Businesses should prioritise smart partnerships to secure their futures.

This article first appeared on TechFinancials

In a highly interconnected digital world, business partnerships and collaboration are essential for surviving and thriving. As technology is reshaping and moulding how we do business, so new business models are evolving.

There is pressure to produce memorable and flawless digital customer experiences in this rapidly evolving landscape, which is difficult to do if you’re going it alone. No single business can deliver all the goods. Even if you’ve perfected your offering, going it alone means limited impact in the future marketplace.

As businesses plan strategies for the next five to 10 years, they should prioritise making and solidifying partnerships. These partnerships must create synergy and use analytics and innovative tools to identify and deliver next-gen value. And the good news is that smart partners abound and unlock new market opportunities through the white labelling of their offerings.

Smart partnerships are backed by research

Research conducted by Accenture in 2018 showed that 36% of businesses are working with at least twice as many partners as they were in 2016. This trend has continued to gather momentum. Sixty per cent of executives interviewed by the consulting firm reported that smart contracts would be paramount to their organisations’ success over the medium-term.

White labelling is one of the cornerstones of the success of smart partnerships. The Covid-19 pandemic has accelerated the penetration of technology-driven platforms that can be tapped into very easily, speedily, and smartly to scale a business or empower the birth of a new one. This scalability is available for companies that have been around for decades or for hungry entrepreneurs wanting to set off on their new venture.

Supply chain partnerships are as old as time

Supply chains are as old as time, and supply chain partnerships have facilitated growth in many thriving industries as far back as the Roman Empire. Traditional supply chains for tangible consumer goods, like food, furniture, and automobiles, are well established and have existed as formal supply chains since the 1920s. They will continue to exist and will thrive into the future if they remain agile and adaptive in a rapidly morphing digital economy.

White labelling is a popular and common practice. For example, in the automotive industry, whether an everyday passenger vehicle or an excavator mining coal, manufacturers of these machines do not make all the parts themselves. They have supply agreements with manufacturers all over the world. These suppliers produce parts and components according to the specifications provided by the OEM (original equipment manufacturer) and brand the goods with the OEM specific logo.

According to strict quality standards, the OEM does the final assembly. This process does not mean that the same parts going into the OEM equipment are not available for a parts supply business in the aftermarket. They can be. The supplier brands the parts with a different logo, known as white labelling.

What the white labelling of parts in the aftermarket has done is create opportunity. Those with the know-how and business acumen can tap into a multi-billion-rand supply chain and build an aftermarket parts business under their brand name. Think Bosch parts for cars.

The company now selling parts to price-sensitive consumers creates employment. This employment would not otherwise be accessible if those parts were available exclusively to the OEM. It opens the market for business and fair competition, which creates opportunity and builds economies. New industries form, and economic hubs of activity are created when these opportunities are capitalised on.

Online businesses can be set up speedily with white-labelled products

Likewise, there are fantastic online products available to tech-savvy and passionate entrepreneurs. These online products can be white labelled and used to build a business. Business owners and new start-ups can unlock the value of these products with a few clicks. Within a few days, weeks and in some cases, hours, a new online business can be ready to service customers. The barriers to entry are low, and the capital outlay is minimal. The entrepreneur gets support from their supplier and does not have to worry about building products they may not know how to but can focus on their core competency. Exceptional value is created for customers as their needs and happiness are central to the service provider, the middleman.

API Integration and Microservice Architecture are some of the key drivers behind this type of modern-day business model. There are ‘manufacturers’ like us who build services using highly skilled individuals according to our core competency. We then test and secure a reputation for the product that we have built and make it available to others for resale under their brand name. A simple plug-and-play approach allows companies to scale their business with new product offerings almost overnight.

The modern-day middleman sits at home providing a service to his customers without needing tech expertise or large amounts of capital to fund his new tech company. In the US, the white label market value for store brands in retail was worth $158.8bn (2020). The share of this value for e-commerce companies selling white-label goods was 9.3%. In South Africa and Africa, for that matter, the market is untapped. It’s a new concept and needs aggressive exploration to tackle socioeconomic issues, especially youth unemployment.

White labelling creates employment opportunities

Technology is changing things more rapidly now than ever before. It is creating opportunities in the workplace in a way that overshadows the industries of 2.0 and 3.0. With access to information and online education, it takes just a few months for someone illiterate in the working of the internet to reskill or upskill themselves in a new sector.

Smart partnerships can create unique product mixes that deliver improved customer lifetime value for an array of different consumers. Not every business can serve every consumer. We need to help each other and partner in a way that builds relationships, creates employment and unlocks wealth for generations to come.