White Label Product

What is a 'White Label Product'

A white label product is a product manufactured by one company that is packaged and sold by other companies under varying brand names. The end product appears as though it was made by the marketer, when in reality it was created by the manufacturing company. The manufacturer can concentrate on making the product or service and focus on cost savings, rather than worrying about marketing, which is handled by the companies that sell the product.

BREAKING DOWN 'White Label Product'

A common example of a white label product is found at a local supermarket. Many of these stores have their own brand-name products, which usually sell at a discount relative to other well-known brands. The store-brand product is actually created by a manufacturing company that places the store's label on the final product in an attempt to make customers think it was created by the vendor. A white label product provides manufacturers and product resellers the option to focus on each area of expertise without having to dedicate the resources to the entire product process.

Benefits of White Label Products

White label products allow resellers to purchase the appropriate inventory for their needs, repackaging the items to reflect the brand they represent. This can be more cost effective than developing a new product, especially in circumstances where the reselling company cannot find a way to improve the product enough to justify the expense or differentiate the new product in a way to gain a large enough share of the available market.

Manufacturers can place a larger portion of the available resources into product development and design, as well as cost management. This alleviates any and all responsibility for marketing the product, as that burden is shifted to the reseller. It also allows the same product to be sold or supplied to multiple resellers, possibly allowing access to a larger portion of the overall market for the supplied product.

Risks of White Label Products

Since the reseller is not participating in the actual production of the product, the reseller may have limited say in how the product is produced or any changes the manufacturing company is looking to make. Further, the reseller may have difficulties providing certain post-sale support to consumers depending on the amount of knowledge the reseller has regarding the product's operation or composition. White label products are often not exclusive to one reseller, resulting in the same items being labeled as part of multiple product lines or multiple brands. This means the product is unlikely to be considered unique within its category.

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