Private Label Dropshipping: A Beginner’s Guide

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James Johnson
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Are you looking for an easy-to-manage online business idea? Here’s the deal: private label dropshipping! With this setup, you can skip the stressful product development process and just brand an existing product. After that, you can let a dropshipping company handle picking, packing, and shipping your product to your customers.

Did you know that one in four shoppers bought private label brands last year? And a whopping eight in 10 people are keen to do so in the future! So why not take advantage of this high demand and start your own private label dropshipping store? Let me show you how!

What is Private Label Dropshipping?

Private label dropshipping is a business model that combines the principles of private labeling and dropshipping. In this model, a retailer partners with a supplier to sell products under the retailer’s own brand without having to handle inventory, manufacturing, or shipping logistics.

When a customer places an order, the supplier ships the product directly to the customer. This reduces overhead costs and eliminates the need for warehousing.

Since your products are branded with your logo, packaging, and design specifications, you can create a unique brand identity and differentiate your products from generic ones.

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Dropshipping vs. Private Label

Dropshipping and private labeling are two distinct business models in the e-commerce space, each with its own set of advantages and disadvantages.

Dropshipping is a fulfillment method where a store doesn’t keep the products it sells in stock. Instead, the store buys the product from a third-party supplier and has it shipped directly to the customer when an order is placed. This means that the store owner does not have to handle inventory management, storage, or shipping logistics.

On the other hand, private labeling involves selling products under your brand name, which are manufactured by another company. In simple terms, your label is put on a product that has already been designed and produced by a third-party supplier. That way, you can sell unique products under your brand name without incurring the expenses of inventory and product development. 

While dropshipping is good for beginners because of its low startup costs, private labeling is suitable for business owners who want build a brand and invest more upfront.

For more information, check out my article “Dropshipping vs Private Labeling”. 

Pros and Cons of Private Labeling

The Pros

  • Cost Savings: Private labeling can be more cost-effective than developing and manufacturing products in-house. Retailers can save on production costs and avoid the financial burden of setting up manufacturing facilities.
  • Brand Control: Retailers have full control over the branding, packaging, and marketing of private label products. This allows them to tailor products to their brand image and customer preferences.
  • Higher Profit Margins: Private label products often have higher profit margins compared to national brands because retailers can set their own prices and avoid the costs associated with middlemen and brand premiums.
  • Product Differentiation: Private labeling allows retailers to offer unique products that are not available from other brands, helping them stand out in the market and build brand loyalty.
  • Flexibility and Adaptability: Retailers can quickly respond to market trends and consumer demands by introducing new private label products without the long lead times associated with developing new products from scratch.
  • Market Stability: Private label products often enjoy steady sales even during economic downturns due to their lower price points and perceived value.

The Cons

  • Higher Development Costs: Developing private label products requires upfront investment in research, development, and production. This can be a significant financial burden, especially for small retailers.
  • Minimum Order Quantities (MOQs): Manufacturers often require large minimum order quantities, which can be challenging for retailers to meet, especially if the product does not sell as expected.
  • Risk of Unsold Inventory: If a private label product does not sell well, retailers may be left with unsold inventory, leading to financial losses and tied-up capital.
  • Quality Control Issues: It’s challenging to ensure consistent quality, especially when relying on third-party manufacturers. Poor quality can damage the retailer’s brand reputation.
  • Lack of Formula Ownership: Retailers do not own the formulas for private label products, which means they are dependent on the manufacturer. If the manufacturer goes out of business or discontinues the product, the retailer cannot easily switch to another manufacturer.
  • Brand Recognition Challenges: New or lesser-known brands may struggle to gain consumer trust and recognition compared to established national brands. Building brand loyalty can be more difficult without a strong existing brand presence.

6 Quick Steps for Starting a Private Label Business

You don’t need to worry about product development or inventory investments when you sell private label products.

Here are the steps you can take to start a private label business:

Step 1: Pick a niche

To get started, you have to identify profitable niches and gaps in the market. Look for product categories with strong demand but not overly saturated with competitors. This can involve analyzing market trends, consumer behavior, and conducting surveys or focus groups.

Some of the best-selling private label dropshipping products span various niches, including supplements, coffee, skincare, cosmetics, and phone accessories. For example, coffee, particularly private label blends, appeals to connoisseurs seeking unique flavors. Skincare and cosmetics, including organic and vegan options, cater to the growing market of health-conscious consumers. 

When you’re trying to figure out what to sell, it’s a good idea to define your target audience by considering factors such as age, gender, lifestyle, and interests. This will help tailor your products to meet their specific needs and preferences.

If you want to differentiate your products from competitors, try to establish a unique selling proposition (USP). This could be based on quality, pricing, or unique features.

Step 2: Contact the supplier

When you know what you want to sell, it’s time to find a reliable manufacturer or supplier who can fulfil your orders. Some companies, like Dripshippers, may only focus on specific types of products. 

You can create a list of potential manufacturers and reach out to them to see if they do private labeling. If they do, ask about setting up an account.

Make sure to ask if there’s a minimum order amount – that’ll help you decide whether you want to stock up or just set up a prepaid account with the manufacturer.

Here’s a list of the platforms that offer private labeling services:

1. Alibaba

Alibaba is a renowned B2B marketplace that connects retailers with manufacturers worldwide. It is particularly well-suited for private labeling due to its vast network of suppliers who can produce customized products according to the retailer’s specifications.

Alibaba offers a diverse array of products across various categories, including electronics, clothing, beauty products, and more. You can specify design, size, material, and other product details.

Retailers can directly communicate with manufacturers to negotiate terms and ensure product quality. The platform platform supports international transactions, making it accessible to retailers worldwide.

2. DHgate

DHgate is a Chinese wholesale marketplace that caters to both B2B and B2C transactions. It offers a section dedicated to customizable products, making it a viable option for private labeling.

DHgate provides a wide range of products, including electronics, apparel, and accessories. Retailers can customize product size, design, color, graphics, packaging, and logo.

You can communicate directly with suppliers to discuss customization and order details.

3. Wonnda

Wonnda is a Berlin-based consumer goods manufacturing platform that connects brands with European manufacturers. It focuses on facilitating the production and customization of private label products.

With the platform, you can get access to over 100 European manufacturers across various categories, including cosmetics, supplements, fashion accessories, and more.

Wonnda offers a digital platform for efficient communication and project management. Sellers can track the production process and order samples through the platform.

However, it’s primarily focused on the European market, which may limit options for non-European retailers.

4. Wordans

Wordans is a wholesale platform specializing in blank apparel and accessories. It is part of Needen.com Inc. and operates in North America, Europe, and Oceania.

The platform offers a vast catalog of blank apparel, including t-shirts, sweatshirts, polos, and more. It’s ideal for businesses looking to customize apparel with their own branding. You can order in small or large quantities.

5. Max Private Label

Max Private Label is a contract manufacturer based in Chicago, Illinois, specializing in personal care products, including skincare and hair care. They offer comprehensive private label services from formulation to packaging.

The platform provides end-to-end services, including product development, manufacturing, packaging, and quality checks. Their products are high-quality, safe, and eco-friendly, making it suitable for both new and established brands.

Step 3: Order samples

Before ordering a large quantity from a supplier, it’s a good idea to request samples. Be prepared to pay for the samples and shipping costs, as this is a common practice.

Once you receive the samples, thoroughly test them to ensure they meet your quality standards. This may involve multiple rounds of sampling and feedback to the supplier to get the product just right.

If the samples meet your expectations, you can negotiate the terms of production, including pricing, minimum order quantities, and lead times.

Step 4: Set up an online store

An online store serves as the primary platform where customers can browse and purchase your products. You may select a platform like Shopify, which offers customizable templates and various tools to manage your store. It allows you to crease an attractive and user-friendly website using their design tools.

After you have set up your store, you can also browse through the Shopify App Store to find all sorts of Shopify apps that can help you manage and automate your private label business.

Learn more about how to start a Shopify store. 

Step 5: Add your products to your store

To add products, you need to input your private label products into the store and write compelling product descriptions that highlight the benefits and features of each product. When a product description is written well, it informs shoppers and reduces the risk of abandoning a shopping cart.

Remember to use high-quality images to give customers a clear idea of what they are purchasing. To get great product images, take a variety of shots and see what works best for you.

After that, you can start to think about your pricing strategy by considering manufacturing costs, shipping fees, and other expenses. It is recommended that you price your products at least two and a half times the cost.

Traditionally, manufacturers increase the price of their products by two times. Now, it is common for retailers to mark up private label products by at least three times their price. With this markup, you are still offering a high-quality alternative at a lower price.

Step 6: Launch and market your store

When it comes to launching your store and private label products, it isn’t just a matter of flipping a switch. To make sales, you must build awareness and drive traffic to your site.

The best way to get your name out there for new stores is to advertise on channels like Google, Facebook, and Instagram. Of all the channels, Facebook advertising is the most popular because it allows you to target a specific audience that best fits your niche.

However, Facebook ad cost has soared in recent years. You might want to supplement your advertising efforts with some free traffic methods, including

  • email marketing
  • social media marketing
  • content marketing
  • SEO

Some private-label business owners might also use customer loyalty programs. In a customer loyalty program, a business offers rewards to frequent customers. This tactic encourages customers to repeatedly purchase from your business from a business standpoint.

Best Practices for Dropshipping Private Label Products

I have launched two successful white-label brands, so I know what it takes to stand out from the competition. Here’re some tips for you:

1. Check the supplier’s reviews to evaluate its reputation

If you’re planning to sell private label products on your ecommerce website, it’s important to find a reliable dropshipping supplier who can handle the production, fulfillment, and shipping of your goods. But with so many options out there, it can be hard to know where to start. Here are a few platforms to consider:

  • Dripshippers
  • AliExpress
  • Alibaba
  • Spocket

Once you’ve compiled a shortlist of potential suppliers, take the time to read reviews from other businesses who have used their private label services. These reviews can give you valuable insights into what it’s like to work with a particular supplier, the quality of their products, and how responsive they are to customer support requests.

Keep in mind that if you choose to work with a dropshipping supplier, any mistakes they make will ultimately be your responsibility to fix. 

2. Request product specs and branding info from the supplier

When searching for a private label supplier, it’s important to get all the necessary information upfront to ensure a smooth and successful partnership. Here are some things you should ask your potential supplier to share:

  • Product specifications: This includes important details such as weight, size, material, and color.
  • Branded packaging specs: Make sure to ask about the materials and logo file formats needed for your packaging design.
  • Shipping timescales: Quick and free shipping is a must in today’s online shopping landscape, so don’t forget to clarify this with your supplier.
  • Product certifications: For certain products like food, cosmetics, and pet products, it’s important to make sure they are FDA-approved or meet other relevant certifications.

Once you’ve found a supplier that meets most of these criteria, it’s time to send them your branding ideas. This can include your brand name, color scheme, and any other customizations you want for your packaging.

3. Look at your personal interests

When it comes to choosing private label products to sell, it can be tough to know where to start. But don’t overlook the value of your own personal interests and passions.

For instance, if you’re a skincare enthusiast, you probably have a good idea of what makes a high-quality product. You know which ingredients to look for when selecting your own skincare items, and you have a good idea of the results you expect to see.

By leveraging your personal interests and expertise, you can make more informed decisions when it comes to selecting private label products to sell. This can help you to better understand your target audience and what they’re looking for in a product.

4. Try the product yourself and see how it works

If you don’t like the product yourself, your potential customers probably won’t! So, you have to test the product and see if it can really provide values. 

Most suppliers are willing to send you a sample at a minimum price. Don’t hesitate to order a few samples and check if they look and function the same way.

By testing your product, you can experience it from a customer’s perspective, from unboxing the packing to using it consistently for at least a week. With these hands-on experiences, you’ll get a better idea on designing your marketing strategy. 

It also gives you an opportunity to make a video of yourself using the product and post it on TikTok to see if it has the potential to go viral. 

Final Words

Private label dropshipping is the perfect fusion of private label selling and dropshipping, making it an awesome choice for anyone looking to break into the world of ecommerce. 

Whether you’re into fashion or tech gadgets, you can easily find a trustworthy supplier and get your hands on all the product specs you need to start selling the products you’re passionate about.

Private Label Dropshipping FAQs

Why should I choose private label dropshipping over regular dropshipping?

Private label dropshipping allows you to sell branded products, which increases the perceived value of your product and builds brand awareness. This leads to higher return rates and sales compared to regular dropshipping.

How can I create a logo or label for my private label brand?

There are a few options for creating a logo or label for your private label brand. You can hire a Shopify Expert from the expert marketplace to design one for you, use Shopify’s logo-making tool called Hatchful, or design one yourself using a free tool like Canva.

Where can I find private label dropshipping suppliers?

Platforms like SupplyMeDirect, Dripshippers, and Apliiq are great places to start your search for private label suppliers. However, it’s important to vet potential suppliers by checking their shipping timescales, minimum order quantities, and customer reviews before making a final decision.

Is it difficult to get into the dropshipping business?

Setting up your store and finding a supplier is relatively easy, but finding your target audience, researching products, and maintaining a sustainable profit can be challenging. However, with patience, determination, and continuous efforts in marketing and improving your site, success is achievable.

What is the difference between private label and white label?

While both involve third-party manufacturing, private label products are made exclusively for one retailer based on specific requirements, whereas white label products are generic and sold to multiple retailers who then brand them as their own.

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