Private labeling. It will probably sound new to you if you have just started learning about dropshipping.
Still, you have most likely heard some good things about it and are now looking for an explanation of how private labeling is different from dropshipping!
The main difference between dropshipping and private labeling is that with private labeling, you sell products that are marked with your company’s brand. For example, on the product or packaging. While normal dropshipping usually involves selling unbranded products.
People are often very optimistic about private labeling since it can bring some great benefits to your business compared to regular dropshipping.
Are you curious now about what private labeling exactly is and what those great benefits are?
Then keep on reading, and you will find out!
And, in the end, we will even cover the difference between private labeling and white labeling!
What is Dropshipping?
Before we start discussing private labeling, you will first have to understand the concept of dropshipping.
Dropshipping is a business model where you sell products on your online store while not managing the stock of those products yourself. That is done by your dropshipping supplier, who will manage your stock, process, and ship out your orders.
To make it clearer, I will show you one of our infographics below that also explains the concept of dropshipping. After all, a picture is worth a thousand words, right?
And if that’s not clear enough, then here’s another one:
The most common question people have now is, “Won’t my customer know that the package didn’t come from me?“.
No, they won’t.
A supplier knows what dropshipping is, so you will only have to let them know that you’re dropshipping. That way, they won’t include any invoices or promotions in the packages.
Here’s an example:
By doing this, your customers will receive a package with only your product in it and won’t know that you are dropshipping!
If you’re interested in learning more about what dropshipping is, check out this article here.
What is private labeling and why is it different?
You can probably imagine that receiving a completely brand-less package and product can have a negative impact on the customer’s experience.
Products without any branding on them just have a lower perceived value.
A great example of a product with a brand is Coca-Cola. The product has a recognizable name and logo, and there is a great story behind the company.
All these things (and more) cause Coca-Cola to evoke a recognizable feeling for people. It is the reason why Coca-Cola is so popular and can ask for a higher price than most of its competitors.
With private labeling, you are the only one selling your product. It belongs to your brand. Unlike dropshipping, no others can just hop on AliExpress and buy the exact same product.
Examples of things that can “private label” a product are:
- A brand name
- A logo on the product
- A brand identity
- Custom (branded) packaging
- Branded invoicing
For more information about branding your dropshipping store, I suggest reading our article about 7+ amazing tips to brand your dropshipping store!
If you feel that you don’t fully understand private labeling yet, don’t worry. In a moment, I will show you an example of a dropshipping and a private label store.
But first, let’s talk about the advantages and disadvantages of dropshipping and private labeling!
What are the pros and cons of dropshipping vs private labeling?
As always, there are pros and cons to two different methods of approach. In this section, I will discuss the pros and cons of dropshipping vs private labeling:
Pros of dropshipping (or cons of private labeling)
- Dropshipping is easier to start & saves time. One of the main reasons you could do dropshipping instead of private labeling is that starting a dropshipping business is much easier. With dropshipping, you will just have to find a supplier and try to sell their products!
- Dropshipping products are cheaper. Generally, private label products are more expensive to buy since they take more work to produce. Things like a custom logo and packaging take extra time to create and drive up the price.
- Common minimum order requirement for private label products. Your supplier will often ask you to purchase private label products in bulk beforehand. This is because it’s not worthwhile for your supplier to produce these unique products one-by-one.
Cons of dropshipping (or pros of private labeling)
- No product branding when dropshipping. Selling a product without your company’s logo or name can lower its perceived value. This means that you will most likely have to adapt your pricing strategy and reduce your selling price. In other words, private labeled products can sell at a higher price!
- When dropshipping, you will have to deal with more competition. Everyone is able to create their own online store and sell the exact same product as you. With private labeling, you’re the only vendor for that exact product. For more tips on beating your competition, click here!
- Customer loyalty. When someone buys a blank dropshipping product, they probably won’t remember the company’s name a few weeks later when someone asks about the product. A private-labeled product includes your company’s name and logo, which positively affects customer loyalty and word-of-mouth marketing.
Is private labeling better than dropshipping?
With the pros and cons all lined up, the next question that naturally comes up is, “What is better, dropshipping or private labeling?”
When weighing the pros and cons, I think that private labeling is better, but it also depends on your situation.
For example, if you’re just starting out with selling products online, I think it’s perfectly fine to start with dropshipping.
That way, you will learn how everything works without carrying the extra risks of spending too much time branding your store and buying private label products in bulk beforehand for a store that may eventually fail.
If you find out that your product is selling really well, you can always take the next step and scale your store by private labeling your product!
However, if you’re a dropshipping veteran, then I think it’s definitely worth a shot to start a private label brand! A brand allows your business to be scaled more easily and is a great choice for the long-term.
And don’t forget that there are private label dropshipping suppliers as well.
Dropshipping vs private label stores: Examples
I’m going to show you a real-life example of dropshipping vs private label stores based on the following product:
It’s a massage gun, which mainly helps relieve muscle soreness and stiffness, but has many other benefits as well. It will cost you around $50 to buy from your supplier, including shipping.
Here’s an example of (one of the many) regular dropshipping stores that is selling (a newer version of) this exact product:
As you can see, the product is basically the same on AliExpress; there is no additional branding on the product or on the package it comes with. However, this dropshipping store is selling it for triple the price!
What do you think will happen to the retail price?
Exactly, you will be able to ask for a much higher price from your customers, as your product’s perceived value is a lot higher!
As you can see, Hyperice put their brand name and logo on the product, but that’s not all!
For example, they even private-labeled the case that the product comes with:
Their private-labeled product and branded store are the reasons why Hyperice can ask double the price of regular dropshipping stores for the (apart from the logos etc.) exact same product.
Hyperice’s product’s perceived value is just much higher.
How do you start a private label dropshipping business?
If you love the idea of private label dropshipping, then you might be tempted to start a private label dropshipping business.
As I said above, it’s a great way to differentiate yourself from your competition, build a genuine brand, and increase your customer loyalty.
However, how do you start a private label dropshipping business?
Well, let me tell you how to start in five steps:
Note: These steps will be simplified due to the larger complexity of the whole dropshipping process. If you are interested in a complete guide on creating a dropshipping business, check out this article.
1. Think about which niche and target audience you are going to choose
One of the first steps of starting a private label dropshipping business is to think about which niche and target audience you are going to pick.
This is an important step for choosing your private label dropshipping supplier, which will be the second step.
I recommend picking a dropshipping niche that interests you or that you are passionate about, especially if you are a beginner.
Picking a niche that interests you will make working on your store a lot more pleasurable. You will learn more about your topic of interest, and it will motivate you on days when you are struggling not to give up and always keep going until you succeed!
You will be able to find some ideas for dropshipping niches in our article about the 25 best dropshipping niche ideas. For example, you could build a business around the fishing niche, pet niche, or hiking niche!
Here’s an example of a dropshipping business in the hiking niche, Delta Hiking:
After creating a list of possible niches that would be interesting to start a private label dropshipping store around, you can also take a moment to think about which country you are going to target.
Our article about the 15 best and worst countries to target in 2022 as a dropshipper will definitely help you with this!
The best countries to target will give you the highest chance of a sale, while the countries you should exclude from your targeting probably won’t bring you any revenue. That’s why it is an important point to consider!
2. Find a private label dropshipping supplier
If you want to start a private label dropshipping business, you have to find a dropshipping supplier that can private label your products.
Such a dropshipping supplier is called a ‘private label dropshipping supplier’. In case you have doubts about what a dropshipping supplier does, here is a reminder:
The best private label dropshipping suppliers can be hard to find. There are many options out there, and sorting the good from the bad can be daunting sometimes.
Thankfully, we have gone through all the trouble for you and put together the ultimate list of the best private label dropshipping suppliers in 2022.
In case you are looking for private label dropshipping suppliers offering products in all kinds of niches, here is a clear overview of the best general private label dropshipping suppliers:
|Supplier||Private label features||Region||Pricing|
|AliExpress||Custom logo, packaging, and invoice||Worldwide||Free|
|Alibaba||Custom logo, packaging, and invoice||Worldwide||Free|
|Wiio||Custom logo, packaging, and invoice||Worldwide||Free|
|HyperSKU||Custom logo, packaging, and invoice||Worldwide||Free|
|SupplyMeDirect||Custom product label/logo||China, US, UK, EU||Free|
|BigBuy||Custom packaging and invoice||EU||€69 / month + €90 registration fee|
|DropCommerce||Custom invoice||North America||$49 or $89 per month|
And, in case you already have a niche in mind, here are some of the best niche private label dropshipping suppliers:
|Supplier||Niche||Private label features||Pricing|
|Printful||Print on demand||Custom logo, packaging, and invoice||Free|
|Dripshipper||Coffee||Custom logo, packaging, and invoice||$30 per month|
|Dropified||Supplements, CBD, Skincare, Coffee & more||Custom logo, packaging, and invoice||$497 one-time or $97 per month|
|TeaSwan||Tea||Custom logo, packaging, and invoice||Free|
|Art of Where||Print on demand||Custom logo, packaging, and invoice||Free|
|Power Body||Fitness nutrition||Custom logo, packaging, and invoice||Free|
|AOP+||Print on demand||Custom logo, packaging, and invoice||Free|
|BTS Wholesaler||Beauty||Custom packaging||Free|
If you are finding it hard to choose a product for your private label business, we recommend taking a look at our article featuring private label product examples.
The products in that article are chosen based on the characteristics of winning dropshipping products and will definitely give you some inspiration on what is possible! Remember, a product should have good profit margins, a “wow” factor, and/or solve a problem.
Not quite convinced yet? Here is one private label product example already:
Using a supplier called Dripshipper, you are able to start your own private label coffee business in just one day!
So, if you would like to see more ideas like this, check out this article!
Once you found a private label supplier and a product to sell, you can continue with the next step.
3. Set up your online store
You will now have to build a private label dropshipping store around your niche and product.
Setting up your private label might seem like an easy task, but you shouldn’t rush this step, especially if you are building a brand using a private label business!
By putting time and effort into your store, you can beat your competition and create a genuine asset for yourself.
To make this step a little bit easier, check out our checklist for setting up a dropshipping store here.
4. Launch your private label dropshipping business
When you are finished setting up your store, the last step is to launch your private label dropshipping business!
After launching your store, don’t expect that your customers will find your products themselves. You will have to get your brand out into the world using marketing.
A popular marketing method for dropshipping businesses is Facebook Ads:
However, there are many options out there! Check out our marketing category to find all articles related to getting customers to visit your store.
If you’re interested in more detailed steps on how to get started with your private label dropshipping business, check out our article here as well!
What is the difference between private labeling and white labeling?
If you have ever heard of the term ‘white labeling’, you may be asking yourself how it is different from private labeling.
Often, private labeling and white labeling are used interchangeably. That’s because many people don’t know the difference between the two terms. In the dropshipping industry, ‘private labeling’ is the most used term, but sometimes, ‘white labeling’ is the right word for the context.
The difference between white labeling and private labeling is the following. Products that are sold using white labeling are generic products equipped with a brand’s logo, label, or packaging. Products that are sold using private labeling are exclusively sold by one brand.
The contents of private label products are fully determined by the brand selling them. An example of a private label product is the Coca-Cola bottle:
Meanwhile, white label products are products that are already sold in stores but are rebranded by equipping them with a brand’s logo, label, or packaging. An example of a white label product is this blender from AliExpress:
And yes, you can use them both as an alternative to dropshipping!
Private-labeled products contain a piece of the brand’s identity. When paired with a branded store, private labeling can be extremely powerful.
If you’re interested in private labeling now, then don’t forget to check out this article, which contains the 15 best private label dropshipping suppliers!
However, don’t get me wrong; dropshipping is still a great business model in 2022.
And don’t forget, a dropshipping store can be a great stepping stone to a private labeled brand, both for beginners and experienced dropshippers.
If you want to read more about branding your store and see more branded store examples, check out this article:
That will definitely help you further to think of ways to give your own store more of a branded feel.
I hope you’ve learned something new today, and don’t forget that you can write a comment below if you still have any questions.
Have a great rest of your day!
More comparison articles
Not sure yet which business model to choose? Check out the articles below: