White-Label Products: The Rise, Impact, and Diversity
While shopping, If you’ve ever wondered why the same product appears under different brands, welcome to the world of product branding. Also, this blog aims to provide a starting point for retailers’ one of the ways to find the market-tested product,the white label product and intro to Supply chain management.
White Label
“White-Label” reminds me of a “white collar.” job. In the product world, the term “white labelled” comes from the white product’s label, which is left blank for the marketer to fill in with its brand. How cool is that, right? Then, Let’s get started.
What are white-label products?
Think of them as the chameleons of the retail world. You’ve got these cool things designed and made by one bunch of creative minds. Then, here comes the fun part — retailers scoop them up and give them a whole new wardrobe, aka their own brand. Imagine your favorite water bottle or coffee cup. Same awesome design, but now it’s got that extra touch that makes it uniquely theirs. It’s like taking your trusty old bottle of wine and giving it a fresh, stylish makeover. Same spirit, new look!”
That’s a fascinating story! But it will all make sense when it fits into its framework i.e Supply chain management which helps to streamline the process of raw material into a product.
Supply Chain Management
Supply chain marketing, which serves as the foundation for changing raw resources into products. For example, if a business wants to sell “Chips”, it must first get raw materials/components, produce or process the ingredients into chips, determine a packing strategy that is relevant to the marketing strategy, add a brand (label), then launch into the market. The whole process is complicated and taxing. This is when white labeling comes in beneficial for retailers.
White Labeling- Supply Chain Management
First-stage tasks such as raw material procurement, production, basic packaging, and, in some situations, inventory management are handled by white-label manufacturers. They sell the products in Generic brand. Their products are purchased by the retailer and sold under his brand. Many cases, White label Manufacturers do not sell their products directly into the market and act only behind scenes. Sometimes, they act like private labels who sell in the local market and sell their products for other brands too. All in contract and strategy.
Sounds promising, right? But, who would prefer white labelling? Or in which scenario does white labeling come handy?
An illustration of White Label Product
Often White and Private labels are interchangeably used in the market; However, let us consider an example of a prospective white label product, even if there is no proof to support this.
In 2018, e-commerce decided to start with the home-cleaning sector to get a competitive advantage. It collaborates with a local manufacturer to launch Presto. The same manufacturer produces a similar product and launches in the market under his brand, “Champion Blue”. Perhaps the local manufacturer started with a private label and then moved to white labelling, considering it an advantage.
Here is the win-win situation for e-commerce and the White label manufacturer.
Retailer benefits on White Label Products
- Ecommerce, who wants to fill the white space or Product gap.
- When an e-commerce platform offers all of the Fast-Moving Consumer Goods (FMCG) products except one, the missing product is known as a “white space” or a “product gap.”
- Market Testing: White labelling can be used as market testing for a new product; Hence it helps in risk mitigation of launching new products in the market.
- Cost -Effective: No tension of raw materials cost, manufacturing unit
- Time efficient: Skips the initial part of the development cycle of the product
- Competitive Advantage in the Market: Filling in the white space of certain industries is easier and gives a competitive advantage for retailers.
How White Label Manufactures are benefited
- A Constant Revenue Stream: Signs up for a longer-term arrangement that guarantees revenue regardless of market conditions.
- Long-term engagement and relationship with established brands
- Owns In-house production & operation unit. It is his product and design
- There is no pressure to launch products
- There is no tension between revenue and monetization based on consumer consumption.
Revolution of White Label Products
Interestingly, white label products started with the music industries i.e. DVD players, slowly migrated to the FMCG industry, Electronic goods, Beauty and skin care products, Software, Airline, Banking and still many more industries. These penetrations are too high in the market and there is a lookout for these products.
Some bigger market products are in white labelling
- White Label ATMs: Under this business model, ATMs are set up and operated by non-bank entities, carrying the brand name of the White Label ATM operators. These ATMs provide a convenient and accessible banking solution to customers, regardless of the bank they hold accounts with.
- Transportation: The industry has white labeling starting buses, trucks, autos and Airline. For example, Airlines, such as Delta (and their Private Jets offering), white label a flight or flights from another airline (such as Wheels Up) to capitalize on a distinct regulatory requirement. Code-share flights by airlines are an example of white labelling, which is also known as “marketing carrier” or the white label (as opposed to “operating carrier” or the white labelled).
White label software
To be specific, if we need to look into White labelling in the Software world, then “Software as a service” is mostly known as white-label software. Like any other industry, label software refers to software products or services that are produced by one company (often a software provider) and then rebranded or customized by another company.
Summary
White Label is the most suitable and secure choice for a novice seller or enterprise seeking to establish a foothold in an unfamiliar industry before gradually carving out a niche for itself. It’s all about product reach in the market and brand evolution.
References:
https://www.spglobal.com/marketintelligence/en/news-insights/trending/RKHC7TZ2wNfeGsok4bxy8g2
