The ability to use white label branding as a marketing strategy is one which requires the backing of a powerful brand. There are some reasons why white labeling is gaining popularity now. Some of the advantages of white label branding –
• Increased Supply – Brands can easily double their production because of the resources on the manufacturer. Through this supply, brands can expand into new markets and cultivate new customers.
• Reduced cost of production – The strategy behind white labeling is that it uses an established brand’s goodwill to sell a similar, yet cheaper to produce, product. This allows brands to reduce their cost of production.
• Rapid brand growth – It becomes easier for brands to expand their market share through white label branding because they can produce a large number of products at a lower price.
• Simplified new market entrance – Brands often choose to set up labeling facilities near production plants to eliminate the high cost of shipping and sell products directly to the market.
• Faster Innovation – Brands can hugely benefit from improvements in products from their production partners since the manufacturer is solely focused on creating and improving the product.
This gives them more time for research and development.
DISADVANTAGES OF WHITE LABELING :
Like everything else, White label branding has some disadvantages, too. They are –
• Inconsistent Quality – Inconsistency in product quality is one the biggest disadvantages of white labeling. The different manufacturers of the white label brands may not follow those same procedures, thus causing an issue with quality consistency.
• Less Control – No party is in full control in case of white labeling. Brands lose control of the production process while producers lose control of the marketing, distribution and sales strategies for products.
• Supply chain cost increases – Brands need to incur the cost of obtaining these products and then repackaging them for sale. Thus the production cost shoots up.
White labeling is gaining more momentum with the onset of Digital Marketing. It allows you to quickly spin up a business around an existing product. It involves a legal agreement between two parties; the manufacturer and the reseller.This approach is very common in the Software Industry.