Creating a white label product for another business can be a lucrative revenue stream, but what impacts can it have on your control of the product and your own brand awareness?
It is a situation that has faced many SMEs, where another business – often a much larger one – seeks to have a product with their own brand created for them by a specialist maker or retailer.
Some SMEs jump at the chance to diversify their income streams and to partner with a prominent brand. Others turn down the opportunity, wanting to maintain full control of how their product is developed, branded and sold.
Tyroola founder Zed Klingenberg is one business owner to have debated this situation, when the opportunity arose to partner with the likes of national retailer Supercheap Auto.
“Supercheap is obviously very strong in automotive parts and having actual physical retail locations for parts as well. They haven't done much so far with tyres yet, so I think opportunity came along and we spoke about working together,” recalls Zed.
“We've done a few things [including] a white label. There's a white label that uses pretty much the back-end and the order processing of Tyroola, but the Supercheap Auto brand. There's a few other things that we've done together. We're just at the beginning of this partnership.”
According to Zed, the white label service with Supercheap Auto is a win-win for both businesses, allowing Supercheap Auto to add tyres to its product base, while Tyroola benefits from a substantial boost in distribution.
Importantly, he adds that this increase in customer reach is essentially an add-on to this business, and as such does not restrict Tyroola from continuing to refine and enhance its core service offering.
“For us, partnerships with retail chains and with wholesalers [are] very, very important. We like to focus on the tech side of things and the marketing of things,” he says.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.