Say you're walking down the Target store's baby aisle. You've seen some brands (Gerber, Johnson & Johnson, and Carter's) at other stores, but only at Target can you find Up & Up. This Up & Up brand is the Target store's specialty brand.
This "white-labeling" is one way Target gets you as a customer to keep coming back to its store; Target is the only place you will be able to find this brand.
The term "white-label" comes from the white label on a package that has the marketer's branding and logo. When a company "white-labels," it simply means that another company will be rebranding one of its products or services to make it appear as the purchasing company's own.
White-labeling almost sounds like a negative, practically illegal action... but in reality, the white-label process is something agreed upon by both parties. The product or service is bought out by the company that then brands it as its own, providing business for the producing company and allowing the rebranding company to provide a service it wouldn't be able to do otherwise.
What You Can White-Label
Products are frequently white-labeled and sold in stores under a different brand name than the actual manufacturer, but surprisingly enough, services (even online ones) can be white-labeled, too.
For example, grocery stores often will offer a cheaper "store brand" version of a lot of cereals. This is a version of white-labeling in which other companies produce cereal, sell it to grocery stores, and allow the stores to put its own branding on the cereal.
Have you seen grocery stores and department stores that offer photo services like digital transfers, printing, and more? Many companies offer a white-label to those stores, so they don't have to do the work themselves on site.
Companies can even use white-labeling for SEO purposes. One site may offer its products nationwide; other domains offer the products locally. They are all connected as a network of the first website, but now some of the sites are able to rank for local keywords, not just worldwide.
Why Provide a White-Label or Purchase a White-Label
White-labeling can be a win-win for both parties.
The company purchasing the white-labeled product doesn't have to spend the time and money figuring out the best way to create the product; it dodges all the troubleshooting, working outside of their knowledge base, wasting money in finding the most cost-efficient ways to produce the product, and much more.
The company creating the product doesn't have to worry about marketing and discovering the best ways to sell the product, and can instead can focus more on the aforementioned items.
Pros of White-Labeling
- Marketing your own brand can be risky and takes a lot of work, time, and money. Doing so can be a huge roadblock for an entrepreneur or small start-up business.
The makers of the product no longer have to worry about branding their own products because the purchasing company does that for them.
- You can get access to incredible clients that you most likely wouldn't have been able to find on your own. If you are just starting out, and haven't been in the industry for a while, it may be difficult to even find clients. When you white-label, you are handed clients, and sometimes these clients will be people you would never even have fathomed working for.
- You get to concentrate on what you love or what the business is really good at. White-labeling provides an opportunity to solely focus on what it is you love and what you are good at. You don't have to worry about how it is sold or how much money you're going to make. You can focus on the strategies and things that work well for your business rather than trying to spread people too thin or have them try things they don't have experience in.
Cons of White-Labeling
- You lose control of the project. Unfortunately, when you're working for another company, you may not have as much say about how the project is carried out, when it's time to throw in the towel, and how long you get to work on each item.
The makers of the product may tell the white-labeling company exactly what it wants, how it wants it made, and how long it should take. This input can sometimes narrow the creativity and control this white-labeled brand may have over its products.
- You don't get the credit for your work. With white-labeling, the purchaser of the white label gets to put its name on your work. So whether the client or customer loves your work or not, you never get to tell them it was you that did such a great job.
You cannot tell others that you created that brand because it would allow consumers to recognize where else they could purchase that same brand, and possibly decide to no longer go to the store selling your white-labeled product.
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White-labeling allows for better business growth and partnership with other businesses. And, all in all, it appears to be a positive interaction and great way for both parties to be successful.