White labeling is an important term to wrap your head around, and it presents an interesting opportunity for startups and eCommerce entrepreneurs, particularly in 2021. White label products can be a simple, low-investment starting point for budding entrepreneurs looking to build a business.
Welcome back to our sourcing 101 blog.
In this series we break down the basics and arm you with actionable intel to help you source products from China like a pro.
In the last post we looked at the difference between a white label product and a private label product. You can check out that post here.
White labelling is an important term to wrap your head around, and it presents an interesting opportunity for startups and eCommerce entrepreneurs. White label products can be a simple, low-investment starting point for budding entrepreneurs looking to build a business.
With that being said, it’s important to weigh up both the pros and the cons (yes, there are some cons) so you can determine whether or not it’s the right strategy for your business.
So, without further ado, let’s dive into white label products — the pros and cons.
A white-label product is a product that is manufactured by one company and sold to another company that rebrands it and sells it to their customers. It’s a sourcing strategy that has been around for decades.
The eCommerce revolution has driven huge growth in online retail. People are buying more online than ever before, and white labelling has played an important role in allowing small businesses to participate.
White label products allow you to skip the lengthy and costly product development phase and get a product to market fast. It’s a window of opportunity that allows smaller players to carve out a piece of the pie without the usual risks and costs.
What is the most enticing thing about a white label product for a small business? The low cost.
Developing a product from scratch is time-consuming and expensive. With white labelling there is no need to dream up the next hot consumer product, develop a prototype, and go through the lengthy and expensive manufacturing process. Your white label manufacturer knows exactly how to make the item you want, and will often have stock ready to order.
You could source a product on Alibaba today and launch your own brand before the end of the month. (Perhaps read the ‘cons’ section of this post before you place your order though). You might have ambitions to eventually launch a fully unique, custom-designed product, but in the meantime, white label products can help you get started.
Important side note: Developing a product from scratch is a great approach too! We’ve worked with many clients who have done exactly that. Need help bringing your big idea to life? Book a free consultation today.
Establishing whether or not there is a market for the product you want to sell is an important step in any entrepreneur’s journey.
White label products usually exist because there is a market for them.
Someone creates a cool product that people want.
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Other companies start selling ‘like’ versions of it.
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Manufacturers in places like China pick up on trends like this and start offering white-label versions of those products.
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Retailers or resellers buy these white label products and sell them to their customers.
For a clearer picture of this, check out our post on the difference between white label and private label products.
White label products can be a useful tool to test the waters in other areas of the market. You might be developing your own line of work boots made from sustainable materials, and see an opportunity to add a work apron to your product offering.
Before you invest in developing one from scratch, you might use a white-label solution to test the waters with your customer base. If your customers like the product, this could provide you with very useful market research. You can then start developing your own custom 2.0 version.
White label sourcing allows you to identify a particular trend in your niche and jump on it quickly. Let’s say you’re in the fitness industry selling affordable gym equipment. Vibrating foam rollers start flying off the shelves and you want a piece of that action. White labelling allows you to jump on that trend, order your own foam roller, brand it up, and start selling.
White labelling is the realm of generic consumer goods. A generic, or ‘like’ product usually closely resembles a product sold by a well-established brand. As such, white-label sourcing allows you to leverage the familiarity of these well-established brands. Let’s look at Olympic weight plates as an example.
The Olympic-style bumper plate design has been widely adopted since the 1980s. Big fitness brands like Eleiko and Rogue have dominated the premium end of the market, which has left ample opportunity for smaller brands to position themselves as an affordable but high-quality alternative. That’s largely thanks to white label sourcing from manufacturers in China.
Reverse Sourcing is a revolution in China sourcing.
It’s the fastest way to connect with suppliers and manufacturers you KNOW can deliver. You find a product you want to source, and we’ll tell you who makes it.
Reverse Sourcing is the data-driven method of finding out who supplies who, and who makes what. It’s a revolution in sourcing that will save you time and money.
Typically, white label products have been used as a mass-market strategy and it is often said that you need a sizable, established following to benefit from their use. A brand’s reputation is key here because you’re dealing with generic products that don’t confer a lot of competitive advantage on their own. This is why white label products have traditionally been used to add new revenue streams and increase market share, rather than as a market entry strategy.
That said, there are plenty of examples of eCommerce entrepreneurs breaking into existing markets with nothing more than a white label product. You might need to get creative with your marketing strategy, but that’s what entrepreneurs do best.
Perhaps the most obvious con when dealing with white labelling is that competition is often very high. White-label products are by their nature generic, and consumers have plenty of options. If you’ve found the perfect protein shaker to white label, it’s likely that some of your competitors have too.
In some cases you may be able to make slight changes to a white label product to differentiate it from others in the market, but this will almost always cost you. Once the costs for modifications start piling up you start creeping towards a private label situation — which you can learn more about here.
Competition doesn’t have to stop you. If you’re a small business dipping your toes into white labelling, focus on nailing your branding and the customer-facing side of your operation.
“It takes 20 years to build a reputation and five minutes to ruin it.”
- Warren Buffett
Quality varies significantly from one supplier or manufacturer to the next on Alibaba — not all products are created equal.
Many excited entrepreneurs race through the sourcing process and place an order with a supplier they haven’t properly verified. The result is often poor quality products that damage your brand.
The lesson here is to make sure you work with top suppliers that have a reputation for producing quality products.
So there you have it — white label products, the pros and cons.
Understanding the world of white label sourcing is like popping the hood and taking a look at how an engine works. It’s a mysterious and misunderstood side of sourcing, but if used correctly the opportunities are endless.
If you’re looking to source white label products and would like some expert support, Epic Sourcing offers a free consultation for new clients. Simply fill in the form here, and we’ll be in touch.
Better sourcing everyone.
