When you go to a supermarket or a store, you may find two similar products: one brand name, and another white label. The difference a priori is the price, since the second is much cheaper. But what is a white label?
If you buy these types of products to save on your shopping list, or because you prefer them to having to pay for the brand name, how about we give you more information about it so that you have a better idea of whether you are right or not?
What is a white label
If we focus on the definition of white label, you should know that it refers to a selection of generic products, that is, those sold with the name or logo of the establishment where they are placed.
For example, in the case of Mercadona, you know that you have many branded products. But along with them you have the Hacendado white label, which is what the chain has created to market its own products at cheaper prices.
The reason why this type of product is called that is because The name of the manufacturer is not shown, but rather a name of the business where it is sold is used to promote them. Now, this does not mean that there are not well-known companies behind the brands. In other words, many well-known brands may be the ones that manufacture those private labels that are put up for sale and sell them at cheaper prices and with greater profits than their own.
In case you've ever wondered, white labels are not something “modern”. In fact, they first emerged in Germany, specifically during World War II. This trend was exported to the United States and France in the seventies and arrived in Spain at the end of the seventies through Simago supermarkets.
Characteristics of white brands
Now that you know what a white label is, its characteristics can help you understand why they are carried out. They are between them:
- They lack their own brand. In reality, they have a brand but this is related to the retailer or distributor that sells it and, beyond their stores, you don't find them anywhere else (at least under that name).
- Low prices. Although many consider that a white label is cheaper because the quality is lower, sometimes this is not the case. The main reason why they can be marketed at cheaper prices is because there are no costs associated with that brand. Furthermore, even so, good profits are obtained from these products, sometimes greater than with branded products.
- Wide category. In the sense that you do not have to limit yourself to a specific category. For example, if we talk about a supermarket, it can have its white label on different products since it can formalize contracts with different factories and sell them in its store.
- Quality. We have told you before that the quality of white label products is not always low. Sometimes it is the same as the branded ones. But it is true that here it will depend on each product as well as the perception you have of them.
How to create a white label
Have you ever stopped to think about how a white label is created? Well, in reality the process involves a series of steps. The first of them is to decide to sell products under a brand owned by the establishment, or created in relation to it. Once the decision is made, You have to contact one or more manufacturers to provide quotes or to see what conditions they offer for producing these unbranded products.. This manufacturer does not have to be unknown; As we have told you before, they can also be own brands. The goal is to establish a relationship between the retailer or distributor and the factory to carry those products.
After finishing production, it is time to sell them in the store or chain of stores at lower prices than the brand names.
Advantages and disadvantages of white labels
With everything we have explained to you so far, it is very likely that you will draw conclusions regarding the pros and cons of white labels. But we want to make it clear to you what the advantages and disadvantages of consuming these products are.
Advantages
Among the benefits that a white label offers, the main attraction for consumers to buy it is, without a doubt, the price. As it costs less than brand name products, even if it is just to try, they will buy once, and if they are convinced of its quality, You will quickly build customer loyalty because you will be saving them money.
However, it is not only benefits for customers, but also for retailers since These products generate greater profits than branded products and allow them to have more income to invest in the business or simply to enjoy them. Furthermore, when we talk about private label products, quality is an issue that matters a lot to retailers; At the end of the day, those products represent your business and, if they are of poor quality, your reputation will be diminished.
In the case of manufacturers, even when they are direct competitors of these products, it means benefits for them: on the one hand, a new source of income; on the other, a lower risk, because they do not invest so much in these products and it would not pose a risk of loss if they did not work (even so, if the contract is important, it could affect it, which is why they try to ensure that quality does not diminish too much).
Disadvantages
Despite all the advantages that we have told you, we must turn the "currency" around, or in this case the white label product. And it is that These products do not usually innovate, but rather they focus on those most consumed to offer cheaper alternatives; but they do not try to release new or original products.
The price itself is both an advantage and a disadvantage. And it is that, If those white label products become “famous” and sales increase, many may consider raising prices and the client would have no alternatives in this regard (either expensive or very expensive). This results in discontent on the part of consumers.
Now that you have had the opportunity to learn more about what a private label is, you may see the products you buy with different eyes. Are you more into brands or white label?