White-label brands and products are used as tactical brand assets by major online players. Today, we want to quickly review two very different study cases of white-label brands created for e-commerce by two - also very different - companies: Amazon and BigBuy.
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To better understand this situation we need to clarify what a white label product is: white label products are sold by retailers with their own branding and logo but the products themselves are manufactured by a third party.
This means that the company branding the product didn’t actually produce it. And a few decades ago, this meant a whole world of difference in comparison with a traditional brand. The problem is that this whole concept shifted during the rise of Amazon.
The worldwide marketplace started to realize, pretty soon, that some products that were massively sold on their website, were also relatively cheap, non-perishable, and easy to produce and store. This led Amazon to the only logical conclusion of any company that wishes to grow stronger and better: what if I had a brand for myself of these products?
To achieve this, Amazon had two possible routes. The first one was to produce the products by themselves - that was the “good ol’ fashion way” - and it implied opening an entirely new line of business, new capabilities, and a new business model.
Or they could outsource the manufacturing and keep doing what they did best: logistics and sales.
???? Obviously, Amazon chose to follow one of the main principles of any successful business: optimize your profitability by keeping the focus on what you do best. ????
So the brand started to outsource the manufacturing of products to other companies, relabelling the products under several in-house brands like “Amazon Basics” among others. And the move proved to be a smart one spanning over 88 “Private Label Brands” or white-label brands, that belong to Amazon.
???? By 2019, AmazonBasics catalog of products accounted for over 160.000 references and 57.8% of total sales by all Amazon private label brands. This is a huge part of their multimillion dollars turnover that is now going directly into Amazon’s pocket. ????
The InnovaGoods brand, part of the BigBuy group, is another great example of white-label online brands. Last week, this brand announced that it is joining the AliExpress brick-and-mortar stores in Spain, further consolidating the bet of BigBuy into its own private brand of products.
BigBuy's approach is interesting for several reasons: first of all, it is not a marketplace. This Spanish company, although has grown pretty fast and pretty big - with a current yearly turnover of 100 million euros - is a wholesaler. This means that, as part of their core business, BigBuy sells other people's brands at wholesale prices.
????InnovaGoods, the white-label brand of BigBuy, produces introduces over 300 new products per year and aims at impulsive shopping for gifts and tech gadgets????
It could be difficult then to consolidate the idea of having your own white-label brand in direct competition with your supplier's brands. Especially at a wholesaler business level, where there is barely any margin left for profit.
???? And yet, the company seems to have found a balance with its white-label brand, and it's actually expanding into the traditional brick-and-mortar retail business by joining forces with the likes of AliExpress, Carrefour, and Aldi. ????
Secondly, BigBuy has the peculiarity of being a staunch defender of e-commerce. In fact, the company has mentioned, several times, that close to 100% of their clients are e-commerce. And they praise themselves as a wholesaler specializing in e-commerce.
However, it is curious to say the least, that now with its white-label brand BigBuy seems to be going the other way around: back into traditional brick-and-mortar retailing.
A substantially different approach from that of Amazon, and yet, another way of integrating white-label brands into a company to capture a larger share of the market.
If you want to learn more about white-label products, we would love to share with you the upcoming White Label World Expo!
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