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Switching gears a bit, let's get into the nuances depending on who you are in the value chain and how that impacts your answer. No matter who you are in the value chain, it goes beyond whether you can technically do it or because "they" offered. This decision is a business decision that needs the proper support to include marketing, customer support, training and certification, and much more. (Being repetitive on purpose). As a manufacturer: It comes down to the following questions "Whom do you want to be short term and long term?" For most of you, it's just not feasible long term, and it makes for a wrong business decision as you look to grow organically, or raise capital, or expand into adjacent markets. That said, if your strategy is solely to be a white-labeled system, then by all means, have at it. That is your strategy. But from what I know about most of you, that's not your business. You are trying to be opportunistic or think you have a short-term differentiated offering by including cobranding or white labeling. But it is the wrong decision to make for your long-term viability. There are two, maybe three companies in our industry that can really do both (different story when you go deep into a vertical). For instance, if you are a large high-security access control software company with traditional go-to-market practices that call on, say, airports, where you get specified and use the channel only, with a marketing strategy focused primarily on product marketing, and lean on trade shows, white labeling brings a minimal return, and it would be a mistake. But, cobranding might make sense with the right dealer (the key is "right dealer") going after a market or vertical you do not want to invest in. But do it with eyes wide open and full throat: product development, marketing support, pricing, SLAs, and more must match this market motion. Overall, most large access control software company’s in our industry will need a brand presence as the market continues to move to where customers want to have a relationship with the manufacturer. They will demand it, and a cobranded or white-labeled system, although seen as critical to some integrators, will add little to no value and a bunch of work for manufacturers. The story is slightly different if you are a mid-market player (self-funded or a start-up without growth capital) or a start-up (funded with growth capital). At least it is a different story in the short term. As a mid-market player or a start-up that has yet to raise significant growth capital (coupled with market conditions), you have the opportunity and permission to do things differently. Realistically, you will want to spend your money on something other than extensive marketing campaigns. Your go-to-market strategy is focused on the channel (some end users but mainly through the channel), and branding is more or less for the industry. With this model offering a cobranded or white-labeled solution is an excellent way to differentiate yourself from "the others" and gain inroads with dealers that would not typically invest the time and resource in a newcomer. But my words of caution are not to sell your long-term strategy short for short-term opportunities unless those short-term gains are part of the long-term world domination plans. I get it. You need to do what you need to, but if you're not going to build with cobranding or white labeling as a core part of how you develop your product, I suggest not getting into it. Other questions to consider as you think through your options: 🎯 What market do you target? High security, particular verticals, geography, etc. 🏪 How do you go to market? The channel, retail, direct business development, direct sales, etc. 🚣♀️ How do you market, brand, and do communications? Cut sheets, press releases, tradeshows, social media, in-person training, mass market, niche market, vertical-specific, etc. 🤝 Do you have the right partners and ecosystem? 🏷️ How do you price your products with this in mind? 🎿 How are you going to service clients if/when your channel changes? As a dealer or integrator: Your options offer a wide range of advantages and disadvantages unique to your chosen path. Choose correctly and do it with clear intentions; your business could be on the fast track to success. Choose poorly, and you can quickly squander customer goodwill, take on more than you need to, and burn through much-needed resources for no reason. This decision is, like others, also related to your strategy and size. For most small local integrators, you benefit more from piggybacking on the manufacturers' brand recognition and marketing juice. But suppose your long-term plan is to go from being a local integrator to a regional, national, and possibly multinational player. In that case, there may be some benefits to getting on the branding train early. For most national integrators or regional players, with the changes in the market, I would take a hard look at both having a white-labeled offering with your brand name and offering known manufacturer brand names. Most large integrators generate opportunities and benefit from specifications, end-user manufacturer brand recognition, and manufacturers' leads. For some, large integrators are in a position to integrate vertically. Do it properly and take more off the table. I am surprised more do not look like Kastle Systems or Datawatch Systems. Sure it comes with headaches, but will you tell me you don't already have headaches? At least these would be from your own doings. Once you decide whether you will or won't get into the branding business, what will it be? White-labeling or Co-branding? Here are some more pros and cons of both: 📈 White Label Pro: You can set your price. 📉 White Label Con: As the go-to resource for your customers, you are typically the tier 1, 2, and 3 for all their questions and issues. 📈 Cobrand Pro: Comes down to focus. You can sell and service to a point while the manufacturer handles supporting customers beyond tier 1 or 2. 📉 Cobrand Con: You limit your revenue capture for services by having the manufacturer involved. 📈 White Label Pro: By rebranding a manufacturer's products as your own, your branding and reputation are front and center, which can build long and deep relationships with your customers. 📉 White Label Con: As a smaller or new company, are you wasting time and resources positioning yourself as the manufacturer when you can put that elsewhere with a greater return on investment? 📈 Cobrand Pro: By blending the brands, you have the opportunity to highlight not only your story but your partners. 📉 Cobrand Con: You are sharing the spotlight and somehow losing some brand awareness by introducing another brand with yours.
📈 White Label Pro: Since you are everything to your end customer, you can bundle support and charge what you think is appropriate. 📉 White Label Con: But being in charge of end-customer support typically means you need more resources.
📈 Cobrand Pro: You can share the burden of creating everything needed to sell and support the cobranded system. 📉 Cobrand Con: You are typically not the only partner the manufacturer is cobranding with, and if that is the case, are you gaining anything? 📈 White Label Pro: By selling white-labeled 3rd party products, you can mix & match the offerings of different vendors and optimize your product line. 📉 White Label Con: The "soft" goods like building support documentation, FAQs, and creating training tools, etc., are expensive and a lot.
📈 Cobrand Pro: The cost to staff appropriately is reduced as you can leverage your manufacturing partner for specific responsibilities. 📉 Cobrand Con: You lose control in setting pricing, reducing your revenue share. As a distributor: This is a fascinating thought experiment and an area where different models continue to merge and work themselves out. At a high level, I like the idea of a distributor having their own brands. The benefits are: 🎚️ More control and leverage: many manufacturers use distributors to gain market acceptance, only to leave them as they grow. Many distributors create their own problems, but that's a conversation for another time. 💰 More revenue potential: not sure if there's actually more margin, but in theory, there would be, with all things being equal. 🗓️ More opportunities from long-term planning and relevancy: training, strategy development, and market development. The first reason is the most important: the ability to be more in control of your destiny. And because of this, we will see more vertically integrated distributors selling their own branded access control products to integrators and selling them to end users (or writing specs). Distributors will look to support their dealers and treat access control as another item in a large basket of goods and services offered. Some can reach an interesting economy of scale by taking this approach. But like the others, think deeply about this before you do it. Again, like the others, it comes down to resources and your strategy. First, consider whether you have the right team to sell your products and market development. Distribution is heavy on teams that can do takeoffs, catch proposal requests, fill out bids, and handle product fulfillment work. That role in the market is okay, but it differs from selling your own line.
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