Want to start a dropshipping store selling your own branded products? You can thanks to white label and private label dropshipping.
But what’s the difference between white label and private label?
And which model is the best for dropshipping?
This article will cover everything you need to know about white label vs private label dropshipping.
What is White Label Dropshipping?
White label products are created by manufacturers with the intention of being rebranded by multiple different retailers.
I’m sure you’ve encountered a product at a supermarket before that you also encountered at another supermarket but with a different label.
For example, Belgian supermarkets Colruyt & Delhaize, French supermarket Carrefour and Dutch supermarket Albert Heijn each sell their own variant of this water, each with their own label attached to it.
This water bottle is mass-manufactured and white-labeled by these supermarkets to fit their own branding.
What Budget Do You Need For White Labeling?
You should budget about $500 to design and test labels.
Say your product cost is $10 and your supplier requires an MOQ of 200, that’s $2000 for your first inventory.
That’s a total of about $2500 to start white label dropshipping.
Keep in mind this does not include the cost for custom packaging or product advertising.
All in all you should budget a minimum of $5000 for white label dropshipping.
Advantages of White Labeling
- Proven products — manufacturers only white-label products that are proven to sell well making them very easy to sell to the right audience.
- Good margins — being mass-manufactured makes these white-label products very cheap and thus you can get a good profit margin
- Knock-out the competition — you can easily knock out the competition that is providing generic brandless products by offering a white-labeled product on the market
Disadvantages of White Labeling
- Competition with other white-label brands — as these products are mass-manufactured, there is often competition between white-label brands. You should always do proper competitor research before entering a market.
- Limited branding — as you can only add your branding to a label, white-labeled products end up looking generic compared to private-labeled products.
- Limited product offer — you are limited to white-label products that manufacturers are putting out there
What is Private Label Dropshipping?
Private label products are created at request. These products are not rebranded for multiple retailers and are completely your own.
An example of private labeling is CVS pharmacy in the US.
Have you noticed that CVS seems to sell products that look exactly like real brands but have CVS branding on them?
That’s private labeling.
CVS hires manufacturers to create these products for them so they can offer them at a cheaper price and position them exactly next to the real product in their stores.
You can make private label products to look exactly the way you want them to look, with absolutely no limitations in branding.
What Budget Do You Need For Private Labeling?
You should budget about $1000 to design and test packaging for your product
Say your product cost is $10 and your supplier requires an MOQ of 500, that’s $5000 for your first inventory.
So in total, that’s $6000 to get started with private label dropshipping.
For product testing with Ads I’d budget at least $3000.
That’s a total of $9000 that you should budget for private label dropshipping.
This amount can be lower, if you find a supplier that allows a smaller MOQ.
Advantages of Private Labeling
- Great for branding — the private label product is completely your own design and fits your branding.
- Little competition — you can enter a brand-new market with your custom product
- You choose your price — your pricing is not based on the competition and thus you can find the ideal profit margin
Disadvantages of Private Labeling
- Big investment required — as products are custom, manufacturers are not going to start working with you unless you order a high number of pieces
- Products aren’t proven to work — just because you have a nice and custom product, doesn’t mean it will sell. Private labeling has a higher risk factor than white labeling as the product isn’t proven to be successful yet.
So What’s The Difference Between White Label & Private Label?
White label and private label are often mistakingly seen as the exact same thing, they are not.
White label products are mass-manufactured and already available with these suppliers. To start white-labeling you contact them, they slap your label on the product and you’re good to go.
In the case of private labeling, retailers request a completely new and branded product from manufacturers.
Thus private labeling takes more time, a larger investment and has a lot more risks involved.
White Label vs Private Label: Which is Best For Dropshipping?
White-label is probably the better choice for dropshipping.
I say this because the average drop shipper doesn’t have the budget to spend real money on market and product research, order high order quantities and there’s the risk of ending up with dead inventory.
White label products are proven to sell, require lower MOQs (minimum order quantities) while still offering branding possibilities.
With white label drop shipping you’ll end up investing far less money, taking fewer risks and you’ll see faster returns.
Afterwards, if successful, you can always switch from white label to private label.
Conventional Dropshipping vs White Label Dropshipping
Anyone can start dropshipping with very little upfront investment.
With regular dropshipping all you really have to invest money in, is Facebook Ads.
White label dropshipping, on the other hand, requires an upfront investment. For this model, you’ll need to hire a designer, test product packaging, and purchase inventory.
Your product price including shipping, will also likely be higher when white-label dropshipping compared to regular dropshipping.
BUT you will be able to build a brand and customer-base, enjoy less competition, provide faster shipping and generally have a more professional business.
My take on it? Conventional dropshipping is great for testing out products and markets but eventually, you should switch over the white labeling if you want to create a long-term brand.
Private Label and White Label Dropshipping Suppliers
Alibaba
Alibaba is the mother company and wholesale variant of AliExpress.
On AliBaba you can find Chinese suppliers that provide products at very cheap wholesale prices.
These manufacturers can add your branding to their products on request.
Keep in mind though that Alibaba does not provide dropshipping fulfillment services, only sourcing.
So you will have to either ship the products to your address or ship them to a third-party fulfillment center.
One big advantage of Alibaba suppliers is that they are very cheap and will likely offer you the best pricing.
Indiamart
Indiamart is the Indian alternative to Alibaba.
This is great if you’re looking to source white label or private label products from India instead of China.
Here too, you can find suppliers that will provide white label and private labeling services for you.
uDroppy
uDroppy is a premium drop shipping service that allows private labeling starting from their PRO plan ($149/mo).
With this pro plan, you get access to your very own point of contact within uDroppy called a merchant success manager.
This manager will contact factories with your request and help you with quality control and other factors.
You’re paying a premium of $149/mo for this service, but you’re also getting a complete done-for-you service.
Want more info? Read our uDroppy review
Zendrop
Zendrop is yet another premium drop shipping service that allows private labeling.
Though from the sounds of it, it sounds more like they mean you can white-label some of the products they have in their catalog.
To access the white label/private labeling function of Zendrop you’ll need to have the Pro plan which costs $49 per month.
Zendrop private labeling requires MOQs of 100 – 200 units.
Want more info? Read our Zendrop Review
FAQ
Is White Label or Private Label Considered Dropshipping?
It depends. If you purchase white or private label products from Alibaba and shipping them to your own address, you are no longer dropshipping.
However, if you ship the products to a fulfillment center or use a premium service such as uDroppy and Zendrop, then you are still technically dropshipping the products.
Is White Label Better Than Dropshipping?
The white label business model is better than dropshipping but it does require more upfront investment and you need to take more risks.
It’s also easier to find a winning product through dropshipping because of the many options out there compared to white labeling where the amount of products you can sell is limited.