The white labelling business model

Whether it’s the headaches of figuring out how to set up your production infrastructure or improve the quality of your products, it’s no secret that launching a business from scratch can be a Herculean task. Fortunately, white labelling can be the entrepreneurial Aspirin that can help streamline your business operation.

In this destination guide for everything you need to know about white labelling, we’ll give you the 101 on how it works, the benefits and challenges, plus examples of some killer white label products. By the time you get to the bottom of the guide, you should have a clear verdict on whether white labelling is for you or not.

What is white labelling?

A white-label product or service is produced by a third-party and then designed to match your business’s marketing and branding.

If you want to think of it in another way, the product will have a ‘white label’ that you can fill in with your own product descriptions, making it look as though you produced the product from scratch yourself. This means that you don’t have to worry about all the intricacies of production lines and, instead, can focus on investing your time and resources into other parts of your business. The other great part about white labelling is that you can choose to order in bulk, dropship, or print in demand. But more on the benefits of white labelling later.

How does white labelling work?

At the most basic level, white labelling is a third party producer making identical products that are sold by multiple retailers under different brand names.

You know that mug sitting in your cupboard that looks similar to your friend’s but is from a different brand? Chances are both mugs were white label products in their infancy, and sold to different suppliers who then slapped their branding on them. One firm can concentrate on producing the product and another on selling it.

Let’s take it step by step:

1. A supplier makes a white-labelled product. This is completed unbranded – no logo, name, or label.
2. A supplier sells the product to a reseller, which can be another company or an individual. This is where the reseller places their branding on the white-label product. As a reseller you can choose to order in bulk, dropship, or order on demand.
3. The reseller sells the product to its own customers. Keep in mind that the customer has no idea the product has been white-labelled, so the beauty of the process is its anonymity

Benefits for business

• Lower barriers to entry: white labelling saves you the trouble of having to learn the intricacies of manufacturing products. That automatically becomes the job of your supplier, which gives you more time and energy to set up your business and enter the market.
• Makes it easy to jump on trends: if there’s a product that’s all the rage on Instagram or TikTok, white labelling allows you to easily jump on the trend and profit from it.
• Offers economic efficiency: if you choose to go with bulk ordering white label products, you’ll be positioned to make good profit margins. Manufactured goods in bulk are more economical, which will allow you to invest more resources into other parts of your growing business.
• Great for international expansion: white labelling allows you to have a presence around the world without having to invest in costly physical infrastructure or personnel training processes that would otherwise be required for international expansion.
• Fostering trust with your customers: white labelling can help you establish trust among customers through simplifying yet streamlining complex processes and transactions. Since the turnaround of white labelling is quite quick, you can foster trust among your customers by having a constant high production standard and consistent supply.

Challenges of white labelling

White labelling is not a panacea and faces some disadvantages when you compare it to fully custom-made products. Here’s a few things to consider:

• You need to work with constraints set by your supplier: there’s only so much you can customise with a white label product, which limits your opportunities to make your product fully unique. You might want to consider which products make sense to white label (like mugs or cosmetics) and which ones don’t (products you want to have a USP that is only associated with your business and no one else’s).
• Price wars: since you and other providers will be selling the same white label product, it could lead to pressure to keep on driving the price down to stay competitive with consumers. This could narrow down your profit margins, which could defeat the purpose of white labelling in the first place. Therefore, you’d need to have a solid pricing strategy in place.
• Dependence on your supplier: you lose some independence when you’re relying on your white label product supplier. This means that if something goes wrong in their supply chain, you’ll also be affected and could let your customers down. For instance, if there’s a shortage of canvas, it’ll be tough to get the necessary supply to sell your tote bags.
• Liability: You may have to take on the responsibility for any issues consumers experience while using the white label product, particularly because producers may be in locations that are less strict with regard to specific regulation, meaning there is a potential risk to the brand if standards fall short of those required for sale in the UK.
• Lack of control: if the white label producer decides to update their product, you don’t really have any say in that. You’d therefore need to go back and re-strategise your marketing and branding to justify the changes in the product to your consumers.

Examples of white labelling

💄 Cosmetics: many makeup products have the same formula, even if they appear different to an unsuspecting eye. For instance, Kylie Jenner’s products are made by Seed Beauty, which also supplies cosmetics for ColourPop. You can make an easy start with lip balms or mascara.

📱 Phone accessories: these are a great option as they’re cheap to produce- everyone needs them, and they are really easy to customise. They’re also fantastic for entrepreneurs that have an artistic side as there’s lots of room for creativity when designing things like phone cases.

👟 Fitness clothing and accessories: From yoga mats to leggings, there’s lots of demand and room for white label projects in this huge and growing market. You can also get the help of fitness influencers to amp up your marketing.

☕ Mugs: this is another heavily customisable idea. From Father’s Day to World’s Best Boss, you can pretty much imprint anything on a mug. They’re also cheap to produce so you’d be well-positioned to make good profit margins. Plus, levels of demand as high as both office and hybrid workers tend to have a cup of tea or coffee on the go throughout the working day.

🕯️ Essential oils: whether it’s for self-care or for the sake of smelling nice, essential oils are another area ripe with white labelling opportunities. They’re a great starting place for wellness influencers or for entrepreneurs who are making their first strides into ecommerce.

👜 Tote bags: from using them as sustainable grocery bags to a reliable place to keep all your valuable as you’re strutting around town, tote bags are highly customisable.

♨️ Coffee: this is a great one to go for if you’re already convinced about selling mugs. After all, you need to pour something into them! Keep in mind that this potentially is one of the trickiest white label products to get into as it requires a sizable investment and is prone to changes in coffee bean harvest and price fluctuations.

Conclusion

White labelling can be an exciting business front to explore if you want to quickly hop on product trends or if you simply want to streamline your supply chain. You have lots of product ideas to leverage so if you’re looking to break into ecommerce, white labelling might be the entrepreneurial way to go. However, keep in mind that white labelling comes with its drawbacks so it’s not a business solve-it-all.