The business model known as White Label is self-explanatory. The literal translation of the name is ‘white label’ and, although in isolation it seems an abstract concept, a more detailed definition allows us to understand why it makes sense.
Sometimes, the White Label concept is described as a solution or partnership, as it guarantees benefits for both companies involved in the business.
But, before knowing the benefits, understand what it is all about.
What is White Label?
White Label is a contract between a company, which develops a product or service, and another, which acquires this product or service to resell it.
The great differential of this dealership, however, is the fact that the second company involved in the business has the possibility of customize the product or service with its own brand.
That is, the owner company develops and sells its creation to the reseller company, just as it was developed, but without taking its brand name.
In negotiations between one company and another, the product is labeled ‘blank’ to receive the name chosen by the second company, which resells it. In addition to the name, visual identity and other customizations can be made.
It is about outsourcing the development of a technology, so as not to bear the costs of research and production, which make the final product more expensive.
With the White Label it is possible to commercialize both physical products, such as clothing, food and electronics, and services and digital products, such as software, applications and online platforms.
The technological market has greatly popularized this business model, allowing more and more companies to benefit from the use of cutting-edge technology, even when they do not have the financial resources and expertise to develop it.
It is also important to understand that the White Label model is different from the Private Label and Franchise business models.
In Private Label, a product or service is also outsourced to a reseller brand that is free to customize it with its own brand. However, the company that produces it delivers exclusively to this only reseller company.
In White Label, on the other hand, standardized and customizable products are delivered to Many companies.
The difference in relation to the Franchise model is the lack of freedom to customize the brand. In franchising, it is necessary to maintain the visual identity and name of the franchising brand, in addition to complying with other contractual obligations, such as royalty rates and the final value of the product.
With White Label, you only need to pay the membership fee, which entitles you to use the product. The reseller company has autonomy in setting prices and other operational processes.
White label for software
As we have seen, the technology market has benefited greatly from the White Label model. This is because the development of software requires specific know-how and sometimes high investments.
In practice, for example, it works like this:
- A technology company invests its knowledge and resources to develop a new digital program.
- This company starts to sell its new program to the end customer.
- A second, smaller technology company recognizes the success of the new program, but is unable to offer it to its end customer, because it does not have enough or specific staff for this, nor resources to invest in the development of an equivalent or similar program. .
- The second company discovers the possibility of White Label. It acquires the program from the developer company and resells it to the end customer under its name, avoiding its migration to the competition.
- The first company, through White Label, in addition to selling the program directly to the end customer, now has new indirect customers (the second company and other technology companies), which increase the profits from the novelty.
In the end, in addition to increasing the chances of profit for both companies, more end customers are also benefited.
Benefits of this partnership
The benefits of the White Label partnership cover different aspects of the companies involved. Just look:
- portfolio expansion of products or services, enabling the conquest of new customers, in addition to offering more solutions to retain old customers.
- Resource saving, since the high investment during the research and development of the technology is not necessary. There is no need to hire specialized professionals and invest in structure and equipment.
- CONTROL in the final delivery, as the product or service created comes from a specialized company, which invested in structure and a qualified team for its development.
- The solution developed by a specialized team also decreases the risks in the implementation of the product or service, which is already effective in the market.
- Easy support: adaptations, corrections and updates are under the responsibility of the developer company. Resellers also save time and resources, while still offering a safe and efficient product.
- Expansion of disclosure of the brand itself, now loaded on the ‘label’ of the new product or service. In White Label, the customization of the name and visual identity of the brand is accompanied by another advantage: the payment of copyrights is waived.
- At resale, the company is free to set the price of the final product.
And these are just the general benefits of a White Label partnership. In addition to these, the company that resells will also benefit from the exclusive advantages of the new technology and can use this as added value for advertising to customers. In other words, they are new commercial arguments for expand sales.
White Label ¡Hola! Suite
Did you know that IXC Soft can be your partner White Label?
¡Hola! Suite, our platform for omnichannel service, is a great example of cutting-edge technology developed by IXC Soft that is available for resale through the White Label business model.
We take into account all the principles of the White Label so that our partners achieve autonomy and success with the resale of an efficient and consolidated platform in the market.
