As entrepreneurs and small business owners, it probably seems like the “To Do” list gets longer every day. So much goes into building a successful small business. A large part of that process is procuring or creating inventory and establishing your brand. But what if you simply lack the time or labor power to develop more products or services? And what if selling other company’s items goes against your goals or image? These same reasons are why businesses – small and large – have been opting for white labeling for years.
What is White Labeling?
Simply put, white labeling is when one business purchases a service or product from another company, with the intention of selling said purchase with their own company’s name and logo on the packaging. This is often done when the manufacturer signs off on branding their products with a different company or buyer’s name. You might be thinking: This sounds like the makings of a lawsuit. The practice is pretty common, though, and with transparency and proper contracting, there’s nothing illegal about it. Instead, one company gets to sell more of their services or product, and another is able to put it on their shelves under their own name.
You’ve probably purchased a white label product as a customer before. Big box stores, such as Target, Walmart, or Costco have their own brands, but so much of what is labeled as such on their shelves are actually made and packaged by third-party manufacturers.
Why Do Small Businesses Opt for White Labeling?
While white labeling is most often associated with large companies who require mass-production for their goods and services, small businesses might find a myriad of benefits as well.
Say for example that you started a small information technology (IT) business that offers computer repair, troubleshooting services, data management, and cyber security. About a year into starting, your company is doing well, but you’d like to expand to website development and email marketing based on customer feedback and desire. Unfortunately, your employees are already too overwhelmed with their current workload and it doesn’t seem possible to develop the services yourself. This is where white labeling comes into play. By finding a different company that offers their services under white label marketing, you’re able to fill the gaps in your business model.
This might also be the case for, say, a CBD or hemp company that wishes to add more products to their inventory but is unable to develop their own due to knowledge, time, access, or monetary limitations. They would seek a white labeling business to help propel their own brand forward.
It’s not impossible to break into a business sector that’s unknown to you, nor is it impossible to further develop your goods or services if time, money, or knowledge is an issue. Even better, it can all be done under your small business’s name and logo, creating a sense of familiarity and trust for your customer base.
How to Choose a White Labeling Business
When making the decision to purchase white label goods or services, the most important part is choosing the right business to partner with. When doing so, you’ll want to keep a few things in mind.
Values and Quality
Customer relations is a critical aspect of any small business, which is why choosing a white label business is about so much more than just slapping your label on any given product. Consumers turn to you for certain goods and services because they enjoy or rely upon what you have to offer. If there are suddenly items on the shelves that range in quality or are misaligned with your values, that customer base is let down. When searching for a white label business, make sure to test out their goods and services before making the final decision.
When embarking on any type of partnership, there’s a lot of ongoing conversation. If you or your employees don’t enjoy communicating with the team at a potential white label business, it’s probably not the one for you. Because a small business is so much more than the goods and services it offers, you’ll want to ensure that any partnership you sign off on aligns with the relationships you already have.
Experience and Knowledge
Since there’s a chance you’re seeking out a white label business to fill a gap in your own experience or knowledge, you’ll want to choose one that can meet those needs. Even if the company is fairly new, consider who owns it. Does this person have an extensive background in the field? Take a look for any case studies that they have on their website or testimonials from companies similar to yours. This will help you gauge whether or not they’ll satisfy your customer base as well, since they – and you – come first.