Last Updated on April 22, 2021
White Label vs Private Label Drop shipping: Which is better?
You may choose between a white label and private label drop shipping if you want to launch an online store. Both terms describe products that have been branded by a reseller, but the two concepts differ distinctly. Especially to newcomers, they can seem very confusing, so let’s go over each one and discuss their relative benefits.
What is Private Labeling?
Private labeling is when a manufacturer exclusively creates a product for a retailer who sells it under its brand. For instance, Costco uses private labeling when selling its own “Kirkland” brand that no other retailer can sell. As a result, products with private labels are usually less costly than national brands. Plus, they can be quite profitable if they’re marketed well.
Dropshipping is a simple way for private label products to be sold. You can find a dropshipping supplier if you are an online store owner, who will sell products exclusively to you and add you’re branding. Dropshipping is an e-commerce business model in which the retailer keeps no inventory. Instead, the supplier handles the storage, packing, and shipping of products to the end consumer. In other words, with dropshipping, the products are sent directly to customers, and retailers never see them.
What is White Labeling?
A white-label product is a generic product that a manufacturer produces but is rebranded by distributors to make it appear as if it had been made. Each distributor is permitted to resell the item under its name and branding.
Unlike private labels, multiple retailers can sell a white label product. For example, you will get your logo and packaging on the shipped products if you want to sell a product under your brand name using the dropshipping business model.
It is always best to look for those who already have demand for products with a white label. It’s risky to create products with a white label that people are not familiar with. It’s better to go with established products that people frequently use. As with private labeling, dropshipping makes it simple to sell online white label products. The manufacturers directly deliver the goods to customers, and retailers never see the goods.
What Are The Advantages &Disadvantages of These Business Models?
You won’t have to go through the problematic logistics of manufacturing a product with either of these two e-commerce business models. You will save tons of time and money without considerable investment in time and resources in product design and manufacturing. In turn, you can concentrate on marketing the product to your target audience and branding it. To grow your business, you won’t stretch yourself thin and focus on other areas of expertise.
So let’s go over the different advantages and disadvantages of each business model:
What Are The Advantages of Private Labeling?
First, for a dropshipping shop, private marking has several advantages:
- Increased margins: Private labels allow distributors to price their products and increase the profit margin more competitively. Many retailers earn 25-30 per cent higher gross margins on private labels compared to manufacturing brands.
- Customer loyalty: People prefer locally made products nowadays, and they would want more if they love your private labeled products. You will be the only source that will be able to provide them with those products. It is hard to gain the loyalty of individuals in the retail world.
What Are The Disadvantages of Private Labeling?
That said, the use of private labeling also has some drawbacks:
- Minimum orders: Minimum orders are one of the essential criteria for most suppliers when you ask them to produce bespoke goods suitable for you for private labeling. This minimum order is such a large quantity most of the time that you would not otherwise order.
- Dead Inventory: Sometimes, by ordering a private label line of products, retailers make the wrong product choice before even knowing whether or not their customers will like it. As you would have inventory hard to sell, this could leave you in foul water. Branded goods are simple to return, and reimbursement for the investment is easy to get. With private-labeled products, however, you can’t do this.
What Are The Advantages of White Labeling?
There are some real benefits to the white labeling business model, including:
- Saves time and money: It’s just easier to white label an existing product instead of spending money on creating your product from scratch.
- Gain a big profit: White label products are usually sold directly from manufacturers and purchased at low wholesale prices.
What Are the Disadvantages of White Labeling?
There are, on the other hand, certain drawbacks to white labeling, including:
- It limited Branding Options. Since it will be the manufacturer or supplier that produces the white label product’s container, label, and packaging based on your design, you will only settle on what it can make for you.
- They limited Product Choices. Only the product that the manufacturer makes will be chosen, and you will not be able to create something unique to sell.
- Competition is hard. It isn’t easy to stand out from other online retailers who, white-label or not, market the same products.
How to Dropship Private Label & White Label Products
We have already discussed that dropshipping is one of the simplest ways for white label or private label products to be sold. So let’s go over how to use private label or white label products for dropship.
Find a supplier
For the success of your online store, finding an excellent dropshipping provider is critical. To find a list of dropshipping suppliers that provide “private label” or “white label” services, you can look at online directories or do a Google search.
Finding a niche can help you to stand out from other online shops as well. Ensure that you do market research and find out what kind of item you want to rebrand or sell.
Define your brand identity
The critical basis for developing customer loyalty, customer retention, and competitive advantage can be a sound brand identity.
Think about your brand identity as the face of your company is how your audience perceives you. Your audience might not understand who you are without a comprehensive, well-defined brand identity. It would help if you made a personal connection in the end.
In your goods, logo, packaging and website, brand identity must be reflected.
Think about the personality of your brand. It should give your brand a “set of human characteristics”. Brands with a well-defined personality make the product relatable personally, connecting clients at a visceral level and having your effect in their lives. For dropshipping products, both white label and private label, this is essential.
Increase your brand awareness
Increasing your brand awareness is another crucial step in creating a successful brand. If your product is new, then defining your target market and finding ways to attract them to your store is the first thing you’ll want to do. Whether you use dropship private label or white label products, this is true. Here are a few ways that brand awareness can be increased at no cost:
- Develop your social media presence online.
- To increase your keyword rankings, do search engine optimization (SEO).
- By adding a blog, create content on your web site.
- To engage more clients, get product reviews.
Which Is Better for Dropshipping: Private Label or White Label?
It depends on your business goals to choose between a white-label or a private label. Brands with white labels are usually less costly and can generate large profit margins. They are also much more comfortable and cheaper to manufacture than products with private labels. On the other hand, private labeling makes you the exclusive seller of that product, and it’s a great way to stand out from your rivals.
Without using any private or white label items, you can also choose the traditional dropshipping method! Blind shipping” or “blind dropshipping” is referred to as this.” Your dropshipping provider does not put any logos, company names, or marketing material on the package being shipped to the end consumer with this method. The return label that is generated will read “Warehouse”. Usually, this is done in nondescript brown boxes or the original boxes of the vendor.