You’ve seen the major white label business models, and you’re ready to invest. Are physical products the way to go, or would a software solution serve you better?
That’s the question we aim to answer in this blog post.
We’ll cover the definition of white label – just in case – before we dive into a versus with these two models. We cover a range of criteria that we deem important when looking for a legitimate business opportunity.
Let’s get stuck in.
A White Label Product?
A ‘White label product’ is anything created and sold unbranded. You, as a reseller, can add your branding and sell the product as your own.
When you don’t need to create the product yourself, you free up time and money to spend elsewhere – for example, on your marketing efforts. Lead generation is going to be your core focus. You’ll also want to provide top-class customer service as a means of differentiation within the market.
White Label Business Apps Vs. Manufactured Goods
The manufacturing industry still dominates the white labelling arena. Millions of products are created each day to satisfy the soaring demand.
However, manufacturing is a resource-intensive process – vulnerable to stock disruptions.
On the other hand, business apps are brand new in the grand scheme of things. When did it all start, though? Let’s satisfy that curiosity and travel back to the sixties for a second.
Inspired by the idea of ‘shared computational power’, Joseph Licklider pushed to realise his vision of the Intergalactic Computer Network. It all started with a giant computer, magnetic memory tape and the desire to allow three people to use a single computer simultaneously.
This led to the internet in the 70s and paved the way for cloud computing, which eventually made it possible for a new player to enter the white label market – mobile business apps. Much like a manufactured white label product, you capitalise on an existing solution while sporting your own branding.
So which product has the competitive advantage?
Is your chosen product in high demand? A critical – if obvious – question.
If you need some help in answering this and other questions, here’s a great step-by-step video on conducting market research by SBI Insider.
Knowing your market is critical – and so is knowing your product or reseller well. If you skimp on either of these two research tasks, you may be setting yourself up for failure already.
If you have the budget for it, you may want to consider hiring a professional for this step.
Is There A Market For Business Apps?
Simply, yes – but as with all markets, it depends on the app itself.
The general market existed before business apps were even ‘a thing’. Some companies even paid hundreds of thousands of dollars to have their own apps developed – all in an effort to stay at the forefront of digital technology.
In light of recent global disruptions, the need for cloud-based services and products has become more vital than ever.
A 2020 ‘Future of jobs’ report by the World Economic Forum found that 50% of business leaders plan to accelerate the automation of repetitive tasks within their teams.
This should excite you if you’ve been eyeing the mobile app market. The days of manual data capturing, exchange, and approval are over. And isn’t that a lovely thought?
Is There A Market For Manufactured Goods?
As with business apps, it’ll depend on your product. There’s a vast market, and research is your ally.
Here are some factors to keep in mind when trying to find a superior manufactured product.
- Check the reputability of your product provider.
- Choose quality over quantity.
- Consider the market longevity of the product – Is the current demand driven by a fad that will phase out in a few months?
If you find a worthy white label product, chances are it’s already listed on a marketplace like Amazon. Check reviews and ensure you’re getting a fan favourite before diving in.
Is your chosen market sustainable? If you’re keen on starting a business that’ll be around for a while, investing in a product that won’t lose relevance overnight should be a priority.
The longevity potential depends on the product you choose. To invest in more sustainable options, follow these tips:
- Invest in products that solve real-life problems.
- Only invest in ethically sourced products.
- Avoid building your business on products driven by trends and gimmicks.
The point is to start with practical items if it fits within the niche you’re passionate about. Remember fidget spinners? Trends never last long.
More control over your business processes equals more power to influence outcomes. However, having more influencing power is not always favourable. Depending on your chosen model, you’ll need the resources to handle such authority.
Business App Control
Comparatively, you’ll have more control over software because it is remotely powered. There are no physical supply chain concerns.
Choose a white label partner that offers reliable, unlimited support and you’re good to go. The ability to resolve technical issues quickly depends on readily available channels of communication.
Although product updates are not in your hands, many software partners are open to feedback to facilitate their research and development process.
Manufactured Product Control
Here, you have partial control. You get to manage and monitor your products from the moment they arrive at your warehouse, and you get to contract with shipping companies or do the transportation yourself.
Everything before that is largely out of your control. Physical products will always be haunted by the possibility of supply chain disruptions or transportation damage.
Mitigate the risk by contracting with trusted companies that have been around for a while.
When you consider the environment in your sourcing and management strategy, you’re casting your vote for a better future. It’s an investment in longevity, not only of your business but of the natural resources that power it.
Good intentions aside, corporate responsibility is increasing as customers become more aware of the issues caused by mass production.
The Sustainability Of Business Apps
When you subscribe to a white label business app, you’ll be doing the environment a favour.
Cloud-based products are essentially paperless. Switching from paper to digital saves oxygen-providing trees and the animals that call these trees home.
You’ll allow your customers to run their business operations remotely (spending less on fuel) and increase efficiency in their daily operations. No more lost documents, no more greasy paper.
The Sustainability Of Manufactured Goods
Manufacturing physical products is environmentally taxing. There’s no other way to put it. Some industries are more sparing than others, but multiple factors contribute to the magnitude of this problem…
- The number of natural resources used in the production process.
- The amount of fuel used to ship and transport the products to your warehouse and your customers.
- The product packaging.
- Repackaging on your side as the retailer.
If you choose this option, check out this helpful post by Sage Accounting on 5 Ways To Be A More Sustainable Business.
The main financial benefit of apps over physical products is that it operates according to the subscription-based model, ensuring a consistent revenue stream.
Retailers of manufactured goods usually sell by order. However, switching to a subscription-based model is doable if you approach it from the right angle. If this interests you, read this helpful Shopify guide on ‘How To Start Subscription Business’.
How much you’ll spend depends on the product and management model you choose.
Here’s a list of considerations to keep in mind.
- The cost of the product itself – quality products will be more expensive but will raise the public opinion of your brand.
- The cost of acquiring and maintaining the necessary equipment.
- Shipping costs.
- Warehouse costs.
- HR costs.
In the end, the barrier to entry is generally lower in a subscription-based software option. Unless, of course, you plan on building your own platform on top of an existing solution – this could prove costly but also give you a unique angle from which to approach the marketplace.
A few of our customers have done this to great effect – here’s one example.
What Could Possibly Go Wrong?
Software and physical goods don’t occupy the same terrain, so they don’t face the same risks.
Having a plan for each of these (while keeping in mind that this is not a comprehensive list) will shield you against liability blows.
Risks Of Selling Business Apps
- Poor quality code – Research the quality of a product beforehand.
- Lack of customer support from white label partners.
- Inadequate platform training from white label partners.
- Propensity to network interruptions.
- Vulnerability to cyber attacks.
Risks Of Selling Manufactured Goods
- Subject to sanctions and tightened export regulations due to political conflict.
- Volatility in global markets can cause drastic fluctuations in acquisition costs.
- Supply chain interruptions and delays can lead to dissatisfied customers.
- Tightening environmental policies can also disrupt the production of your chosen product, resulting in costly upgrades or having to abandon the market altogether.
- Profit loss due to physical damage to goods.
The Votes Are In…
So, which product reigns supreme? Ultimately, it’s up to you to decide.
As always, we recommend that you start with your business goals. What are you trying to achieve? How much time do you need to realise those results?
Once you have the answers to these questions, choosing the best investment should come easier.
Let’s summarise the criteria mentioned above:
- Market Potential – Are you tapping into a robust market?
- Longevity – Will your success last?
- Product Control – How much of your business outcomes can you directly influence?
- Environmental Sustainability – Will your business survive the scrutiny of ever-increasing regulation?
- Risks – Are you aware of and prepared for all the things that might go wrong?
We hope this article has, at the very least, brought to light new considerations to make while on the hunt for your next opportunity. May you find the ideal business opportunity for your unique business goals. ✊
If you’d like to explore a software solution, perhaps you want to consider Appenate?