White Labeling: How Different It is From Private Labeling?

Okay, so this is going to be one interesting post as we are about to get a little confused, explore misconceptions, get clarity, get confused a little again, get enlightened and decide better.

Yes!

Welcome to another post on our Retail and Ecommerce series, where we explore diverse business models, which you can implement for your store or business.

Our previous post was on private labeling and how you could go about understanding the business model for your retail and Ecommerce venture. Similar to how we shed light on private labeling, let us explore in detail white labeling as well.

But not to worry. Once we keep going, you’ll know all the differences you need to know about what makes white labeling different from private labeling, what are the various challenges here and what solutions you could implement to make your white labeling business more airtight.

Let’s find out.

What Is White Labeling

White labeling is very different from private labeling though it might seem very similar or the same from its outlook.

When a brand name or a business offers their label (such as brand logo and branding collaterals) to be used by a different business such as a manufacturer or a vendor, it is called white labeling.

Just to clarify, private labeling is when you – the manufacturer – want to sell your products under a different brand name. But white labeling is where you use a different brand to sell your products.

Like private labeling, white labeling has been a common practice in the manufacturing and retail industry. However, nowadays, white labeling has also found its place across other industries such as Information Technology, banking, food and beverage, forex trading and more.

The key difference between a private label product and a white label product is the authority a venture has. When the brand you intend to sell your products under dictates the manufacturing terms like specifications, requirements, build, quality and more, it is known as private labeling.

On the other hand, when you dictate these because you are a pro in your business and market under the label of a bigger brand, it is called white labeling.

No confusion there, right?

Let’s Make Some Lemonade

For better comprehension, let’s imagine you make great lemonades and you decide to open a stall in your street. Because you are new, your credibility is less and so the footfall in your store is also less. But you know that your lemonades are amazing.

To improve sales and numbers, what you do is opt for the white labeling model and get the brand logo and branding collaterals of an already popular lemonade chain and sell under that particular banner. Your original ingredient and recipe remains the same.

But in a private labeling business, the bigger lemonade chain would tell you how many lemons you should extract for one cup, the amount of sugar or sweetener to be used, the quantity, whether you would serve in a glass cup or a disposable cup and more.

We are sure you have a better clarity now.

What Are The Advantages Of White Labeling?

There are several advantages to experience when you prefer the white labeling model. Some of them include the following –

You get to sell under the banner of a more credible and popular brand.
You spend less on marketing and branding as you capitalize on the brand’s existing popularity.
You become popular with your target audience faster.
Brand loyalty is more prominent.
You get guaranteed contracts, sales and revenue as brands want to collaborate with you for their sales.
It allows you to increase your product line significantly.

Types of White Labels

The business model of white labeling can be applied to both products and services.

White Label Products

When a tangible product is manufactured and the brand image of a different organization is used, it’s a white labeled product. This is prominent across several major industries such as

Food, beverage and groceries
Apparel and fashion
Electrical appliances
Electronic devices and gadgets
Computer software and applications and more

White Label Services

The model of white labeling can be applied to the service industry as well. If you’ve ever explored online trading, white labeling is a legit concept where brokers are allowed to use the forex brand of a particular company to trade, promote and bring customers into.

Several banks and telecommunication companies have joined the white label service bandwagon, where they fill areas of expertise and departments these bigger businesses usually lack. Background verification companies, back offices, sales or support businesses can all be white labeled service providers of a different brand.

Challenges in White Labeling

A complex concept like white labeling is bound to have complex challenges. On an everyday basis, white label companies face a myriad of challenges and we have handpicked the most prominent ones.

Product Purchase And Relationship Management : where as a label offering your brand value to a manufacturer, you have an obsolete method of collaboration, still use offline methods, have a half-baked application or a software that is built for a different business and more.

Real-world scenario : You have a disorganized database or operations, where you are unclear of how many white-labeled businesses you have, their terms and conditions, revenue details and more. You also don’t have a tracking system in place if your brand image is used under the terms and conditions you set. Besides, your mails and communications are one-sided, where you have not automated acknowledgement and follow up of emails and calls and more.

Delays In Delivering : where you implement a poor workflow management process that spans across your business’ operations.

Real-world Scenario : You experience delays in manufacturing that creates a dominos effect of consequences to stocking, packing and shipping causing a delay in order fulfilments.

An Improper Product Portfolio : where your portfolio is a paper-based brochure or a flyer that you distribute to your potential brands and customers.

Real-world scenario : You don’t have a website, an application or an online presence that could serve as a comprehensive virtual portfolio of your products or services. Because of this, you also don’t track conversions, reach and credibility of your white-label business.

Lack Of Online Tracking Mechanism : where there is no extensive dashboard, a business intelligence tool or even a 3rd-party tracker to fetch you crucial business information.

Real-world Scenario : You have zero or minimal ways to track the performance of your business, data on which product does better, what needs improvement, how your customers feel about your brand image, your competition and more.

Marketing And Building Loyalty : where age-old processes and lack of updated tech infrastructures deter you from keeping up with current market trends and aspects that eventually build credibility and loyalty for your brand.

Real-world Scenario : You have trouble connecting with your customers or audience as you are not on mediums and avenues they are on. This offers your competitors an edge to increase their sales numbers and fetch even bigger brands for collaborations.

Overcoming The Challenges In White Labeling

Future of private labeling operations Winning in a digital era_blog-6(2).jpg

Tech digitization is one of the best ways to overcome the challenges in white labeling. We have curated different aspects of this here.

A Unified POS : to streamlines diverse processes across teams and branches to give you a comprehensive look on the entire operations of your business. You can segregate your brand’s usage business wise, region wise and more options and get information about the performance of each white-labeled products or services in one click. This is beneficial from a manufacturer perspective as well.

Shipping And Order Tracking : to make use of real-time data generation and GPS services to track the status of your products and their shipments across the world. This also involves automated messages in the form of notifications to customers who look forward to their products after making a payment.

A State-Of-The-Art Ecommerce Solution : to stay abreast of market advancements and trends. Custom built Ecommerce solutions allow you to automate several crucial business aspects and help refining and reaching out to your target audiences easier. You can identify what products fare better in which regions and modify your approach accordingly.

A Customer Relationship Manager Platform : to foster a transparent environment with respect to running your business. Your clients on the other side can see through your business and its statuses regarding their brand image or usage. From solving queries to strengthening your business operations, a CRM is inevitable.

Loyalty And Reward Programs : to gain more customers and increase retention rates. You could start an exclusive club for deals and discounts or offer points-based reward programs all from your POS.

Case Study

One of the best examples of white labeling is the range of Go Value products you could see in Walmart. There are tons of different Great Value products on the shelves of Walmart. Their presence does not mean that Walmart has manufactured, processed, packed and placed them.

They are all white-labeled products that Walmart simply lends its brand image and logo to. In this interesting aspect, the brand that probably made one of the Great Value products you hold on your hand could be placed right next to it under a name of its own or a different name.

Future Of White Labeling

Like any other market segment, white labeling is also bombarded with competition. To stay ahead of the clutter, democratization is essential. This means information to be made available to every stakeholder involved in a white-label business. The more transparent a business’ modus operandi are the stronger the collaboration and market presence.

That’s why this sector will see an upsurge in the adoption of digital trends and completely do away with obsolete and offline ways of running a business in a few years. Complex CRMs will make their way into companies and manufacturers, real-time data generation will happen, marketing simulation, delivery and logistics automation, enterprise Ecommerce solutions in the form of apps and websites will all seep into this sector.

If you are looking to expand your retail and Ecommerce business by implementing the white-label model, you need a substantial solution to overcome the challenges we just mentioned. That’s why we recommend getting in touch with us to get an extensive digitized solution custom build and tailored for your business.

Reach out to us today.

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