MBA1456 Should You Sell a White Labeled Product?

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Hey O welcome to the $100 MBA Show. If you're building a business, we got your back every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teach Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online and in today's episode you will learn should you sell a white labeled product? White label products are products that you could sell under your own brand name. You either buy the right to use this product as your own outright or you're contracted to use it for as long as you pay a ongoing fee. The best way to understand a white label product? It's like owning a franchise like a Subway, a sandwich shop, right? Except Subway says you can change the name of the business if you want the brand. You can call it Frankie Sandwiches, whatever you want. We'll supply the product, you could sell it, make a profit and you give us a fee. Sounds pretty cool, right? Well, in today's episode we go through the pros and cons of selling a white label product. White label products could be courses, they could be informational products, they can even be software. But what should you look out for if you're considering to sell one? Are there any gotchas out there? Well, we cover them in today's episode. So let's get into it. Let's get down to business. A few years ago white label products were very well known or very popular in low end products like an ebook or even a video course. You could buy a white label course on how to use WordPress and you can rebrand this course and sell it on your own site. But today there are higher end products, bigger businesses, software products that you can buy as a white label product, rebrand it and sell it as your own product. Now for many people this is actually a really good fit because they're like, I, I like to market, I like to sell, I like to find good solutions for my customers and I got a really strong following and I got a really good sense of brand. But I don't want to deal with the headaches of building a product or maintaining it or inventing something new that I'm not sure that's going to work or not. So many people will go into the white label business, but today I want to outline the pros and the cons to starting a white label business or product. Let's start with the pros. Number one, there is very low overhead when you're selling a white label product. Often the product itself, you're going to buy it outright, is not too expensive in terms of an investment. If you decide to sell a white label software, often it costs nothing to get started, or maybe very little. And then the ongoing fees, depending on what packages your customers buy, are quite reasonable. So you're really not paying for a lot. So in the software example, you, you're not paying for server space or employees or developers or any of that stuff. This business creates the product, maintains the product, keeps it running, and you resell it under your name. So really all your expenses is really to sell this product, to market it. There are some other expenses we'll talk about, but overall the overhead costs are pretty low when it comes to a white label product. Second pro. A white label product business is very quick to start. It's very easy to get started. It's very fast. Some white label products even come with marketing materials like a website template so you can build your storefront. You're not actually creating the product, so that's going to save you a ton of time. So like theoretically you can launch a very successful white label product or white label product business in a matter of weeks. So if you're itching to get started with a business, this is a good one because it doesn't take long to launch it. The third pro is, I believe, white label products, if they're good products, are a great way to get an MVP under your belt, a minimal viable product. If you're interested in getting into a genre, a type of business, let's say you want to start selling informational products. It's a really quick and easy way for you to validate. Do you want to be in this business? Is this something you want to do? Does my audience want this type? Of course. Does this problem exist that I'm trying to solve or the problem doesn't exist in the first place? If you're going with a white label software, this allows you to understand what selling software is like or having a software business without actually starting one from scratch. So it's a great way to get your feet wet in a business and have a minimal viable product really quickly. The thing is, is that you can always start with a white label product and then change into a product that you created yourself. You still own the users, you still have that list. When you have customers, let's say, for example, you're selling a white little product and you have 500 customers that bought that, that, that product, you may want to upgrade that product to something that you created yourself down the line after you've said, yep, I love this kind of business. This is a great business. I want to build something for my own. You can always do that. Version 2 is your own thing. It's not the white label product anymore. All right, those are the pros. Let's talk about the cons. Number one, most white label products do not come with support. So if your customers have an issue with the product, have a question. You need to build your own support team. This means your support team or you who's going to be doing the support, needs to contact the owner of this product, the white label, the parent product, when there is a problem that they need to fix, like a bug or an issue or a mistake. If you can't fix it, if you can't help the customer directly, it's not like user error. You're going to need to get in contact with that company and if their support is not responsive, it's going to be a chain reaction in terms of delay. So if it takes a couple days for them to get back to you, then you're going to have to get back to them and get back to the customer, all that kind of stuff, right? So it's a little touch and go with support. That's why it's so important to get a solid product if you're going to sell white label, because you're going to have to support these customers. The customers don't know the parent company. They know you, your brand, they bought it from you. So they need support. Number two, you don't own the ip, right? You don't own the intellectual property of the actual product. Most white label products don't give up the ip, meaning that if one day you want to sell your business, the actual software or the actual product is not really for sale because you're being licensed to use it, the business around it, yeah, you can sell it. The systems and the customers and all that kind of stuff. You know, the user base, the revenue you're making, that's all by your business. But the actual, you know, intellectual property is not yours because it belongs to the company you're leasing it from. And the third one, which is probably the biggest challenge is, is you can't change the product, you can't improve it. You can add to it. Like, say, for example, you have a course product or a content product. You can add videos, you can shoot videos yourself, or you can add live calls. But say, for example, it's a software product. You can't add features to the software. Only the people that actually run the software, the parent company can do that. If we go back to the Subway sandwiches metaphor, Subway gives you a menu. These are the type of sandwiches you're going to create. Here are the ingredients. You can, you can't just invent your own sandwich and start selling it. That's against their policies, and that's not a Subway sandwich. So some people might think, this is not a big deal. I don't need to do any extra work. Why would I want to do that? Well, you're going to get customers emailing support, asking for a feature, asking for an upgrade, asking for a change of ui, and you're going to have to just say thanks for the suggestion. And you really can't tell them a timeline or anything like that. You can't make any promises of changes because you don't know will be changed or not. You can make a suggestion to the parent company, to the parent product owner, but there are no promises. You're not the person that invented this product or created this product or owns this product. So you really can't change the product itself. Now, do I think white label products are a good idea? I do think they're a good idea. I actually think they're a good business model. If you're looking to start your first or second or third business, you're looking to make some revenue, you're looking to make some money. You want to, you know, maybe learn on the job and learn how to be a successful entrepreneur. And you don't want to deal with so many spinning plates. You just want to deal with the sales and marketing side. This is A good idea. I do say you have to find a really good product. Product that's solid, that's well known, that's tested, that works well, that has results. Because this is going to save you a lot of headaches in the long term. And you want a product where the team is very responsive so you can ask questions and get help for your customers. And I think it's a good way for you to understand that, hey, without an audience, you have no business. Even if you own the product, if you invented the product yourself, you need an audience. So this gets you to work that muscle of building an audience, building a customer base, converting people into your funnel, converting people to customers and selling them whatever you have to offer. The skills you're going to learn in selling a white label product are transferable to your own product, your own businesses. And now you always can add to the business. You know, you can always add products and add innovations alongside the product you're selling. There's one thing you do need to answer and you're gonna have to speak to the actual parent product about this. But what if one day you just want to, you know, fold and go home and retire? What if you don't want to do this business anymore? What about these users that are using this product now? You don't want to serve them anymore, you don't want to deal with them anymore. Can you hand them over to them and say, hey, can you take on my clients? Can you buy my business or take it off my hands? What do you do if you want to stop doing this business? Change trajectories. You want to change businesses, Maybe you change your mind. Find out what kind of agreement you can strike with the parent company. You don't want to leave these customers hanging because you want to keep the audience. You want to keep the audience happy because you could take that audience with you to whatever other business or product you sell. In the future.

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To wrap up today's lesson, white label products are a great option. I really want to emphasize quality is really important. You want a great quality product. It gives you a framework to build a business around and to market and sell a product that you believe in and one that is marketable because it works and it's really good. And the best way I can describe selling a white label product is it's something in between of being an affiliate and being the actual product owner.

Why?

Because you're building a brand, you're building a business around this product. And you're not just referring people like an affiliate. But at the same time, it's not your product that you invented, that you created. It's sort of like you're reselling the product for a profit. And by the way, most businesses are that, look at Amazon, they're selling all these products that are not theirs. Look at ebay, look at Walmart, look at Whole Foods, all these companies, all these stores sell products that they don't make. But the umbrella, the brand is the store name that you walk into, the store name that you visit online. So it's similar in that way. Thanks so much for listening. I hope today's episode was helpful. If it was, let me know in itunes rating and review. We read every single review. And by leaving us a review, enter our weekly random draw we call Free Ride Friday. Listen in on Friday to see if you won access to one of our lifetime memberships to one of our courses. Also, don't forget to hit subscribe. By hitting subscribe, you get the next episode once it's available right on your device. It also gives you access free access to over 1400 business lessons. Our archives, all the episodes that we have. The only way to get access to that is to hit subscribe right now. And we're on every platform, whether it's itunes or Stitcher radio or Spotify or Overcast or Himalaya or all of them all. Before I go, I want to leave you with this. If you're looking to build a business on the side, selling a white label product is actually a good one because it doesn't require as much time because you're not managing a huge team, a product team, an engineering team to make it happen. It gives you time to just focus on sales and marketing and service and you could do that in the evenings on the weekends as you're building out this business. It's a good starter business or business that you can make some money on the side while you're in a 9 to 5. Thanks so much for listening and I'll check you in tomorrow's episode Freeride Friday. I'll see you then. Take care.

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