As you discover the type of eCommerce store which will work best for you, the next step is to understand the difference between white label and private label dropshipping before taking the plunge. Neither of these business models requires retailers to undergo the tedious process of manufacturing products which makes it time-saving and cost-efficient; however, you must brand and market the product to the targeted audience.
Both of these terms have been endorsed by resellers, each of which you must be weighed in terms of pros and cons when selling online.
What Is White Label Dropshipping?
A white label product is thought of as a generic product manufactured by one manufacturer but sold by multiple retailers. These retailers can rebrand the product (under their name and branding) to make it appear as though they were the original manufacturers of the item. White label dropshipping makes it easy to sell such white-label items online.
The white label dropshipping model enables online sellers to sell products from other manufacturers under their brand name by adding a logo and custom packaging each item shipped out. For this reason, it’s best to opt for established items for this dropshipping method that your consumers use frequently or there’s a demand for in the market. After the consumer purchases the product, the order information is shared with the dropshipping supplier, who packages the item and ships it to the mentioned address.
The Advantages of White Label Dropshipping
Time-Saving and Cost-Efficient
Instead of designing a product from scratch and paying an additional fee to keep all rights reserved, it’s easier to white label a product that occurs in abundance in the market. Despite being a seller, you’re not required to purchase the product until your consumer has confirmed their order, reducing wastage of failed products and increasing cash flow.
A Larger Profit
Because white label products are purchased directly from the product’s manufacturer, it’s possible to buy them at wholesale prices. Generally, dropshipping service providers allow resellers to sell as many items as they like via their website or other social media platforms for no additional charges. This business model has lesser capital requirements, making it an effective strategy for aspiring entrepreneurs with a limited budget.
What Is Private Label Dropshipping?
With private labeling, the manufacturer designs and develops the product exclusively for one retailer who sells it under their brand name. These are known to be cheaper than national brands yet equally profitable when marketed correctly.
Private label dropshipping is a convenient method of selling private label products. The dropshipping suppliers sell these goods exclusively to one online business owner by adding the unique branding element before shipping to the consumers.
The Advantages of Private Label Dropshipping
Visibly Increased Margin
Private label dropshipping allows business to price their private-labeled products more competitively. Retailers secure as much as 25 to 30 percent higher gross margins on these products than white label products. Private labeling can therefore help increase the overall profit margin.
Gaining Consumer Loyalty
Everyone is shopping online — a study found that 49 percent of consumers are shopping online globally more than they did before the outbreak of the coronavirus pandemic. There’s no denying the fact that people prefer purchasing locally made products, so if you’re able to provide to them a private labeled product that satisfies their demand, you’ll be the only source to buy from. This has enabled businesses to gain the loyalty of consumers regardless of the tough competition the retail world throws at them. Moreover, you’ll be able to supply your private labeled products internationally to expand the business further.
Note: A solid brand identity is required for customer retention and to aid the competitive advantage.
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