PAYIX BLOG-WHITE-LABELING

Payix PR
September 18, 2017

The Advantages of White-labeling
White-labeling is a simple process that is often applied throughout the business world. In fact, it is so commonly used, most people don’t realize how many items around them are actually white-labeled. Frequently purchased items ranging from electronics, like radios and remote controls, to supermarket signature brands are examples of white-labeled products [1]. So, what exactly is white-labeling, and why is it so widely used by businesses?

Here’s how it works: white-label solutions, or products, are created by someone who does not intend to market straight to the end consumer. Rather, the creator who has already put in the time and effort to build a product will sell it to another business. Then that business will brand the product as its own and resell it to its consumers. [2]

The process may sound like businesses are taking advantage of creators, but white-labeling is a win-win for both groups involved. Though the creator does all the work, it is paid amply for its time and effort – a win. As for the business that bought the product, it has to pay a fee, but it still gets to market the product as its own – another win. This win-win situation is why white-labeling is so widely used by businesses.

There are other reasons why white-labeling can be advantageous to businesses that choose to utilize the method. Maybe the most crucial reason is so a business can offer a product or service to its consumers without spending the significant amounts of time and money needed to produce the service.[3] Creating new products is incredibly time-consuming and requires both financial and human resources. [4]  If the product or service already exists, it can be more efficient and cost-effective for a business to pay a creator for it than develop one itself.

White-labeling is also advantageous during business development. Say a business wants to develop new products for its consumers or its consumers are demanding new products. In either scenario, a business has three options. The first is to create the new product in-house, which is often a slow and expensive option. The second option is for the business to buy a third-party’s product. But, without white-labeling, a business is buying and promoting a different company’s brand instead of its own, which could potentially cost the business consumers. The third option is to purchase a pre-made product or service from a developer and white-label the product to sell to consumers. With this option, the business can provide its consumers with a familiar brand that they trust, thus strengthening the loyalty of consumers and growing that brand.[5]

Additionally, white-labeling allows businesses to avoid some roadblocks. Undertaking a project to create a product or service can derail other business goals. [6]  Creating something brand new requires significant attention from employees dedicated to that project. That adds up to a great deal of time focused on only a small part of the overall business. Frankly, it can be a huge distraction that can be dangerous, especially if consumers are waiting on the business to get the job done. If developing a service takes a few extra months, or potentially even years, customers could leave to find solutions somewhere else.[7]

Ultimately, white-labeling is often a simpler path for businesses to take to bring a new product or service to market. This solution not only saves businesses significant time and money, but can also help keep consumers happy and loyal.

 

References:

  1. White Label Product”. Investopedia. Retrieved August 29, 2017.
  2. Pepalis, B. (2016, Feb. 11). “Keep your Brand’s Value with White Label Software”. Izenda. Retrieved August 29, 2017.
  3. Gainor, D. (2014, June 3). “Why A White Label Solution Is Easier Than Building Your Own”. Forbes. Retrieved August 29, 2017.
  4. Gainor, D. (2014, June 3). “Why A White Label Solution Is Easier Than Building Your Own”. Forbes. Retrieved August 29, 2017.
  5. Jenkins, J. (2015, Aug. 6). “Let’s Not and Say We Did: 8 Reasons to White Label”. Sky Stats. Retrieved August 29, 2017.
  6. Creed, M. (2017, July 12). “Is Your Company Considering White Label Software?”. Clinked. Retrieved August 29, 2017.

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