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This approach has become a popular business model, especially for startups and small businesses in Nigeria, seeking to scale quickly without the burden of extensive product development. This post will tell you more about white labels, their benefits and how they work.
Understanding White Label
White label is a strategy that allows you to procure existing products or services and market them as your own. Essentially, the company that creates the product (the producer) sells it without branding, allowing other businesses (the marketers or resellers) to add their label, logo, and identity before selling it to consumers. This process is particularly common in industries like phones, gadgets like chargers, software, food and beverages, cosmetics, and even financial services. For example, if you’re using a phone charger or some other gadget from China, there’s a good chance it was developed by a white-label company, with the Nigerian dealer simply adding its branding to it. Also, a software development company might create a generic software application. Other companies can purchase the rights to this software, customize the interface with their branding, and sell it as their product. These arrangements allow businesses to offer high-quality products without having to develop them from scratch, saving time, money, and effort.Benefits of White Labelling
1. Cost Efficiency
One of the most significant advantages of white labelling is cost savings. Developing a product from scratch requires great investment in research, development, and testing. White labelling allows you to bypass these costs by purchasing products that are ready for market. This way, companies save on research and development expenses, allowing them to focus resources on marketing and customer engagement.Sign up for the Connect Nigeria daily newsletter
2. Speed to Market
White labelling allows companies to bring products to market quickly. Instead of spending months or even years developing a product, you can start selling almost immediately after customization. This is particularly advantageous in industries where trends change rapidly, and being first to market can capture significant customer interest.3. Focus on Branding and Marketing
Since the product is already developed, businesses can concentrate their efforts on branding and marketing. This means they can build a strong brand identity, create customer loyalty, and establish a market presence without worrying about the technical or production side of the business.4. Access to Expertise
White-label producers are often specialists in their field. By partnering with them, you can leverage their expertise and offer high-quality products or services that might otherwise be beyond your capabilities. For example, if you’re offering a white-label software product, you benefit from the producer’s technical knowledge and experience, ensuring the product is reliable and up-to-date.5. Scalability
White labelling offers you the flexibility to scale your operations quickly. As demand grows, you can easily increase your supply by purchasing more white-label products, without having to worry about scaling production.How White Labelling Works
The process of white labelling is straightforward. First, a company (the reseller) identifies a product or service they want to offer. They then find a white-label producer that creates that product. The producer sells the unbranded product to the reseller, who adds their branding, packaging, and marketing before offering it to customers as if it were their own, often with their pricing strategies and marketing campaigns. The reseller usually handles customer support and after-sales service, though some white-label agreements include support from the producer. So many payment processing companies use white-label payment processing services such as the Flutterwave or Paystack APIs, rebrand them, and offer them to their customers as their solution. This allows the companies to offer a new service quickly and efficiently, without having to invest in developing the technology.Register to attend the CN Business Mixer
Is White Labelling Right for Your Business?
White labelling has numerous advantages but it also has its challenges. One potential downside is the lack of control over the product’s development. If the producer encounters issues, it could impact your business. Additionally, you don’t have exclusive rights to these products so, you may have many other companies selling the same product, making it difficult for you to differentiate your product in the market. However, if you’re looking to expand your product offerings without worrying about setting up a factory and product development, white labelling can be a great choice for you.Got a suggestion? Contact us: editor@connectnigeria.com
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