A white label refers to a general line of goods a retailer sells in its own name as its own brand.
So, white label meaning in business is anything sold under the logo of a commercial establishment. This concept applies to any type of product in the business sphere, but let’s take it as an example with items made to order by the store.
A distinctive feature is the simplicity of packaging design. The cost of the line is lower than the alternative brands. As a result, the product is considered low-grade, but this trend has changed over time.
The White Label – Evolution of the Concept
Initially, the list of private label items included only basic categories. These included food and detergents. The concept’s primary goal was to offer lower-quality food at an affordable price.
Over time, white-label positions began to improve amid competition with high-quality brands. As a result, the assortment expanded, and items beyond the main categories were added to the production.
Nowadays, their trademarks become their brand, which characterizes the company. Offering customers low-quality products means presenting one’s sales network in a bad light.
Own TM: advantages and disadvantages
Creating one’s brand has some pros and cons, about which one should learn.
- On the dealer side. A reseller company can make more profit from white labels than from the sale of well-known brands. In addition, the distributor can create loyalty programs for customers, which helps to strengthen the relationship. On the downside, there are significant costs and management risks.
- On the consumer side. The customer gets a reduced cost and an expanded range. Minus – one can face the opposite effect when the distributor begins to exclude traditional TMs gradually.
- On the manufacturer’s side of the white label. The dealer orders his own TM from a third party. The manufacturing company can take advantage of generating economies of scale, which will lower the price of the production of each unit. The downside is that one only has to rely on consumer demand.
If one takes honest and competent cooperation as the basis of their activity, one can succeed in the market. It is necessary to organize the work properly so that everyone is engaged in their specialty.
If a distributor has decided to create his own brand, he needs to understand the difficulties he will face. First, it is necessary to find a manufacturer with whom to build a relationship of trust. The dealer also needs to follow the agreements clearly, so as not to raise doubts with the business partner.
The seller must understand that he will not be able to control the quality of products fully. But he will have to answer for the goods to the consumers. If a distributor wants to sell his brand of high quality, an unscrupulous producer can make products cheaper by using low-grade raw materials.
Where did this concept come from
Private trademarks appeared during the Second World War in Germany. It was a difficult period for the country. Due to the lack of money, cheapness attracted people, and famous brands were receding into the background. The white label trend began to spread in France and the United States in the 1970s.