Monday, November 30, 2020
Home Tips & Tricks Why Do Branded Dropshipping or Private Label Dropshipping?

Why Do Branded Dropshipping or Private Label Dropshipping?

Are you at the stage where you want to create a brand that you can manage for the long-term? Then consider branded dropshipping! Branded dropshipping is another term for private label dropshipping. It involves taking an unbranded product that is mass-produced by a manufacturer and putting your logo and custom branding on it before selling it as your product. 

There are three ways you can come up with your branded products:

  • You can make the product yourself (e.g.handmade jewelry or artwork).
  • Get a manufacturer to create your product based on your design and specifications.
  • Buy unbranded products in bulk and attach your label on them.

What are the benefits of branded dropshipping or private label dropshipping?

Branded dropshipping or private label dropshipping offers advantages for your dropshipping business. With this model, you’ll be able to do the following:

  1. Offer extremely fast shipping to your customers
  2. Have a logo and custom branding in your products
  3. Add promotional materials to encourage customers to buy again
  4. Automatically process returns and reuse inventory
  5. Use 3rd party fulfillment located in your chosen marketplace

To learn more about how branded dropshipping or private label dropshipping works, you can read this article. If you have an idea of the advantages and disadvantages of using this model, you can determine if it’s time for you to adopt this strategy to scale your eCommerce business. 

For whom should the branded dropshipping or private label dropshipping best for?

This dropshipping model is best for dropshippers who are already making a significant amount of sales in their dropshipping business. This is because starting an online business selling private label products would be too risky for eCommerce beginners as it takes a lot of money and skills to set up. 

Regular dropshipping reduces the risk of failure for newbie dropshippers as they won’t be investing huge amounts of money on it. It is best to first gain some experience and collect essential data by dropshipping products from AliExpress before you leap into branded dropshipping. 

Compared to branded dropshipping or private label dropshipping, dropshipping is a low-risk eCommerce model that lets you earn money without buying products upfront and renting a warehouse to store them. Though the profit margin is smaller than branded dropshipping, regular dropshipping enables you to identify the dropshipping products that sell well which you can then private label later on. By ensuring that a particular product has a continuous demand for a long time, you are reducing the risk of private labeling products that no one wants to buy.

What are the expenses involved in private label dropshipping?

Private label dropshipping requires that you spend a huge amount of money upfront. There are more expenses to deal with in this model compared to regular dropshipping. The kinds of expenses you’ll encounter include:

Shipping Container Cost: If you’re going to buy your products from China, you need to consider the cost per unit for the shipping container you’ll use to ship your items.

Shipping by Air or Ocean: Airlifting products from China is faster but will be more expensive. Ocean freight on the other hand, is cheaper but will take a long time to arrive. 

Transportation from Port to Storage Location: When your shipping container arrives in the destination port, it has to be unloaded and moved to your home, warehouse, or the fulfillment center that you want to work with. To do that, you’ll have to pay some people to transport your products. 

Warehouse Costs: If you rented a warehouse to store your goods you have to factor in the costs too.

Fulfillment Center Costs: When you choose to partner with a fulfillment center, you need to pay them for various costs. They will charge you for the space that your products will occupy, their employee’s time, package fee, and shipping fee.

Where to look for private label dropshipping suppliers?

If you’ll be sourcing from China, Alibaba and AliExpress are where most dropshippers source their products. For bulk buying and private labeling, look for Alibaba suppliers but if you’re into regular dropshipping, work with AliExpress suppliers. Be careful in choosing Alibaba suppliers. Pick the one that is appropriate for your private label needs. By vetting your suppliers carefully, you can avoid the risk of getting scammed by frauds that are lurking on this platform. Check out this article to know the qualifications of the right Alibaba supplier.

Final Thoughts

Undoubtedly, branded dropshipping or private label dropshipping has a lot to offer eCommerce business owners. However, there’s the right time for it. If you’re an eCommerce beginner, it is not your first step towards building a lucrative online business. To have a higher chance for success, you should have the skills and the commitment to run and operate a business from the ground up. Branded dropshipping or private label dropshipping is not for everybody. Don’t jump into it until you’re ready!

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