Retail Swaps: White-labelling Your Solutions
The author of this article, Harsh Shah, Co-Founder of Fynd, explains how the manufacturers and retailers have successfully resurrected themselves from the global recession that hit them in 2008.
The answer to this is White Labelling! A simple example would entail the use of the Samsung screen on Apple’s I-phone. This is done simply because Samsung has the ability to mass-produce quality screens to fit on a variety of gadgets produced by a number of brands. Some of the other buyers of Samsung screens include Nokia too.
What is White Labelling?
After Lehman brothers crashed in 2008, manufacturers were scouting for omnichannel environments where consumers could avail retail options at the click of a button. The Internet boom gave manufacturers the impetus to sell products and services under their own brand name in the e-commerce space. However, with white labelling becoming hugely popular, manufacturers are now open to selling their products and services to other companies. These companies rebrand the purchased products and services and sell as their own.
Take Dell for instance! The company has some of the most consistent models produced by alternate manufacturers, while Dell typically focuses on marketing and sales using white labelling (which is one way of incorporating the concept purposefully.)
E-commerce Wise
White labelling is a widespread phenomenon in the software segment. It displays its expansive ways in the e-commerce space as well. If a brand has to set up their e-commerce arena, they would have to hire a team of professional and qualified software engineers, invest in data collection, and create the software application that would be used by consumers. While they are doing all this on their own they procure zilch in return after investing heavily in gathering their own set-up.
What are the advantages of White labelling (especially in the e-commerce space)
If a brand like ‘Celio’ were to set up its e-commerce website, the brand will typically work in conjunction with one of its omnichannel partners (like Fynd) what will help Celio formulate its own website in order to enhance their web presence. This is using the data intelligence of in-store inventory which omnichannel partners already have. In this case, since Fynd already has its own operations network as well, Celio can simply use this as an out of the box white-labelled solution as well to fulfill the orders on their website.
Another more fitting example would include OYO rooms. There are a number of boutique hotels that rely on Oyo’s support to attain presence on the e-commerce platform. Now, since Oyo already has the capability of maintaining room reservations, food orders, logistics etc., they can simply white-label the solution which can be used by these small scale hotels to manage their inventory other than Oyo as well.
Some of the key benefits of companies utilizing white-labelled solutions are:
- Low initial/fixed cost investments
- The company can cherry pick the desired features, (or products, where retail is concerned) or a hoard of other features that are already present with the alternative manufacturer. The features can opt to accord with the chosen client base.
- Working with an omnichannel partner will help lower manufacturing costs, which in turn, will help the brand to balance variable cost
- The turnaround time to set up the technological aspects (in the case of software) reduces considerably, leaving the company to focus on other areas of development.
- It is believed that software developers sell applications to well-known software giants without a label. This, in turn, gives giants open access to quickened profits (depending on how the product or application is ranked on the marketing charts).
- The logistics are taken care of in that one-time payment itself. This is because the alternative manufacturer has created a ready point of contact for the seller/retailing company/brand.
- It saves the brand the necessary turnaround time, sizably discounting on needless paperwork.
- The manufacturer attains their due credit and also earns off the software application that is in use.
- In the case of retail, the brand can purchase goods on consignment, and pay a certain percentage to the alternate manufacturer on the basis of the delivered sales.
Overall, white-labelling helps both the manufacturers and marketers as both of them get to work on what they work best. In the case of e-commerce, especially in terms of developing technology, the effort is put by just one firm to progressively build a solution which is then re-used by multiple marketer firms. This helps speed up the technological advancements and also optimize the resources available to either of the firms.