Fashion Designer and Content Creator. Daniela leads the social media operations at GAT Fashion Lab
The fashion industry encompasses two primary business approaches: wholesale and white label, each with its own characteristics and considerations.
The choice between them depends on a company's goals, sales strategies, and the types of products it offers. In this article, we'll explore in detail the differences between these two models and assess their advantages and disadvantages.
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Wholesale involves acquiring brand products in bulk from a manufacturer, supplier, or distributor and then reselling them to consumers.
On the other hand, white label involves manufacturing products by a contracted third party, which are then sold under the retailer's own brand.
In this guide, we'll examine the distinctions between wholesale and white label, allowing you to determine which option is most suitable for your business.
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Opting for white label clothing offers various advantages for businesses seeking to establish their distinctive identity and control the production process. Here we'll explore these advantages in greater detail:
One of the main advantages of white label clothing lies in a company's ability to build a brand from the ground up.
With white labeling, companies have total control over the customer experience, brand reputation, and sales objectives.
This autonomy is especially valuable for companies aspiring to differentiate themselves from competitors and build a brand with solid economic value, enabling them to set higher prices and enjoy wider profit margins.
Another advantage is that, with adequate financial resources, companies can quickly expand and have the freedom to develop, produce, or manufacture a wide range of products in any sector.
This is beneficial for companies with unique or innovative product ideas they want to bring to market.
By marketing products under their own brand, companies don't have to compete for consumer attention with other retailers and can opt for brand protection programs to safeguard their product listings.
This represents a significant advantage for companies looking to protect their brand identity and maintain control over their sales channels.
Finally, companies selling products under their own brand have total control over the supply chain.
This allows them to place direct orders with the manufacturer, adjust products for future orders, and manage the production schedule.
This autonomy is particularly beneficial for companies looking to optimize the efficiency and quality of their operations.
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Although white label clothing offers many advantages, it also comes with significant challenges that must be considered before opting for this approach in the fashion industry.
-One of the main drawbacks is the risk of competitors imitating product listings. While having your own brand gives you control over the customer experience and brand reputation, it can also make you more vulnerable to unfair competition seeking to undercut prices or copy your listings.
This could harm your sales and brand perception, making it difficult to compete in the market.
-Another drawback is the time and effort required to develop and establish a new brand. Building a brand from scratch requires a significant investment of time and resources, which can be especially challenging for smaller companies facing time and budget constraints.
Additionally, issues related to manufacturing and importing may arise, as white label products are created by external manufacturers. Delays in production and shipping can negatively impact sales and revenue, which is especially frustrating for companies relying on an efficient supply chain to meet market demand.
-A critical risk associated with white label clothing is the possibility of choosing inadequate suppliers. Selecting the wrong supplier can jeopardize the entire investment and business.
Issues such as delivering low-quality products, delivery delays, or even supplier bankruptcy can endanger the viability of the company. Due diligence in selecting suppliers and drafting solid contracts is crucial to mitigate this risk.
-Wholesale clothing offers an alternative to white labeling and also presents its own benefits and challenges. In the next section, we'll explore these aspects in more detail.
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An attractive option in the fashion industry, wholesale clothing offers advantages that can benefit different types of companies.
A standout advantage is that by purchasing wholesale clothing, you acquire products that already have the backing of recognized and established brands. This eliminates the need to create a brand from scratch, allowing you to sell products that are already known and trusted by customers. This familiarity can be helpful for companies without the resources or experience to develop their brand identity.
Since products are already associated with an established brand, advertising costs tend to be lower or even nonexistent in some cases. By selling wholesale clothing, companies can leverage existing brand recognition, reducing the need to invest in expensive marketing campaigns. This cost saving can be significant, especially for companies taking their first steps in the market.
Another significant benefit is that wholesale clothing is usually easier to scale and requires less time than white label clothing. Since the products are already created and branded, companies can focus on expanding their operations without the need for significant investments in brand development, product design, or manufacturing. This can be helpful for companies looking to quickly expand their product offerings or enter new markets.
There are some unfavorable considerations that companies must take into account when opting for the sale of white label clothing.
A significant drawback is that companies must obtain a wholesale license to buy and sell products wholesale. This process can be lengthy and take 4 to 5 weeks, which can be a barrier to entry for smaller companies or those with limited resources to navigate the licensing process.
Another potential drawback is price erosion. Competition can be intense, as other traders may sell the same products, exerting downward pressure on prices. This can make it difficult for companies to maintain their profit margins or stand out among their competitors.
Selling wholesale clothing can involve fierce competition in the market. Since other companies may offer the same products, it is crucial to find ways to differentiate yourself. This can be challenging, especially for smaller companies lacking resources or marketing expertise to stand out in crowded markets.
Companies selling wholesale clothing may have less control over their products and brand. By selling products created by another company, they have less influence over aspects such as pricing and marketing strategies. This can be a significant disadvantage for companies seeking more direct control over their operations and brand identity.
In summary, when making the decision between wholesale and white labeling, it is crucial to consider your company's goals, sales targets, and product types. Carefully evaluating the landscape will help determine the most suitable business approach. If you need to innovate or lack creativity, wholesale may be the best option. However, if you aspire to build a strong and enduring brand, white labeling is the way to go.
At GAT Fashion Lab, we have over 20 years of experience in the fashion industry manufacturing garments for leading retailers in LATAM. Learn more about us here.
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