What is Private Label Dropshipping, and How does it Work?

Have you ever wondered that as a dropshipper, you just present other merchants’ products, send the customers’ orders to them, and your brand name remains unknown?

What if you want to grow your business and increase your brand awareness?

Wouldn’t it be great if you could sell your exclusive products with your own logo on them?

Then you’ll be amazed to know that with private label dropshipping, you will have your own branded products without having to manufacture them. Let’s see what exactly private labeling is and how it works for your business.

What is private label dropshipping definition?

Private label is a dropshipping model in which the suppliers make a certain type of product exclusively for a dropshipper. So the product sent to the customer is under the name of the dropshipping brand and has its logo on it. It’s somehow an agreement between a supplier and a dropshipper. The dropshipper needs to reach out to the supplier and discuss producing private label products to bring it up. You might have heard of private label suppliers or products as well. We have explained them separately to clear up the confusion!

What is a private label supplier?

Some merchants or suppliers are available for private labeling, which means they accept manufacturing a dropshipper’s desired product with their preferred features. Private label suppliers also put the name of dropshipping’s brand on products and ship them to the buyer. The suppliers should be convinced that the dropshipper’s private label product is trendy and has high demand in the market. Otherwise, they won’t take a risk to waste their time and energy manufacturing a product people aren’t going to buy.

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What are private label products?

Private label products are those that dropshippers want to be exclusively produced for their business. These products have special features and are labeled with the dropshipper’s brand name.

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What are the differences between private labeling and regular dropshipping?

In both models, the dropshipper plays the role of a middleman between the manufacturer and the customer, which means that they’re not responsible for manufacturing the products in either way. They also don’t get to see the products. In private label dropshipping, however, the products are labeled with the name of the dropshipping business as the dropshipper produced them. So the customer would know where the product comes from and refer to the dropshipping online store again to buy more branded products.

What are the pros and cons of private label dropshipping?

So why would some dropshippers have some products privately labeled with their names? What challenges do they have to deal with in this dropshipping model? It’s best to know about the advantages and disadvantages of private label dropshipping to figure out whether it’s going to be profitable for you or not.

What are the advantages of the private label over regular dropshipping?

Increasing brand awareness: More people get to know about your brand with your business logo and name on the products. It’ll lead to more traffic to your website and more conversions.

Regular customers: If your buyers are happy with your private-labeled products, they’ll spend their money on your exclusive products again.

Less competition: selling generic products that can be found on any online store is so competitive; however, adding special properties and features to a product makes it more unique and less difficult to compete for.

More control on the price: you can set higher prices for your private label products as you have no competitor who offers lower prices.

Monitoring the products: just like regular dropshipping, you don’t handle shipping and managing inventory. So you never see the products sent to the customers. But in this model, you can specify the product's features and have more control over its quality.

What are the downsides of private label dropshipping?

No chance to test the market: dropshippers can’t order a low quantity of private label products, and there is always a minimum order quantity which is often the number of products. So the dropshipper has no chance to test their exclusive product in the market and then order a high quantity of it.

More difficult to find a supplier: not all suppliers accept to manufacture private label products, especially if your brand hasn’t gained much popularity. Plus, the dropshipper has to prove that their exclusive products are trending and demanded in the market.

High cost: some suppliers require dropshippers to pay in advance for the private label products. That can be much of a problem if the dropshipper can’t convince the customers and sell their products to them.

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Private label dropshipping vs. White label dropshipping

It's better to know what is white label dropshipping to realize how private label and white label dropshipping are different.

In the white label model, the products are not solely produced for your brand. But a certain number of the products are labeled with your brand. The supplier has generic products, and they just put a certain number of them aside and put the name of dropshipping’s brand on them. So unlike private labeling, in white label dropshipping, the features of the products, such as color, size, and design, aren’t in favor of the dropshipper. It is also more affordable to order the supplier’s products and have your brand name labeled on them, rather than ordering the supplier to manufacture them from scratch. If you want to know more about white label dropshipping, don’t miss this blog that explains all the different aspects of white labeling.

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