When selling different goods, businesses always confront two alternatives: a main label and a white label option. Each option has its benefits and challenges. It is necessary for businesspersons to analyze the options in order to make reasonable strategic decisions. The final decision is influenced by several variables including brand positioning, price, management, and prevailing objectives of the organization.
In this article, we will discuss the definitions of main label and white label managed IT services , their differences, and the most suitable one for your business. Let’s jump right into it!
What Is a Main Label?
Main label merchandise is a term that describes goods in a particular category that are sold under the name of the company making them. Such products bear the branding, sign, and promotion messages of the respective company. The company handles everything which includes concepts, strategies, acts, relations, and package and service offered to the customer.
If a business, for instance, creates its own line of skincare products complete with their branded logo and packaging, those products would be regarded as main label products. The business handles everything from finding the necessary resources, to selling the products as their own branded items.
Pros of Main Label Products
- Full Control: Businesses are able to maintain the utmost sovereignty over the branding, marketing, advertising, and even the pricing of the product. This also allows them to mold products to fit to their branding identity and values.
- Brand Recognition: Companies that sell their products under their own brand label are able to foster brand reputation and loyalty sales. With time, clients learn to connect specific products to the brand which enhances their working relationship with the company.
- Higher Profit Margins: Businesses make main label products from the range of products they have, hence, they do not incur the expenses of paying a brand to use their products. This often leads to an increase in profit margins.
Cons of Main Label Products
- Higher Costs: Businesses, especially smaller ones, have to pay high costs if they decide to manufacture their own products. This is attributable to the fact that a business has to spend money on research and development, production, packaging, and inventory control.
- Time-Consuming: A new product goes through a range of processes which include coming up with a brand name for it and marketing it. Companies have to do market research, product testing, and product improvement which is a lengthy task.
- Risk: Products that are manufactured in-house have a higher risk factor attached to them. If the customers fail to buy the product or do not like the newly introduced brand, it can lead to financial issues for the business.
What is a white label?
A white label product is essentially a product that is already manufactured by some third-party company. These products are usually made for one brand but can be sold under a different company’s name. The branding business only has to change its logo, its packaging and marketing materials, everything else stays the same.
As an example, a company may acquire some non branded skincare products from a manufacturer and print their logo on them and sell them. In this case, the manufacturer does the production and the business handles branding and selling.
Pros of white label products:
- Lower costs: Third-party companies have already manufactured such products, therefore, the business purchasing and selling the product does not spend any resources on production. As such, this is more cost-effective compared to main label products.
- Faster Time to Market: products that fall into the white label category can be advertised, marketed and sold far quicker than those that fall into the main label category. As the entire salable unit is already manufactured, companies are able to focus on branding and selling the product.
- Less Risk: For companies using white label products, the risk associated with product development is minimal as compared to traditional models. Since the products have already undergone trial and testing by the manufacturer, the level of unreliability faced by the company using the product will greatly be reduced unlike if they had designed and developed their products.
Cons of White Label Products
- Less Control: The possibility of companies controlling a product’s quality, design, and overall production is reduced if the product was created by a third party vendor. If the manufacturer fails to maintain sufficient standards, this can sometimes lead to poor quality.
- Limited Customization: Businesses are allowed to modify the products in terms of packaging and branding, however we are limited in substantial ways that can affect the core white label product. This greatly impacts efforts that intend to differentiate their product from competing businesses that white label products.
- Branding Restrictions: The use of third party suppliers for production can strip white label products of their individualistic touch, making them appear authentic. For products that are not remarkably unique, establishing brand recognition can be exceptionally difficult.
Key Differences Between Main Label and White Label
- Ownership and Control: Restrictions are more apparent for white label products as business only manages the branding and distribution with all production and quality control being handled by external suppliers. Setting white label products aside, the business in question retains ownership for all processes pertaining to development, including marketing and quality control.
- Costs: Rebranding white label products is usually cheaper as there is no need for extensive research, development, or manufacturing. White label products also happen to be less expensive as they are mass produced which eliminates the cost of production per piece.
- Time to Market: White label products offer the benefit of faster branding due to their pre existing nature, whilst main label products have no other option than to start from scratch. As a result, the more time intensive approach would be the creation of an entire new product from ground up.
- Branding and Customization: The customization offered by white label products is insufficient to accommodate the brand’s needs, which strips the functionality of unoriginal branding. On the other hand, main label products can incorporate a wide variety of custom features that allow businesses to showcase their identity.
How to Choose What is best for Your Business?
Your goals, requirements, budget, and business model all play a significant role in deciding between main label and white label products. The following are some important factors that may assist you in choosing what is best for your business:
- Budget: Should your resources be more constrained, and if you do not wish to spend too much on production, then white label products would be ideal for you. They make for a highly cost-effective option to penetrate the market without brand-new costs.
- Timeframe: White label is ideal with regards to speed. They have little to no product development, thus resulting in more time being allocated to marketing and branding the product.
- Branding Goals: Should your business requirements include building a stronger brand image along with providing unique products, then main label would serve you best, as you will have full control over product and brand development.
- Risk Tolerance: Should your business model be primarily aimed at lowering risk as well as the stress that comes with product development, white label products would be more fit for you, as they require minimal investment but provide maximum value.
Conclusion
Like any business endeavor, both main and white label products have pros and cons. Main label products allow for full control and have the opportunity to yield high profit margins, however, they involve a higher risk and cost. White label products are inexpensive, simple to market, and allow businesses to focus on branding, however, quality control and customization are not as easily managed.
In the end, every single business is different, and depending on what your specific goals and resources are dictate the right option. The more you analyze and the differences these two have, the better decision you will make that will match your expectations.
