselling coffee brands buy coffee beans from local suppliers in third-world African countries. However, the resellers process the coffee beans according to the customer’s requirements and sell them under their name.
Cotton Industry
Many western brands buy cotton and silk from suppliers in China, Kashmir, India, and other Asian countries; they rebrand the final product and sell it under their name.
Conclusion: What is a White Label Company? Pros & Cons, Examples
After an in-depth study of what is white label company; how it works, its advantages, and disadvantages, and examples; we have realized that white labeling could amplify the growth of your business. If you are developing white label company and gathering some information about it, then keep in mind the abovementioned guidelines.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
