White label fulfillment is the reason Seed Beauty, a company known for their affordable makeup products, is also the manufacturer behind billion-dollar makeup companies like Kylie Cosmetics, famously owned by Kylie Jenner, one of the most influential celebrities of her generation. This is just one of countless examples of popular businesses that use the white label model.
Another example is Dollar Shave Club, who used generic white label razors branded with their name and then created a unique (at the time) home delivery method. In 2016, with sales approaching $200 million, this small startup sold the company to Unilever for $1 billion, all by sourcing white label razors!
In this article, we’ll explain what white label fulfillment entails, its benefits, and its downsides, plus share a step-by-step guide to implement white label fulfillment in the your brand operations.
Many people often confuse white label with private labeling. They share similar qualities—the product is developed by a third-party company and sold under a different company’s brand name—but they are not the same. White label occurs when a third-party supplier embarks on mass production of a similar item (also known as generic or unbranded products) for multiple companies. Private labeling, on the other hand, is where a product is exclusively manufactured for a brand.
Should my business use white label fulfillment? Benefits & Downsides
The Benefits of White Label Fulfillment
The Downsides of White Label Fulfillment
How White Label Fulfillment Works in 5 Steps
Want to know how this process works in the real world? This step-by-step guide can help fulfillment managers understand the white label fulfillment process:
Step 1: Manufacturer Creates White Label Products
Before a white label provider embarks on the manufacturing, they conduct market research to identify which product is in high demand in the market.
Whether you’re a startup or an established business looking to break into a new market, conducting market research allows you to get a clear picture of what to sell. It helps you understand consumer behavior and trends. Market research also lets you find market gaps and opportunities that could transform your brand.
Apart from manufacturing products, white label providers are responsible for labor, material, and overhead costs. Manufacturers often accommodate requests for simple modifications, like color choices or minor adjustments to existing designs, unlike in a private label where the manufacturer offers a lot of customization.
Step 2: Customize the White Label Product with Your Branding
The next step is customizing products to align with your brand. Up until this point, the white label products are still unbranded. Customization is what sets your products apart from others and turns customers into brand loyalists!
You could incorporate branding in your product designs with custom boxes, brand logos, branded manuals, or even color scheme designs aligning with your company’s branding. A white label product can also be customized with marketing items such as personalized thank-you notes or branded receipts.
Step 3: Create a Marketing & Distribution Plan
A solid marketing plan is the blueprint ensuring all digital marketing efforts are in accordance with your business goals—both for sales now and for expansion later.
Fulfillment managers should identify their target audience and understand their needs and preferences before enlisting products for sales. More importantly, you should have unique selling points that set you apart from others in the industry.
Likewise, a robust distribution plan ensures your products are visible and accessible to the right customers. This fast tracks your business growth and customer satisfaction. Fulfillment managers should have an understanding of current omnichannel trends and multichannel ecommerce platforms to sell to the ideal customers. Product distribution could be through google ads, facebook ads, email marketing, to drive sales through ecommerce platforms like Shopify and Amazon.
Lastly, you should create a SEO optimized product description, images, or videos that highlight the needs of your audience and position your products as the solution they’ve been yearning for.
Step 4: Order Fulfillment
Ecommerce order fulfillment is a crucial stage where orders translate into tangible products in the hands of your customers. This process encompasses receiving orders, efficient packing, and timely shipping, all of which directly impact customer satisfaction and brand perception.
To optimize this process, many brands partner with 3PL providers. These logistics experts offer warehousing and shipping services, freeing you from the complexities of storage and logistics. This allows you to concentrate on core business functions such as marketing and product innovation.
Whether you manage fulfillment internally or through a 3PL, fulfillment software is indispensable. Opting for a software like Extensiv can enhance your customers’ experience from when an order is placed up to the point it is fulfilled. An ideal fulfillment software solution should have features that streamline customer experience like real-time tracking, seamless integrations, and analytics—enabling you to monitor progress, identify potential delays, and ensure prompt delivery. Personalized packaging isn’t the only way to win brand loyalists; speedy delivery timelines also earn you major brownie points!
For brands, this software streamlines operations and boosts efficiency by automating tasks such as generating shipping labels and tracking packages. This automation minimizes errors and reduces manual effort. Furthermore, it provides valuable data and insights into order trends, enabling optimized inventory levels and accurate demand forecasting.
Step 5: Warehousing and Inventory Management
Efficient warehousing and inventory management are essential, whether you handle fulfillment in-house or outsource order fulfillment with a 3PL. This step involves the physical storage of goods, meticulous tracking of stock levels, and optimizing the movement of inventory within the warehouse.
If your warehousing is managed in-house, it involves significant investment in infrastructure, personnel, and technology. You'll need to secure appropriate warehouse space, implement robust inventory control systems, and manage the logistics of receiving, storing, and retrieving goods. This can be a complex undertaking, requiring careful planning and ongoing optimization.
However, even when outsourcing to a 3PL, understanding warehousing and inventory management remains crucial. A reliable 3PL will seamlessly integrate your operations into their existing infrastructure. They utilize sophisticated warehouse management system (WMS) software to track inventory, optimize storage, and streamline order fulfillment. These systems should integrate with your ecommerce systems, allowing for real-time visibility and automated order processing.
Whether you manage warehousing yourself or partner with a 3PL, effective inventory management helps with demand forecasting and planning, meeting customer expectations, minimizing storage costs, and preventing stock outs or overstocking. It's a foundational element of successful order fulfillment for white label ecommerce.
Keys to Remember When Starting with White Label Fulfillment
Now that you have an idea on how white label process works, here’s are notable factors to keep in mind when you’re starting one:
Product Quality
The first thing to consider when choosing a white label fulfillment company is the quality of the product they produce. Look for a partner that is consistent and has a good reputation in producing products with high quality that meets or exceeds consumer standards.
When your products are not consistent or have a really low quality, it will reflect badly on your brand and could lose you clients and revenue. This is why it’s essential that you partner with white label companies with business goals and values that align with yours.
A great way to determine their reliability and performance is by checking online testimonials, case studies, ratings, and reviews from their past clients. You can also get on a call with their customer support to ask for samples. A partner with a good reputation will go a long way in building trust between you and your customers, thereby improving the reputation of the brand.
Pricing & Fulfillment Cost
The costs associated with shipping and logistics in white labeling can vary widely based on factors like how big your operations are, the regions you serve, and the types of products you offer. For example, if you’re shipping perishable goods, you’ll need refrigerated transport, which can substantially increase costs. Additionally, international shipping is typically more expensive than domestic due to customs duties and taxes. On average, these expenses can range from a few hundred to several thousand dollars each month.
However, It's important to remember that shipping and logistics costs go beyond mere transportation; they also cover warehousing, fulfillment costs, inventory management, and handling returns or exchanges. For small businesses, these expenses can accumulate quickly and significantly impact your budget.
It’s important to compare price models from different providers to check the one that will be suitable for you as some might have lower per-unit costs, while others might have higher downstream fulfillment fees. However, cost isn't everything; frequent errors can do a lot of harm to your brand, so choose a provider with a strong track record of accuracy and technology that merges easily with your ecommerce platform and fulfillment software to process orders with ease.
Branding & Customization
The quality of packaging plays an integral part in the overall brand experience and should be a key factor in your decision-making process when choosing a white label fulfillment partner.
Make sure to ask the branding options available (e.g., if you can add your logo, brand colors, and marketing copy that speaks to your target audience). The more branding options you have, the better you can differentiate your product in a highly competitive market. Also, choose a provider who values packaging; high-quality packaging can add to customer satisfaction and make them feel valued.
Customer Service
Customer service is a critical factor to consider when choosing a white label fulfillment partner. A provider with excellent customer service can help you build strong relationships with your customers and improve your brand reputation.
Find out what customer service options they provide, if they have multiple communication channels available (such as email, phone, and live chat), that your customers can easily reach out with questions or concerns about product, and also if they have a standby team with a solid reputation to respond promptly to customer inquiries.
Customer support that is confusing, difficult to find, or takes too long can frustrate customers and damage your brand’s reputation—even if you aren’t the company providing the support.
Legal & Contractual
Address legal aspects early in the process. Draft clear agreements with suppliers regarding product specifications, responsibilities, and quality assurance measures. Familiarize yourself with applicable regulations to avoid legal complications later on. Pay special attention to the contract sections on liability, intellectual property, and termination clauses, and make sure that your supplier's minimum order quantities and service scope are explicitly stated. Most importantly, never sign anything without getting your legal team’s review and input.
Get the Most Out of White Label Fulfillment With Extensiv
As a fulfillment manager, handling order fulfillment in-house is a lot when you have limited staff. Outsourcing your order fulfillment to a trusted logistics company can help take some weight off your shoulders. But we know that with so many options for 3PLs, finding the right one is exhausting just to think about.
With Extensiv’s Fulfillment Marketplace, you can simplify the process of finding the perfect 3PL partner for your operations. With our 3PL directory, you can filter your search to find a reputable and high-performing partner experienced with white label fulfillment services that will meet your business’s specific needs!
Alternatively, if you do manage fulfillment in-house, Extensiv’s solutions for brands can help you unify your ecommerce technology stack to streamline your fulfillment operations, from inventory management to order management and everything in between.
Want to know more about how Extensiv can help you grow your brand with a solution that works for you? Request a demo today!
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