For many people around the world, their eCommerce business is literally their bread and butter. Many a times, they are faced with the quandary—whether they should launch their own online product or should white label. These days, many entrepreneurs and business persons consider white labeling as the perfect solution for enhancing growth.
What Is A White Label?
White labeling is a practice in which a manufacturer provides a product or a set of products to an eCommerce retailer, which then markets the product on its website. In the process, both companies make a profit. So, a white label product is manufactured by one company but is branded and marketed by another company. This technique is frequently used in the electronics industry where the products are manufactured in large quantities. Despite the fact that some white-labeled products are of inferior quality, many white label products are built to the same standards or exhibit even better standards than branded products.
White Labeling In Online Businesses – Some Considerations
With white labeling, online businesses can considerably reduce manufacturing costs. They can also proceed with lean operations while improving customer experience. White labeling is ideal for rapid growth as they can test the product lines with lesser risk and even react quickly to changing online consumer trends.
Since white labeling significantly reduces manufacturing costs, online businesses can reinvest more revenues into selling more products. They also do not need to own a factory or pay employees and thus save on raw material and labor costs. With a white labeling product, they are not responsible for the risks involved in manufacturing. So, if a product is defective or if the raw material is poor, then they are not responsible for the losses or the sunk costs.
So, businesses can run a lean online operation as a white labeling eCommerce business as costs are low and do not involve manufacturing. Thus, they have fewer employees on the payroll. Also, they can perfectly operate their eCommerce business in a lean fashion if they are a white label eCommerce retailer. They even can go online with the products the manufacturer provides and reduce a load of issues such as stock and limited varieties.
Besides, online businesses can improve product quality and partner with their manufacturer to offer an amazing line of products and customer service to their online customers. Also, online white label companies can leverage the knowledge of staff that is experienced and already understands the nuances of the product.
Even if a business wants to private label, in the long run, white labeling offers them a great way to begin their business and online operations. Businesses can take months to start a private label business but only a few weeks to start a profitable online business with the white labeling concept. They can try out a new product line by going for a white-label version while testing how it would do in the market. If the white-label version does well in the online market, they can then go ahead and create their own product label or line.
Thus, white labeling is an easy way to get started as it reduces risk and provides a fairly flexible way to start a business and reduce startup risks. Even starting a white label partnership is fairly simple if businesses have an upper hand in sales, branding, customer success, and marketing and can rely on the manufacturer for a quality product they can white label.
The Advantages of White Labeling In Ecommerce Development Companies India
At this juncture, it is viable to consider the advantages and disadvantages of the white label eCommerce model. In an online scenario, a white label venture can become successful, if the online business is able to cash in on its strong reputation and consumer awareness. If the white label business can sell more than the manufacturer could have, then it is considered a success. Hence, the success of a white label eCommerce venture rests on how strongly an online business is able to brand and market the white-labeled product.
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Many other eCommerce models such as ‘print-on-demand’ and drop-shipping exist. They have their own advantages, but white labeling has its own set of advantages. For example, it is possible to easily expand into other markets. For example, businesses can expand to sunglasses if they run a sports clothing line. For this purpose, they can brand and repackage the unbranded sunglasses after teaming with a company that produces them. At the same time, online businesses can also improve the value of their brand — if they team up with the right manufacturer.
Some Disadvantages
However, there are some disadvantages as well. In case the manufacturer provides the online business with inconsistent product quality, their business could suffer. Potentially, this could also damage their brand and could also put businesses in the line of litigation if people start having genuine issues with the product. As regards inconsistency in product quality, businesses will need to have their own method of ensuring the product quality and that it comes up to acceptable standards. Thus, it is entirely up to them to make their product and branding respectable in the markets.
It can also happen that the company making the product for the online business has its own philosophy and quality control systems that differ from the ones followed by the online business. These practices could align or not align with that of the online business, creating a host of issues to start with for the online business. Yet another potential problem is that of innovation and competition—many other businesses could also be using the same product manufactured by that very same manufacturer. So it is very essential that online businesses innovate and introduce a fair element of competition and quality in this space.
Finally, it all comes down to the tools of the trade—the website, the marketing, and customer service all count. Businesses can get a website and all the plugins they need to help them sell their white label business. Email marketing can add to the white labeling efforts. Finally, digital marketing and SEO complete the marketing package, so online businesses can white label and sell to their heart’s content. Thus, if judiciously used, white labeling in eCommerce can lead to a win-win perspective in the online space.