Private Label Dropshipping is an emerging strategy employed by many dropshippers and entrepreneurs. But what exactly is private label dropshipping? To understand it clearly, let’s start with the basic definition of dropshipping and private labels.
Dropshipping allows us to sell products to our customers without holding inventory. Instead, the supplier holds the inventory of the product and delivers it to our customers for us.
Similarly, private labeling means purchasing products from a supplier or manufacturer, branding them, then distributing and reselling them in our store.
This article will guide us on how to combine both business models by utilizing private label dropshipping. Furthermore, we will cover the top five private label wholesale suppliers and steps to start a private label dropshipping business.
What Is Private Label Dropshipping? How Does It Work?
Private label dropshipping is an eCommerce model that offers dropshipping functionality while selling our unique products. It allows us to sell products under our brand label directly to consumers without holding inventory or manufacturing it ourselves.
So, how does private label dropshipping work? Our private label supplier manufactures products or purchases the goods. After manufacturing, they allocate a specific quantity of products to label privately. Once the products are privately labeled, we add them to our dropshipping store.
Then, when a customer orders the product from our store, we let the supplier know about it, and our suppliers deliver the products to them.
However, private label suppliers don’t automatically offer their services to any dropshipper. The dropshipper would usually need to show proof of good sales records. That’s because private label suppliers don’t want to risk manufacturing products that won’t sell.
What Are The Benefits Of Private Label Dropshipping?
Now that we know how private labeling works let’s look at how beneficial private labeling is in today’s context.
According to Statista, the market share of private label brands in the United States was 19.5 percent in 2020.
Furthermore, retail sales of private label products under store brands in the United States amounted to around 158.8 billion US dollars.
Due to this massive potential, it’s a no-brainer to brand our products. Branding or private labeling our products gives us a unique identity that separates us from the competition.
Private Label vs. White Label Dropshipping
Now that we know about private label dropshipping and its benefits let’s distinguish it from White Label Dropshipping.
In Private label dropshipping, a supplier or company manufactures customized products for a dropshipper and attaches a label containing the dropshipper’s unique brand.
For example, an eCommerce store orders a private label product from ABC Company. Then, ABC Company manufactures a specific number of products according to specifications/modifications provided by the eCommerce store. Finally, the products are packed and labeled with the store’s brand.
In contrast, white-label dropshipping means selling products already available on the market using the vendor’s brand. Unlike private labeling, suppliers aren’t manufacturing or supplying the products according to our brand. Instead, we can customize small things like gift packaging and adding a custom note to our package.
Private Label vs. Dropshipping
Private label? Dropshipping? Private label dropshipping? While these terms may sound similar, they all mean different things.
With standard private labeling, the supplier manufactures products according to our specifications. Furthermore, we can brand products under our brand name, custom logo on the packaging, customized notes, etc. However, we are responsible for holding an inventory of the merchandise and shipping orders.
Meanwhile, dropshipping means selling goods without holding inventory or purchasing products in advance, where our profits come from working as middlemen. Because dropshipping is a fulfillment method, we can use it for any product as long as it is legal.
Private Label Dropshipping
When we combine private labeling and dropshipping, the result is private label dropshipping. Now, let’s understand how it works.
In private label dropshipping, private suppliers manufacture the goods for us, hold them in their storage, and label the goods with our brand . Like regular dropshipping, we only pay the supplier after customers pay us, and the supplier is in charge of shipping orders. For this reason, it’s a low-risk business model for us dropshippers.
Advantages and Disadvantages Of Private Label Dropshipping
While Private label dropshipping sounds like an attractive business model, it also has some disadvantages. Let’s take a look at the pros and cons of private label dropshipping:
Private Label Dropshipping: Pros
Here are some pros of Private label dropshipping:
- Loyal customers: Private labeling products carry our unique label, giving us the legitimacy and credibility that creates loyal customers. Therefore, it increases our opportunities for long-term profits.
- Low investment costs: Unlike standard private labeling, private label dropshipping requires only a low initial investment. That’s because suppliers handle all manufacturing, branding, and distribution of our products, and we only pay the suppliers after customers pay us.
- Stand out from the competition: Private labeling allows us to differentiate our products with customized logos and packaging. Even if other sellers list similar products, the customization and branding give a unique look to our product.
- Freedom to adapt and evolve: Since suppliers do most of the work, we can remain focused on being flexible and adapting to the market more quickly than regular e-commerce businesses.
For instance, if there’s a new trend on the market, we can contact our private label suppliers and order trending products according to our specifications and labels. Then, we can immediately start selling those products.
In contrast, niche companies that aren’t private labeling cannot just start selling trending products out of a sudden because they need to plan things out carefully.
Private Label Dropshipping: Cons
While the pros of private labeling make it an attractive option, we must also be aware of the cons.
Here are some cons of private label dropshipping:
- Private label suppliers do not manufacture easily: Not all private label suppliers agree to manufacture and brand the goods for dropshippers in advance. That’s because the suppliers have to carry the risks and keep holding the stock until we sell them. However, we can overcome it by building a proven track record of sales.
- Minimum Order Quantity (MOQ): Private label suppliers often require a minimum order quantity before manufacturing a product. It does not allow dropshippers to test the market first, before taking the plunge.
- Slow Movers: Products that we privately label are our responsibility whether we paid for the goods in advance or not. We have to sell them one way or another.
- Uncertainty in quality: Because we outsource manufacturing to a supplier, we have little control over product quality. In fact, many private label suppliers are known to produce low-quality merchandise, which is why it’s so important to work only with reliable suppliers that have a proven track record.
While there are some disadvantages to private label dropshipping, we can easily overcome them if we partner with suitable suppliers and use the right blueprint for our business.
Wholesale Suppliers/Manufacturers For Private Labeling And Branding
The importance of working with quality private label dropshipping suppliers cannot be overstated. We should aim to work only with the best in the business to build a successful and trustworthy brand.
With that in mind, here are the five best wholesale suppliers that provide the best services for private label dropshippers:
Let’s learn why they are some of the best in the business:
The first wholesale supplier that is perfect for private labeling is Alibaba. If we want products specially manufactured for us, Alibaba is a great platform to find thousands of reliable and trusted manufacturers.
- Tons of product options
- Low private labeling costs
- Hundreds of verified suppliers
- Comfortable payment system
Alibaba has around 6000 different categories and tons of products for private labeling. Additionally, private labeling costs are comparatively low because we purchase products directly from a supplier on Alibaba.
When we are private label dropshipping, it’s crucial to have a reliable supplier who can offer high-quality manufacturing and labeling services. With plenty of reviews and ratings, many suppliers on Alibaba are verified suppliers who are reliable and trustworthy.
To make transactions easier, Alibaba provides dropshippers with multiple convenient payment methods such as Paypal, bank transfer, Western Union, L/C, etc.
Nevertheless, using Alibaba as a private label dropshipping supplier has its downsides:
Language barrier with some manufacturers: Beginner dropshippers may feel slightly overwhelmed when purchasing on Alibaba due to some suppliers’ language and cultural barriers.
Requires higher MOQ: Ordering on Alibaba requires a higher Minimum Order Quantity as the platform is geared towards wholesale buyers. However, don’t hesitate to negotiate for low MOQ.
Long shipping times: Shipping times on Alibaba can take anywhere from 15-45 days, depending on order size, destination and workload.
Second, on our wholesale private label suppliers list is AliExpress, the most popular website for people looking to buy cheap goods from China. It is an excellent platform to find private label manufacturers and private labeling servicers.
- Thousands of suppliers who can connect us with private label suppliers
- Low-priced products
- Easy Product research with AliExpress dropshipping center
Although the AliExpress platform doesn’t offer Private Label services, the AliExpress platform has a massive number of suppliers who can connect us with Private Label dropshipping suppliers.
Since many of the private label suppliers we find on the platform are also located in and around China, the product prices are low and competitive. Additionally, high competition between AliExpress sellers has also made products cheaper.
Even with many products, AliExpress allows us to filter and search through them with the AliExpress dropshipping center. Furthermore, AliExpress dropshipping center can help private label sellers get terrific ideas for products by showing trending products and emerging trends.
Long shipping times: Many of the private label suppliers we find via AliExpress are located in China or similar distances from Europe and the US. Therefore, we should expect longer shipping times.
Low product quality: AliExpress is known for its low-cost goods, and with it comes suppliers who may offer low-quality products. Dropshipping low-quality products to our customers can negatively affect our private label dropshipping business.
On the third position, we have SupplyMeDirect, a B2B wholesale platform that provides private label dropshippers direct access to manufacturers/suppliers.
- Specialization in beauty and fabric products
- Integration with Shopify, BigCommerce, eBay, and Amazon
- Fast shipping time
- Syncs tracking number to our store
Dropshippers working in the beauty or fabric niche can significantly benefit from SupplyMe Direct’s private labeling features. That’s because SupplyMe Direct specializes in those niches. If we are private labeling any other category, we may gain access to other product categories by contacting a client manager.
Additionally, SupplyMeDirect can easily connect with eCommerce platforms like Shopify, BigCommerce, eBay, and Amazon. The more platforms the supplier integrates with, the better for us as it allows us to sell on more platforms and reach more customers.
When it comes to shipping products, SupplyMeDirect has a fast shipping time of around 4-14 days. It is possible because more than 60% of the stocks of SupplyMeDirect are stored in warehouses located in the US, Canada, the UK, and Europe.
Once the supplier ships out from their side, SupplyMeDirect enables us to update tracking numbers directly to our store so that we can always track our orders. Furthermore, it enables us to inform and communicate with our customers about their delivery progress.
Relatively new supplier: SupplyMeDirect is a relatively new platform to trust. In fact, It is also evident with their Shopify app, which has only four reviews.
Limited product category: While it has a vast selection of products, there are some limitations in choosing categories.
4. Printed Mint
Fourth on our list of wholesale suppliers is Printed Mint, a dropshipping company specializing in print-on-demand products for private label dropshippers.
- Specializes in print on demand products
- High-quality items
- Custom Packaging
- Offers dropshipping services
- Integrates with multiple eCommerce platforms
Printed Mint mainly focuses on a single niche, print-on-demand products. We can use Printed Mint to pick products, create unique designs, set the pricing, and deliver them to our customers.
Printed Mint’s high-quality products help build a strong base for our private label business. On top of that, Printed Mint provides a custom packaging service allowing us to add a personal touch to the products.
Finally, Printed Mint easily integrates with multiple eCommerce platforms. As a result, it’s easier to list Printed Mint products on platforms like Shopify, Etsy, Squarespace, or WooCommerce, and sell them with ease.
Very few products: With only around 150 products, Printed Mint doesn’t offer much variety in product selection.
High cost per item: In addition to having fewer products, Printed Mint products have a higher per-item cost than its competitors like Printify, which offers similar products.
5. Magnum Coffee Roastery
Last but not least, we have Magnum Coffee Roastery, a private label coffee supplier specializing in developing private label coffee brands.
- Quality coffee products
- Custom packaging and design
- Marketing services
- Reliable and trustworthy supplier
Magnum Coffee Roastery is the most reliable and competent distributor of coffee products. The company always sources its best quality ingredients to bring out an excellent taste in the cup.
Additionally, Magnum Coffee Roastery wraps our coffee products in custom packaging with graphic designs. Once our product is ready to be sold, Magnum Coffee Roastery also helps to promote our coffee brand with its marketing services.
Furthermore, the company has a superb reputation as a reliable supplier, certified with various associations such as National Coffee Association USA, USDA Organic, Fair Trade Certified.
Single specialization: Since Magnum Coffee Roastery only specializes in coffee distribution, they are only helpful if we’re into the coffee niche.
Limited packaging sizes and types: While they offer custom designs on packages, you can only pick from a handful of package sizes and types.
How To Start A Private Label Dropshipping Business
So far, we’ve learned about private label dropshipping, its benefits, and the types of suppliers that support it. Now it’s time to learn the practical steps of starting a private label dropshipping business.
Here, we have eight easy steps to accomplish our mission:
- Step 1: Product Research
- Step 2: Contact A Private Label Supplier
- Step 3: Choose Your Selling Channel
- Step 4: Add Products To Your Store
- Step 5: Brand Your Store
- Step 6: Launch Your Private Label Store
- Step 7: Market Your Products
- Step 8: Customer Success
Step 1: Product Research
The first step to creating a private label dropshipping business is researching the right products to sell. Product research’s end goal is to understand market trends and find a profitable niche.
For that purpose, we can always read the ‘Product Finding Strategies’ section on the AutoDS blog page or the ‘Sell These Now’ Youtube playlist. Similarly, AutoDS’ product research feature and the AliExpress dropship center help us find trending products to sell.
Once we find products with a high potential to sell, we can dropship similar products by private labeling them.
Step 2: Contact A Private Label Supplier
Once we decide on a product, we contact private label suppliers who offer private labeling services. First, we have to inquire about the availability of our product and other details.
Assuming the supplier has the product we wish to sell, we can send them specifications like logo, product dimensions, etc.
If we do not have a brand logo, we can use Hatchful to create one. Although Shopify powers Hatchful, we can use Hatchful’s custom logos on multiple selling channels and not just on Shopify.
Then, we have to determine how much the total order will cost us by inquiring about the average price per unit from the supplier.
To gather such information, we’ll first need to inquire with suppliers about their minimum order quantity (MOQ) and the price for the bundle. Since private suppliers charge you for shipping products to our customers, get a separate quote to know their shipping charge per product.
Once we have the shipping cost and MOQ, we can determine the average unit price. We multiply the per-item shipping cost by the MOQ and add the total to the MOQ cost. Finally, we divide the result by the product quantity and we get the average unit price of the product.
Then, we can add our profit margin to get to the final selling price.
When we have the final estimation, we can get separate quotes from different private label suppliers to negotiate and get the best deals possible.
Beginner’s Tip: While many people assume that having a lower order quantity is beneficial, a higher MOQ can be cheaper per unit.
Step 3: Choose Your Selling Channel
Now that we negotiated a private label dropshipping deal, the next step is to choose where we list the products. Selling channels are primarily of two types: Marketplace and customizable eCommerce platforms.
Marketplaces like Amazon and eBay are trading platforms with an existing audience. With those existing audiences, there is a high chance that customers will come across our products.
In contrast, customizable eCommerce platforms like Shopify/Wix allow us to add custom designs and templates to brand our store and personalize it for our target audience.
Pros And Cons Of Different Selling Channels
Now that you know the basics of selling channels let’s see how our private label dropshipping business fares with different selling channels by knowing their pros and cons.
eCommerce platforms like Shopify and Wix are website-building platforms that allow you to create and host our private label dropshipping store.
- A fully customizable platform that helps us build unique websites according to our brands
- Unlimited products listings from day one
- It doesn’t require technical or coding skills
- Customized theme to go with our brand
- High marketing costs
- No existing traffic, unlike Amazon, eBay, and Facebook Marketplace.
eBay is an eCommerce marketplace that allows our private label dropshipping store to generate organic traffic.
- Easy to use interface
- Low start-up investment
- Free organic traffic in our stores
- Easy promotion for our private label listings to reach customers.
- eBay restricts us from selling as many products as we want.
- Unlike Shopify and Wix, there are limitations in building our customized store.
Facebook Marketplace is a relatively new eCommerce platform that allows people to buy and sell things from one another.
- Low competition due to Facebook Marketplace being relatively new
- Free organic traffic from Facebook users
- Low selling fees
- Unlike eBay, there are no selling limits
- Communicate with customers through Facebook Messenger.
- Unavailability of storefronts to showcase our brand
Amazon is a leading eCommerce marketplace with over 300 million active users. With Amazon, our private label dropshipping store can quickly generate traffic among those users.
- Significant existing traffic
- It costs less to market our private label/brand
- The trustworthiness of the Amazon brand is a plus point for our private label
- No listing limits like eBay. Sell as much product as you want
- Target multiple categories with a single product
- A high level of competition means we have to put extra effort to sell our products.
Step 4: Add Products To Your Store
After choosing a selling channel, we list our private label products in our store to sell them to our customers.
To add products, simply create a listing on your selling channel, write product descriptions, add color variations, if any, edit or upload images, and follow other necessary steps.
Tip: Using creative titles, attractive product descriptions, and eye-catching images are excellent ways to optimize our private label products’ listing because it leaves a better first impression.
Step 5: Brand Your Store
Branding is the process of creating a unique identity to stand out from the crowd and build trust with potential customers. Every company needs to have a distinct personality that reflects what they do and who they are, to make a genuine connection with your audience.
There are different methods to brand stores as it varies by selling channel:
Branding on Shopify/ Wix: If our stores are built on Shopify or Wix, we can take advantage of fully customizing our websites to provide a more brand-influenced interface for all of our customers.
Likewise, Shopify and Wix both allow adding a store theme that compliments our brand and a store logo. To create free unique logos for our store, we can use Hatchful.com.
Branding on eBay: Branding our eBay store is slightly different from the Shopify/Wix platforms. Instead of complete customization, we can customize individual elements of our store.
For example, we can create a branded store template for our listings, along with a store logo and billboard.
Branding on Facebook Marketplace: Unlike eBay and Shopify/Wix, stores based on Facebook Marketplace may find it tricky to brand their stores. That’s because there is no storefront to show our logos. However, we can brand our products by editing titles, product descriptions, images, etc., to reflect our company’s brand.
Step 6: Launch Your Private Label Store
Well done. We have already researched products, found suppliers, and labeled our products. Now that our products and stores are branded, we can launch our private label stores.
Before launching your store, update your policies, set up a subscription plan, and design a professional store. Also, creating a launch event and advertising that our store will be going live on a specific day is an incredibly effective way to build up anticipation.
Step 7: Market Your Products
To be successful in the private label dropshipping business, we need to market our private-labeled products. Products that are marketed well generate profits and gain popularity because advertising influences people.
Here are some ways to market our private label products on the three most popular selling channels.
eBay Private Label Marketing
- Promoted Listings Standard: Promoted listings are a method to market our store and get more notably featured across eBay. Importantly, we only pay for it if the product sells.
- Promoted Listings Advanced(eBay-PPC): eBay Pay Per Click is eBay’s new advertising method that allows sellers to run ad campaigns and compete for the top spot on search results for their products to boost sales. In contrast to Promoted listings – standard, eBay charges us a fee whenever a customer clicks on the ad.
Shopify Private Label Marketing
- Email Marketing: Sending emails with special discounts or attractive offers to our customers helps us increase sales. An effective email campaign drives sales, builds customer loyalty, and establishes positive brand perception.
- Facebook Ads: With Facebook Ads, we can select a particular audience to target with our product’s ads. In addition, we also get to learn what our audiences prefer by using this method.
- Influencer Marketing: Influencer marketing is one of the most effective ways to promote a business or product. Dropshippers advertise their products by paying influencers for reviewing and promoting the product to their large following. We can simply choose from one of the influencer marketing platforms to find and collaborate with an influencer that knows our target audience.
Facebook Marketplace Private Label Marketing
With over 700 million active users, Facebook Marketplace is a great place to promote our products at a low cost.
Here are some ways to market on Facebook Marketplace to boost your listings further:
- Boosted listing: Boosting an item we’ve listed helps it sell faster. More people who see our boosted listing will view and engage with our item, which may lead to a quicker sale.
- Seo Optimized titles: SEO enhanced product titles significantly increase your sales. The goal is to create a title that immediately attracts the right audience. Such a strategy ultimately leads more people to click on your product link and purchase.
Step 8: Customer Success
The final step is to always look after our customers as good customer service is the basis for a successful business.
If we provide quality services, give adequate information and resolve issues swiftly, customers will have a better experience while shopping at our store. Plus, providing excellent customer care builds loyalty, increasing the repurchase rate.
Here are some methods to managing customer success on different platforms:
We can see our customer’s messages from the Shopify dashboard or email inbox.
To take complete care of our customers on eBay, AutoDS has a customer support management system to handle all customer complaints, returns, and queries from a single dashboard.
Communicating with our customers on Facebook Marketplace is easy with Facebook Messenger. Any inquiries or customer complaints directly land in our inbox, which we can promptly resolve.
And there you have it. Now, you know all about Private Label Dropshipping and the best private label wholesale manufacturers that provide these services. In addition, the eight steps we mentioned will help you build your own private label dropshipping business.
All that’s left is for you to find your niche and start taking action. With the proper guidance, you too can create a flourishing brand with a consistent customer base that develops into a reliable income stream.
Once we consistently provide quality private label products and services, our brand will start blooming over time as our store grows more popular.
If you want to get some more ideas and strategies to help you in your private label dropshipping venture, here are some helpful resources: