When you understand the various white-label business models, you can better visualise where you fit into the picture as a potential investor.
And white-label has a lot to offer – building your business on an existing solution helps avoid many typical risks. You won’t need to set up manufacturing or development flows. This could save you – quite literally – millions. That said, you still need to know the game before you dive in.
This post covers the definition of white labelling, three white label business models, and their pros and cons. We’ve even added a few product examples to help spark some ideas.
Set on White-Label Software? Explore Your Options on Our Reseller Page.
Let’s dive in.
White Labelling In A Nutshell
White labelling involves two entities, a provider and a reseller. The provider develops an unbranded product, which a reseller can pick up to market as their own creation.
A white label item could be a physical product, software or even a service – but more on that in the next section.
If you want a more comprehensive introduction to white labelling, see our previous post here.
Three Main White Label Business Models
We’ve lumped white-label offerings into three main categories for simplicity’s sake.
Are some models better than others? It depends on your business goals and the resources you have on hand.
Let’s weigh our options…
The Physical Product Model
Within this model, your white label partner covers manufacturing, and you’re in charge of the branding and distribution. So keep in mind that you may need to set up a process to get your products labelled.
The list of ready-to-resell options out there is truly endless. A sound marketing strategy and cultivating a unique brand identity will take the front seat when you decide to go down this route.
PROS:
- Cash In On Craze – Trends are great if you spot them early and capitalise fast; otherwise, they’re better left alone. You don’t want to lose the value of your investment by hedging on a trend.
- Easy Testing – Trying samples and getting customer feedback won’t be costly or complicated.
- Existing Market – Where there’s a white label product provider, there’s often an existing market.
- Business expansion – It can be a secure way to experiment with new products if you plan to expand your range.
- Easy Sentiment Research – Product reviews are easy to find. A simple google search can give you all the insight you need about your chosen product.
CONS:
- Competitive – You’ll face heavy competition in most niches, with some markets being plain oversaturated.
- Generic Product – Your marketing and customer service execution will have to do most of the ‘talking’ since you’ll have no inherent competitive advantage in your product.
- Lack Of Authority – You have no control over the product’s architecture – if the supplier decides to prioritise cost-saving and lower quality, you simply have to deal with it.
- Warehousing – You’ll need space to store your products, which can be costly.
- Supply Issues – Supply chain disruptions are out of your hands, and you’ll have to bear them when they inevitably occur.
Product Ideas:
Travelling Equipment
With the pandemic easing off, people are keen to travel again. Why not capitalise on this by selling smart backpacks or camping equipment? Influencer marketing in this domain should be a breeze, and Instagram can be your go-to advertising channel.
Notebooks And Stationery
At Appenate, we advocate for the ‘paperless way,’ but notebooks and stationery have always been in high demand. You can also repackage these items into functional sets to sell more in one go. Plus, these kits will have that popular ‘value pack’ appeal.
Eco-Friendly Alternatives
For a more environmentally-sustainable product, delight the millions of coffee- and workaholics out there with stainless steel flasks. Branding as “sustainable” is easy, with no demographic limitations on your target market.
The Service Model
The service model is commonly found in the digital marketing industry. It’s like traditional digital marketing, but with a middleman – a ‘reseller.’ This model allows smaller agencies to enhance their operations through outsourcing.
It’s not limited to marketing, however. Accounting is another of many popular white-label services.
PROS:
- Save HR Costs – Your agency will save the overhead costs necessary to maintain an in-house team.
- Outsource – You can expand your scope of service by outsourcing anything you can’t do yourself.
- Save Time – You’re not only outsourcing tasks but management and execution of those tasks as well, thereby freeing up more time.
- Grow Your Business – Without the worry of handling smaller day-to-day execution tasks, you’ll be able to focus on business growth as your core priority.
CONS:
- Service Quality – You will be held responsible for any bad service your white label partner provides, even if you’re not directly at fault.
- Wary Customers – This practice may decrease trust in your services, should customers become aware of it.
- Back And Forth – You’ll potentially be spending a lot of your time reviewing marketing materials, as well as exchanging feedback between parties.
Service Ideas:
Web Design Services
Do you want to expand your services to include website design, but you don’t have the in-house talent to deliver?
This is the perfect opportunity to bring a white-label service on board. One potential provider could be Color Whistle.
Social Media Management
Elevate your eCommerce shop to new heights by reeling in a few paid-ad experts. ROI Minds is a reputable provider you can consider to get the job done.
The Software Model
If you want to build a sustainable business that keeps up with an increasingly digitised world, the software route could be for you.
This model includes cloud-based products or services (or a mixture of both) that are commonly distributed to vendors on a subscription basis. An excellent choice if you’d like to break into the information technology industry with little-to-no talent resources.
PROS:
- Market Potential – You’ll be entering a profitable industry, boasting a compound annual growth rate (CAGR) of 11.7%.
- Save HR Costs – You’ll save massive overhead costs. If you don’t already know: talented in-house developers are pricey assets.
- Save Time – Cut down on the time, effort and cost it takes to develop your own software solution.
- Digital Transformation – Digital solutions become more relevant by the day.
CONS:
- Buggy Code – Frequent technical errors will reflect poorly on your business. Therefore it’s crucial to partner with a quality software provider with solid support.
- Limited Customisation – Some software solutions will have limited customisation capacity. If you want a genuinely custom digital solution, do your homework.
- Superficially “white label” – Some providers claim to be fully white-label but let their brand slip through the cracks. The potential issue is that your customers could switch to the provider to save money, losing you business in the long run.
Software Product/ Service Idea:
White Label Workflow Software
Looking for a no-code tool to offer smoother operations across departments? Consider Processmaker. With it, you’ll be able to automate complex enterprise-level processes for your customers.
Project Management Software
ManyRequests built an easy-to-use platform to help agencies manage their clients, team members, projects, billing and general automation.
They offer a free 14-day trial so that you can play around with the platform and see if it’s a fit for your goals.
Custom Business App Builder
Appenate is a custom mobile form builder and task management system that allows you to build personalised apps the ‘no-code’ way.
You can resell our software as your own through our 100% custom branding option & bespoke feature set. Enjoy free and unlimited support with the knowledge that your customers are yours. We even go so far as to contractually bind ourselves to this statement.
Invest Wisely
Ultimately, investing in a white label solution can help you reap impressive rewards. It’s worth investigating, but there are some caveats you might want to consider before taking an opportunity like this to heart.
Start by getting acquainted with the red flags that should send you running.
Know your ‘why’ and remember these three ground rules for making better business decisions:
- Quality over quantity.
- Real value over hype.
- Lasting over fleeting.
Happy Investing😉!