There’s a lot of debate about the profitability of white labeling vs. private labeling. But truth be told, whether we are white labeling or private labeling, we can find long-term success with the dropshipping model.
In essence, dropshipping allows us to sell products without holding inventory, which means we can start with little to no investments. On the same note, we can easily replace and remove products if they don’t sell, making it a low-risk model.
While both white label and private label dropshipping are highly rewarding, there are key differences between the two. And, we, as dropshippers, must select the best method for our business.
Therefore, this article will explain the differences between white label vs. private label. In the end, we will learn which option is more suitable for our dropshipping business.
What Is Private Label Dropshipping?
So, how does Private Label Dropshipping work? To elaborate, private label dropshipping allows us to sell customized products without manufacturing them or holding their inventory.
In general, private labeling allows us to source customized products from our suppliers. To clarify, customization can include any physical modification, feature addition, custom packaging, or labeling of products under our brand name.
Moreover, private label products are designed according to our customizations. As such, they are specially manufactured for us. With that said, we may be required to pay for products in advance or fulfill the supplier’s Minimum Order Quantity (MOQ) requirement.
Nonetheless, with unique branding, we can scale our success. Therefore, private labeling enables us to build a brand for our dropshipping stores easily.
What Is White Label Dropshipping?
On the other hand, White Label Dropshipping refers to selling products in their original form and without any customization. With white labeling, we are selling generic products which are mass manufactured.
Since the products are manufactured and supplied by many dropshippers, customers can find white label products from various sellers. And that’s why we must focus on differentiating ourselves from the competition, which we will learn below. Since white label dropshipping is easy to start, it is excellent for beginners.
Private Label Vs. White Label – What’s The Difference?
While white labeling and private labeling are both profitable, they are significantly different from each other. So, here are the pros and cons to give us a clear picture of private labels and white labels. First, let’s begin with the pros and cons of private label products.
Pros Of Private Label Dropshipping
- Low investment cost
- Creative branding
- Competitive advantage
- Customer loyalty
- High-profit margins
With private label products, we can benefit from low upfront investments. By using the dropshipping model, we do not have to handle the production and delivery operations. Instead, our private label supplier handles the manufacturing, branding, and fulfillment on our behalf. Thus, we can sell customized products with a low investment.
Since private labeling allows us to customize products, we can build our brand around the product we are dropshipping. To clarify, branding our products will enable us to gain a competitive advantage over our rivals.
Additionally, private labeling also enables us to gain customer loyalty as they find our products to be unique. Because of the branding and customizations, our products will have a competitive edge even though others sell the same product.
Moreover, private label products are not readily available in the market so we can charge higher prices for them. On top of that, when we combine private label dropshipping with excellent customer service, we will surely obtain repeat purchases for our stores. Therefore, we can enjoy higher profit margins with private label products.
Cons Of Private Label Dropshipping
- Minimum Order Quantity (MOQ)
- Limited suppliers
- Risk of slow movers
- Expertise required
On the downside, private label suppliers often require a Minimum Order Quantity (MOQ) before they provide products to us. In short, MOQ is a minimum number of orders required by suppliers before they source or manufacture products for us.
In general, suppliers require a MOQ when private labeling to cover the cost of production. Since the products are customized and only designed for us, the supplier cannot sell them to other sellers. So, without a MOQ, the supplier risks losing money due to unsold products.
Additionally, not all suppliers are capable of private labeling products. Therefore, we have a limited number of suppliers to source products from, which reduces our product variety and flexibility to negotiate.
Furthermore, when we source private label products, we are responsible for selling them. So, if they don’t perform well, we can’t replace them like other products. As a result, our suppliers will end up holding unsold stock, which can negatively affect our relationship with the supplier. Also, there is a chance we have to pay for unsold stocks, meaning there is a risk of loss.
Plus, private labeling requires more knowledge than white labeling. Thus, we need to develop our expertise in this field rather than jump in without direction. For instance, we need to learn about branding, product development, and packaging when we are private labeling.
However, despite the downsides of private label dropshipping, we can still gain significant benefits from this model. And as such, it provides us an exciting opportunity to create a strong brand identity.
Pros Of White Label Dropshipping
- Great for beginners
- Many available suppliers
- High-profit potential
- Easily replace products
Unlike private labeling, we are not customizing products when we opt-in for the white label model. Instead, we sell them as is. Thus, white label dropshipping is low-cost and requires less of a time investment. Additionally, anyone can start dropshipping white label products since it doesn’t require expertise or a specific skill set like branding.
Furthermore, there are unlimited suppliers who provide white labeling services. As white label products are not complex to manufacture or source, many suppliers offer white label dropshipping services.
Additionally, we also don’t need to pay upfront for products. As suppliers are mass manufacturing white label products, there is no MOQ requirement.
Instead, we only have to sell it from our stores and contact suppliers to fulfill our customer’s orders. So, if a product is not selling well, we are not losing our money on unsold stocks. This enables us to easily remove products that don’t sell and replace them with trending, in-demand ones.
Finally, white label dropshipping is a high-profit potential business. Although customization is limited with white labeling, it doesn’t have a high risk associated with it. For instance, there is often no MOQ or high upfront investment to start dropshipping white label products.
Cons Of White Label Dropshipping
- Lack of creative control
- Limited branding
- More competition
As white label products are mass-manufactured, we sell exactly what we source from the suppliers. And the suppliers have complete control over the production process.
In other words, we get no special features that can differentiate the product from other sellers. Therefore, white label dropshipping limits our creative control. Also, building a strong brand with white label products is difficult because they are readily available in the market.
That is why we need to optimize our marketing strategy to increase sales.
Additionally, thousands of dropshippers are selling white label products in the market due to low entry barriers. As a result, there is high competition in white label dropshipping.
However, we can perform product research to overcome competition. With product research, we can find trending and in-demand products that help us beat our competition.
Private Label & White Label Dropshipping Comparison
Now that we know about the benefits and drawbacks of private label and white label dropshipping, let’s compare them. With that in mind, we’ll explore the following factors of both models:
- Initial Investment
- Product Customization & Exclusivity
- Order Fulfillment Speed
- High-Profit Potential
- Supplier Availability
- Customer Loyalty
- Dropshipping Automation
Below, we’ll look at how the two models fare against each other in detail.
In essence, both private label dropshipping and white label dropshipping require a low level of initial investment. Since the dropshipping model doesn’t require us to buy products in advance, we don’t need much investment upfront.
While we can start both methods with little to no starting capital, private label suppliers may require a down payment for products. That’s because not all private label suppliers manufacture and brand the products for us in advance.
The main reason for this is the nature of the private label products. As private label products are made specifically for us, the suppliers won’t be able to resell them to others.
Thus, if we can’t sell the products, the suppliers will be stuck with unsold products, resulting in a loss. However, if we have a proven sales track record, we can negotiate with the suppliers to source private label products without upfront investment.
Product Customization & Exclusivity
With private labeling, we gain complete product customization and exclusivity. We can customize products, create distinctive packaging and promote our products’ uniqueness to increase our brand’s value.
In contrast, customization options are limited with white label products. Nevertheless, we can ask our white label suppliers to customize packaging or add personalized notes for a competitive edge.
Order Fulfillment Speed
When we are white labeling, we are selling products that are mass produced from our suppliers. So, our suppliers can fulfill the orders quickly without any issues. However, with private label dropshipping, our suppliers customize the products according to our specifications.
For example, our suppliers must add brand labels or package the product according to our instructions. In some cases, suppliers also send personalized notes to our customers. This means suppliers will need more time to add these customizations. With that in mind, the order fulfillment speed is faster for white label dropshipping.
Whether we are private label dropshipping or white labeling dropshipping, we can achieve high-profit potential through both. However, private label products gain extra points as there is a slightly higher profit margin.
Essentially, private label dropshipping allows us to sell products with our brand and logo that customers perceive as unique. Plus, with additional features such as packaging, and personalized notes, we are also providing customers a personalized experience. Thus, customers are willing to pay higher prices for our products, meaning we can enjoy increased profit margins.
As white label products are mass-manufactured, suppliers provide these products to every reseller. As such, we can encounter thousands of eCommerce stores selling the same product in their stores. That also means we have to face high competition when dropshipping white label products, which can cut down on our profits.
On the other hand, private label products face less competition as they are
produced for one brand specifically. Thus, white label dropshipping has a higher level of competition.
When comparing supplier availability between two models, private label dropshipping suppliers are very few, whereas white label dropshipping suppliers are abundant.
To clarify, not all suppliers offer product customizations. That’s primarily because of the complexity and the risk involved in private labeling. However, some suppliers are willing to manufacture or source private label products for us. As such, they may want to look at our history of proven sales records.
Otherwise, the suppliers have to risk keeping the unsold products in their inventory. Thus, we have a wider selection of suppliers when running a white label dropshipping business.
If we provide excellent customer service, customer loyalty is possible with both private label and white label dropshipping. However, if we are looking to build our customer base quickly, private labeling has a slight advantage over white labeling.
When we provide private label products, our customers will receive a unique product resulting in a positive experience. Thus, they are more likely to make repeat purchases and referrals to their friends and family.
However, achieving a loyal customer base is possible as long as we are providing exceptional service from our white label dropshipping business. With that in mind, we should offer our customers 24/7 assistance, fast shipping, and an easy returns & refund policy.
We can automate both white and private label businesses with dropshipping software. However, dropshipping automation is comparatively easier with white label products because there are more suppliers.
To clarify, we need to automate our dropshipping business operations such as product importing, product research, order fulfillment, and more. When we are manually dropshipping, we perform these operations individually, which takes time and effort.
With this in mind, with the help of dropshipping automation, we can save a lot of time and work doing these tedious tasks. Furthermore, automation software also eliminates human errors such as filling in wrong customer details.
Therefore, we can use the AutoDS dropshipping software to automate our dropshipping business operations efficiently. So, let’s look at some features of the AutoDS dropshipping tools:
- Product Research
- Product Importing
- Complete Order Fulfillment
- Automatic Tracking Updates
- Price Optimization
- Price/Stock Monitoring
- Easy Inventory Management
- and more!
Essentially, this tool is an all-in-one automation solution that enables us to easily manage our white label and private label dropshipping business. Although there are more white label suppliers than private ones, AutoDS supports both white label and private label suppliers. Therefore, we can automate our dropshipping business no matter which type of products we list.
Which Is Best – Private Label Or White Label Dropshipping?
Even though private and white label dropshipping are different models, they both can bring us significant profits. As a matter of fact, the best choice among them depends on our business needs and capabilities.
So, as a general rule of thumb, private label dropshipping is for those who:
- Have some experience with dropshipping
- Focus on building brand awareness
- Have a starting capital
- Have designer skills or can outsource to designers
On the other hand, white label dropshipping is suitable for dropshippers who:
- Are beginner dropshippers
- Want to enter the market as soon as possible
- Have low starting capital
- Want to start earning money immediately
Overall, both private label and white label are promising dropshipping ventures. And once we choose a suitable model, we can use automation to scale our business.
How To Automate Your White/Private Label Dropshipping Business
Once we have chosen our preferred business model, we can start our dropshipping business and generate huge profits. But it doesn’t have to stop there. We can scale our business to an even higher level with dropshipping automation. Generally, we can perform dropshipping operations in two ways: manual and automatic.
With the manual method, we import products and fulfill orders one at a time, which is time-consuming. Besides that, if suppliers run out of products or change their prices, our store can incur losses.
Plus, earlier, we had a quick glance at some beneficial AutoDS features. Now, let’s highlight some of the great automation tools we can use to optimize our dropshipping business:
- Price/Stock Monitoring
- Quick Product Importing
- Order Automation
Price/Stock Monitoring & Quick Product Importing
Whether we are dropshipping private or white-label products, we have to rely on our suppliers. As such, the stock availability and prices of products may fluctuate due to various factors such as production delays and high demand.
Therefore, we need to use the Price/Stock Monitoring Tool. This tool sends us a notification whenever there is a change in price and stock. This way we can update the price and stock in our store to prevent our customers from buying elsewhere.
Additionally, we can use the Automatic Product Importer to import tens of thousands of white-label or private-label products with a single click. This eliminates the need to import manually, saving us a lot of time.
On top of that, all our customer’s orders can be fulfilled automatically with an order automation tool. To elaborate, there are two types of order automation tools.
In general, the Automatic Ordering Tool is an automatic method of order fulfillment that uses our buyer accounts. In short, buyer accounts are our accounts with integrated payment plans on our supplier’s website. Plus, the automatic orders also show order statuses for each order. So, we can find out where our customer’s orders are in the fulfillment process.
On the other hand, Fulfilled By AutoDS (FBA) is a fully automatic order fulfillment feature that doesn’t use our buyer accounts. This means there is no risk of our buyer accounts getting locked or suspended. Instead, we load a balance on the AutoDS platform. On top of that, this tool provides one-click returns. So, we can sit back and relax as everything is done for us.
All in all, whether we choose Automated Orders or FBA, both of them provide tracking number updates to our customers. With tracking numbers, our customers can quickly determine when they will receive the products.
Overall, we can automate our white label or private label dropshipping business with features like these. As a result, we can easily scale our business and achieve higher profits.
Frequently Asked Questions
Is It Legal To Dropship Private Label And White Label Products?
It is entirely legal to dropship private label and white label products. However, we should avoid dropshipping VeRO products. To clarify, dropshipping VeRO products infringe copyright rules and can land us in legal trouble.
What Is The Biggest Difference Between Private Label And White Label?
The most significant difference between private and white labels is that private labeling allows us to customize products according to our specifications. As such, we can label products under our brand name, customize packaging, add personalized notes, and more. On the other hand, white label products are great for beginners, and they’re mass manufactured.
Is It Easier To Start A Private Label Or White Label Dropshipping Business?
Due to high supplier availability and low expertise requirement, starting a white label dropshipping business is easier. Nonetheless, that doesn’t mean the private label route is difficult to start. With the proper knowledge, we can also start sourcing and dropshipping private label products.
Can I Make More Money Dropshipping Private Label Or White Label Products?
In reality, we can make more money with both, but, in general, private label dropshipping is more profitable. As the products are branded specifically for us, we can scale the price of the products and earn more in the long run. However, white label products can bring us high-profit margins when using the right strategies.
Awesome! Now we know the differences between private label and white label dropshipping. Despite their differences, we can establish a successful dropshipping business with either of the two business models.
All we need is a reliable supplier to partner with and the right marketing strategy to promote our products. Once we do that, our dropshipping stores will be a force to be reckoned with. Whether we choose private label dropshipping or white label dropshipping, we can automate our way to success with dropshipping automation software.
However, the more you learn, the higher the chances of success. So, here are some articles to gather more knowledge about white label and private label dropshipping: