Dropshipping VS. Private Label: Which Should You Choose?

Before opening an e-commerce store, we need to determine the product brands we sell. For different merchants, we will recommend different models. If you are a novice, we recommend the dropshipping and delivery model, which will save brand expenses; If you are an experienced merchant, we recommend your own brand, which can expand your brand influence. This article will introduce to you what is the meaning of dropshipping and private labels, what are their respective advantages, and how to develop a brand dropshipping merchant for free. After reading this article, I believe that you will be able to deepen your understanding of drop shipping and private labels and make decisions easily.

What is Dropshipping?

For merchants, the most common merchant model is dropshipping. Dropshipping is a relatively simple method. In this way, merchants do not have to prepare their own products, rent, or build warehouses. Merchants only need to open stores to sell goods, and then the suppliers will ship them directly. That is to say, the dropshipping model can directly synchronize the purchase information of consumers to the supplier. Once the order is paid, the supplier is responsible for the rest of the work.

1. Pros of Dropshipping

  • Low Investment

The biggest advantage of the dropshipping merchant is that it has less investment because it saves the cost of goods and product cost. In addition, there is no warehouse cost. Not to mention the cost of promoting commodity brands, so the investment is very small for merchants.

  • Product Diversification

There is no product limit for dropshipping marketing, and merchants can choose products according to social hot spots. From this point of view, we can choose a variety of products. You can get more profits by choosing the products you sell according to the social hot spots.

  • No Risk

There is basically no risk in dropshipping merchants. If it is a non-dropshipping sales model, merchants should not only produce products but also build or lease warehouses to expand commodity storage. Once the sales volume is poor, the products are overstocked or expired, the merchants have to bear great risks.

2. Cons of Dropshipping

  • Fierce Competition

Compared with private label sales, the competition for dropshipping is very fierce, because there will be many merchants in the market to sell the same products. Therefore, if other merchants can provide more favorable prices or better quality products, it will be difficult for us to occupy the market.

  • No Brand Dividend

The dropshipping model sells products produced by some suppliers, and this brand advantage is directly enjoyed by suppliers. Dropshippers have no way to enjoy the dividends brought by the brand effect of goods. Once the brand is recognized by the market, suppliers are likely to cut off the supply chain.

What is Private Labeling?

There is a big difference between private labeling and dropshipping marketing, and the most obvious difference is brand. Private labeling means that merchants can own their own labels and create their own exclusive brands. Although merchants can sell products according to the production mode provided by suppliers, suppliers have no way to control the final products received by customers, so merchants can use this opportunity to promote their own brands.

1. Pros of Private Labeling

  • Product Brand

Having a private label means we can create our own product brand. If it is in cooperation with a manufacturing company, the merchant can require the manufacturer to print private labels before the products leave the factory. These labels include fonts, colors, logos, packaging guidelines, etc.

  • Flexible Pricing

If it is a private label product, the pricing power of the product is in the hands of the merchant, so if there are peers to sell similar products, we can take the brand price advantage to reduce this risk. After all, the cheapest price is in our own hands.

  • Exclusiveness

There is basically no risk in dropshipping merchants. If it is a non-dropshipping sales model, merchants should not only produce products but also build or lease warehouses to expand commodity storage. Once the sales volume is poor, the products are overstocked or expired, the merchants have to bear great risks.

2. Cons of Private Labeling

  • Higher Expenses

If you are a new e-commerce merchant, do not have your own brand, and have a limited budget, then launching your own brand will require significant capital requirements. After all, there are many brands in the market. If a merchant wants to stand out from so many brands and be recognized by consumers, you need to consume a lot of advertising expenses.

  • Higher Risk

Private label merchants need to keep their stock of goods in stock because manufacturers won’t produce our products if they can’t meet the drop shipper’s minimum order quantity. For merchants, this is a certain risk, and we need to have a reliable market.

Private Label VS. White Label Dropshipping

The private label refers to the sale of products marked with their own brand by merchants, and merchants can participate in the process of controlling product development and manufacturing. There is also a model that combines dropshipping and private labeling so that we can enjoy the advantages that both models give us

1. What is White Label Dropshipping?

Once we decide to sell our own branded products, suppliers usually give us two options: private label or white-label drop shipping. White-label merchandise means we can buy merchandise from a supplier and rebrand it as our own brand. Compared with branded products, white-label products have a certain price advantage.

2. Differences

A private brand means that we have absolute control over the brand and can participate in the process of product production and research and development. But white label dropshipping means that only the supplier is responsible for the production and R&D process, and we can only participate in the design of packaging, labels, and self-branding.

How to Start to Be a Private Label Dropshipping Merchant?

Having your own brand is a great option if you want to differentiate yourself from your competitors. But how to start a private label business? You can do it according to the following steps.

1. Excellent Product Ideas

Product creativity affects brand popularity. A good product idea can lead to more sales. So how can we improve our product ideas? You can take a look at Internet Hotspots to learn about popular products on other platforms. Market research will play an important role in improving our product ideas.

2. Find Suppliers Who Offer Private Label Dropshipping

If we don’t have the ability to create our own brand but want to try the benefits of our own brand, we can also look for some suppliers who can provide our own label. These companies can help us find the right supplier, customize our brand, and help us improve our brand packaging, all of which can improve our branding.

Here, we recommend everyone to choose Honest FulPhilment. Honest FulPhilment is a business that specializes in private label services for merchants. They have many manufacturers that they have cooperated with many times, and the professional team of Honest FulPhilment can help us improve brand content and help us develop brand promotion plans.

3. Marketing your Private Label Dropshipping Business

Once you have your own brand, you can launch your own store on the e-commerce platform. But be aware that a brand new brand is unfamiliar to consumers. Therefore, we should increase our own promotion efforts to let consumers know our brand, understand our brand, and buy our brand products in order to recognize our brand.

Conclusion

Private label products contain part of the brand identity. Private labels can be very powerful when paired with a branded store. If you are interested in private labels, you can study this article carefully. For some merchants who have just entered this industry, opening a dropshipping store can play an important role in their own brands that helps to establish their own private brands, increase product sales, and obtain higher profits. If you want to know more information, please contact us.

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