When it’s about starting online selling, you may choose from private label or white label drop shipping. You can't decide which business model you should build without knowing about private label and white label dropshipping aka white labeling. Therefore, here we have a brief overview of Private Label vs. White Labeling to let you know more about these.
So, here we go:
Private Labeling refers to selling products with your brand label on them. In private Labeling, you generally have better control over your final products. This eCommerce model allows you to create your brand. You can also ask your product manufacturer to put your business logo and name on your sourced products along with other packaging and branding guidelines you provide.
Above all, with private Labeling, you will be the only seller selling your product.
On the other hand, dropshipping is an eCommerce business model where you sell different products online. In this business, the model seller doesn’t need to manage their products in stock. Instead, their dropshipping suppliers do the packaging and shipping of these products.
Dropshipping suppliers are the bodies that manage the product stock and packaging process and ship your orders whenever you receive an order through your online store.
Let’s have a look at the pros and cons of white Labeling vs. private labeling below to understand which one is better:
More control over products
Private labels offer you more options to design and brand your products. Also, you can better check the quality control and production level of your private labeled products.
Higher profit margin
You can competitively price your products to increase your profit margin significantly. As you are the only one selling your products, you can increase your profit margin over time after developing a loyal customer base.
· Contracting with a manufacturer for private Labeling more often has min. order requirements. Therefore, it requires a huge upfront cost to startup.
· Misjudging consumers' demand for your private labeled products can lead to dead inventory. Moreover, Private Labeled products are never easier to return.
Less or no upfront costs
White Labeling doesn’t require a huge upfront cost compared to private Labeling. You can even start dropshipping without spending anything on buying products.
Chances to earn healthy profit margins.
White label products are more often sourced directly from manufacturers and suppliers. Therefore, you can buy them wholesale and have a higher possibility of making a healthy profit.
Money and time-saving business model
Rather than spending a lot of money and time manufacturing products from scratch, you can start selling pre-existing products in your dropshipping store.
· In dropshipping, your product offerings aren’t exclusive. Instead, multiple other dropshippers might have product listings the same as you. This can make you face tough competition.
· Also, dropshipping has lower branding options in terms of packaging.
Both private Labeling and white Labeling have their pros and cons. Dropshipping is a better option for startups that don't have enough capital to spend. On the other hand, sellers who want more control over their products and are willing to spend huge upfront costs can go with white Labeling.
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