How Private Label Dropshipping Works

David Linder

David Linder

I write about dropshipping, ecommerce and marketing. Owner of www.www.productmafia.com the worlds best product research agency for Dropshippers.
5 min read

Private label dropshipping is one way of branding your business to make it different from other dropshipping businesses out there.

 

The dropshipping model has been a popular business concept that eCommerce businesses use. From giant brands down to one-man businesses, dropshipping has been proven to be very lucrative with the right marketing strategies. However, dropshipping can be done in three ways, dropshipping, white label dropshipping, and private label dropshipping.

 

What are the differences between dropshipping, white label dropshipping, and private label dropshipping?

All these models come with risks. They also do not require you to manage your inventory, storage, and shipping. Yet, they differ in some aspects.

 

  • Dropshipping

Dropshipping is an order fulfillment option that enables business owners to sell to customers without managing their inventory. With this model, they don’t have to pay for the production of their products, warehousing, inventory management, and restocking of items. The dropshipping supplier will take care of everything from the fulfillment of orders to replacing of damaged/lost items during transit. All the dropshipping business owners will do is choose the dropshipping products to sell from the supplier’s range of products, list them on their stores, and get people to place orders.

 

  • White Label Dropshipping

White label dropshipping, on the other hand, requires extra steps to implement. Depending on which type of white label dropshipping that you want to explore, you might have to pay the supplier extra for the additional work. If you’re blind dropshipping, the supplier might not charge you an additional fee as they will only not be inserting the invoice and promotional materials in the package.

Meanwhile, if the deal would be to add your brand labels to their products so you can resell them as your own, this would be done under contract for a higher fee and minimum order quantity (MOQ) requirement. You’ll have to pay the supplier upfront based on the MOQ to white label their products. They will place your branding to the items, store them at their warehouse, and take care of the packing and shipping every time you have orders received from customers.

 

  • Private Label Dropshipping

Dropshipping private label products also require a MOQ with manufacturers. As there will be some changes to be done on the product itself, you’ll have to negotiate with manufacturers directly. Regardless if you only require some enhancement on the original product or have an entirely new product created for you to sell exclusively, you’ll be working with manufacturers directly. Some popular brands that work with private label manufacturers are Nike, Fenty Beauty, Kat Von D, and Marc Jacobs.

Although you have to buy the products in bulk from the manufacturer, you can still arrange for dropshipping with them or with a third party fulfillment service. This way, you don’t have to handle the warehousing, order fulfillment and shipment of items to your customers. However, the lack of control over the packing and shipping of products is a common risk for all these types of dropshipping.

 

What makes private label dropshipping different from white label dropshipping?

Although this has been touched briefly in this previous article, let’s discuss further the difference between the two. Before we do that, let’s discuss first the similarities of white label products and private label products.

They are both produced by a third-party manufacturer.

They don’t carry the manufacturer’s branding.

You can re-brand the products to any name that you want.

You have total control over your advertising and marketing campaigns.

 

White labeling and private labeling are so alike that they are often used interchangeably. However, they differ in terms of the following:

 

#1 – Cost and ROI

You’ll have to invest more money with private label products. From product research to marketing, you’ll be spending money to make your product unique. Yet, when it comes to returns, you’ll expect a higher ROI because you are selling a unique product that consumers like. Meanwhile, white label products can be purchased at a cheaper price but you’ll have to spend more money on marketing them more aggressively due to the presence of competition that sells the same product. You can still earn good money with white label dropshipping if you play your cards right.

 

#2 – Exclusivity

With private label products, you give your specifications to the manufacturers and they are bound by a contract to not sell the same products to other retailers. Therefore, you can have the advantage of being the sole retailer of a unique product. Exclusivity is absent when you white label products.

 

#3 Product Customization

Private labeling allows you to customize your product in terms of ingredients, materials, and add on features. Although the manufacturer sells a variation of your product to other dropshipping business owners, they won’t be able to sell your exact product. White labeling, on the other hand, the product is already created and you can only customize the labeling and packaging, nothing more.

 

 

What product ideas to private label?

Make sure to private label only products that you can sell for the long-term. It should not be a fad or seasonal products that would lose the market after some time. You can find some product ideas for private labeling in this article.

 

How to find private label dropshipping suppliers?

Finding private label dropshipping suppliers uses the same methods as looking for white label dropshipping suppliers. Aside from Alibaba, you can also look for suppliers using the methods specified here.

 

Can you get a sample of a product with your branding from the manufacturer?

The answer is no. The manufacturer will not customize only one product for you as a sample. It will just be a waste of time for them to come up with custom designs and have you order one product. They would typically require that you order for 50 – 100 units first and then send you samples of the finished product before they finalize the rest of the batch.

If you want to see how they package products before committing to a contract, you can buy a sample of their generic products or the private label product that one of their customers is selling.

 

Final Words

Private label dropshipping allows you to run your business without setting up a warehouse or hiring people in your payroll to stock, pack, and ship your goods to your customers. Just bear in mind that the product you’d choose to the private label should fit your brand, business goals, resources, and commitment level. An eCommerce business takes hard work therefore you have to make sure you have carefully assessed everything to achieve success in this industry.

David Linder

David Linder

I write about dropshipping, ecommerce and marketing. Owner of www.www.productmafia.com the worlds best product research agency for Dropshippers.

Leave a Comment