White Label vs Private Label Dropshipping

White label or Private Label Dropshipping can both be your good options when you want to set up a new dropshipping business. However, what are the advantages and disadvantages of each, and how to start with those e-commerce model?

Those terms can seem confusing especially for newbies. So today, we will help you to dig deeper into the concepts and go through each business model. Let’s go!

What is Private Label Dropshipping?

Dropshipping is a retail method that a retailer receives the orders and transfers them to the suppliers or sourcing agents who then ship the product directly to the customers. In this model, dropshippers don’t need inventory to store the products nor in charge of the shipping and packaging process.

Private label dropshipping is a dropshipping method in which the manufacturer produces a product only for you and you are going to sell it under your own brand name. As such, private label dropshipping products are normally cheaper than national brands. And if you have a good marketing campaign for it, it can bring you quite a huge profit.

What is White Label Dropshipping?

In contrast with Private Lable Dropshipping. In White Labeling, the manufacturer creates a generic product for different retailers to sell. And those products will be re-branded by each retailer by adding their brand name on the packaging for instance so that it appears like their own made products.

With White Label Dropshipping, it is always good to look for a product that already has a demand. Since it can be risky to start with a new and strange product to the customers while you don’t know they will like it or not.

The Advantages & Disadvantages of Each E-Commerce Model

Like any other e-commerce business models, either white label or private label dropshipping has its own pros and cons. Understanding the advantages and disadvantages of each will give you a more profound knowledge to choose the best fit for you. You will also have resources to prepare for all the difficulties that you will be going through. So let’s go for the benefits as well as the drawbacks of the two models.

The Advantages of Private Label Dropshipping

Private Label Dropshipping does have some big benefits.

First, it brings an increased margin by allowing the shop owners to put a competitive price on the market. A lot of dropshippers are able to gain 25% to 30% higher gross margins with private label dropshipping than they do with manufacturer brands. As such, you can see expanding the profit margin is undeniably a huge advantage of all.

Second, you can get your customer loyalty by selling the products of your own brand name. Since today, people like to buy from local brands especially private labeling more. If they like you, they keeping purchasing from you and can even recommend it in their community. Once you’ve got their trust, you have your own loyal customers buying your brand rather than manufacturer products sold by any other dropshippers.

The Disadvantages of Private Label Dropshipping

Beside big benefits as above, you will encounter some difficulties with Private Label Dropshipping while running your business.

First, almost all manufacturers will require a minimum order. Since they cannot just produce a small number of customized products under your brand name and only sell them to you. That costs them a lot. So, they normally will require you to buy a large quantity and you may not be able to buy or just don’t want to spend a great amount of money while you’re not sure you can get profit from those products or not.

Next, if you do not make the right choice and order a long line of your private label products without knowing that your customers will buy it or not, it can become a huge loss to you. You can find yourself in difficulty to sell all of the inventory. Unlike manufacturer products, private labeled products cannot easily be returned and as a result, you will not be refunded after all.

The Advantages of White Label Dropshipping

Other than Private Label Dropshipping, white labeling has some advantages such as saving time and money. With Private Label Dropshipping, you will have to spend a lot of time creating and designing your brand. With white label dropshipping, you don’t have to do that.

Furthermore, compared to other business models, white labeling does gain a large profit. Since most of the white-labeled products can be purchased from manufacturers with a low wholesale price. And it becomes easier for you to put up a competitive price on the market but also can get a huge profit from that.

The Disadvantages of White Label Dropshipping

White label dropshipping also has some disadvantages as below:

First, you can only have very limited options for branding. The manufacturer or supplier will be the ones creating all about label and packaging, so you only can go with what they can give you.

Second, you cannot choose something unique to sell but can only rely on some limited choices of products from your manufacturers or suppliers.

And next, you hardly can stand out among other competitors selling the same products as you.

How To Start a White Label or Private Label Dropshipping Business?

Now you understand what are the benefits and drawbacks of both business models. You can also choose the best model for you to start with. So we will help you by bringing up the easiest way to dropship white and private label products with simple steps as below:

1) Find a dropshipping supplier

Finding a good supplier is always the most important thing. Good products definitely bring you more customers. So go to the search bar or can use your network if any to look for the one for you. A good niche and a good supplier will help you stand out in the competition. You also better do some research and consult with customers reviews before deciding what products to sell or rebrand.

2) Define your brand identity

Brand identity is critically important to gain customer loyalty. Brand identity is what people see from you. Without it, people cannot know who you are and what you can do for them. You can define your brand identity by marking them on your products, logo, packaging or websites. All these will help to build a personal connection between your brand and your customers.

3) Increase brand awareness

To get more and more customers buying your products and grow your business in the long term, you need to increase your brand awareness. Especially when your product is quite new to people, you may want to do it more. Here are a few tips to increase your brand awareness either with white label or private label dropshipping:

• Create your image on social media
• Improve keyword ranking of your product or your brand through search engine optimization (SEO)
• Create a blog and put up useful and attractive content for your target customers
• Get product reviews to improve your business and get more customers

Final Word

It all depends on your business goal to choose between white label and private label droshipping. While white labeling can save you more cost and time creating the products, it can bring you a huge profit. On the other hand, private label dropshipping is a great way to sell a unique product, which makes you stand out on the market. Getting a deep understanding of the benefits and get prepared for all difficulties you can face with the model you choose, you will see that success is not so far to reach.