Welcome to Private Label vs. Dropshipping – Which Is Better? Inside this Private Label vs. Dropshipping – Which Is Better? blog post, you will get to know the main difference between Private Label and Dropshipping and the one that is best for you to start.
Hey there, so if you’re thinking about doing drop shipping, maybe you’ve heard about it online, maybe you’ve been watching YouTube videos, you’ve heard about it on social media, you’ve heard other people post about it, I want you to stop and listen to something real quick. So when I started my very first business it was actually doing dropshipping. Straight out of college about seven months, I quit my job, I tried to fumble my way into building a business, and I ended up actually getting into dropshipping business, which I had no idea what it was at the time. I thought it was a super cool idea because I was able to actually list products on my own E-commerce store, on my own website, and unless I made a sale I didn’t have to buy any inventory.
So it sounded fantastic, right.
Now let’s dive deep into this Private Label vs. Dropshipping – Which Is Better?
Private Label vs. Dropshipping – Which Is Better?
The problem was is that when you’re dropshipping you’re selling somebody else’s brand of products. This means they control everything. If they don’t want you to sell it for a certain price, if they don’t want you to run certain discounts, if they don’t want you to run Facebook ads, if they don’t want you to do email marketing, if they don’t want you to sell it on multiple websites, they control all of that. And they can pull your business out any time they want. They can basically say you’re no longer allowed to sell this product.
Because typically when you sign up to sell products with them you have to sign a legal agreement that says this is how you’re gonna sell it. And they can basically tell you anytime they want that you can no longer sell their products. Not a great business to be in. I was getting emails almost every day from these manufacturers. At the time I had about 90 different brands I sold on my own website, about 11,000 products.
I was getting emails from them almost every single day complaining about how I was selling their products because one of my competitors was upset because I was stealing sales from them. Not a good business. By chance I happened to meet a guy, believe it or not, at the pool one day in the neighborhood I was living in, and he actually created a private label version of a product that I happened to be selling really well on my own website. Completely random encounter. And this changed my business life forever.
So I wasn’t even completely sure what private labeling was then, all I knew is what he was telling me, is that he could put any label I wanted, my own label for example, on a generic version of pretty much the same exact product I was selling. And that just blew my mind. And he told me the price too. I think I was buying that product for about $10, selling it for $17. And he could sell it to me with my own label on it for only about $2.
So, all of a sudden, my margins went through the roof. I was able to scale faster with ads, I was able to run bigger discounts, get more sales, make more money. And it changed everything. So, when I hear people thinking about doing drop shipping right now, I think it’s crazy. You know, getting into any business, building any business is better than no business.
So, if it’s drop shipping or no business, go for it, at least you’ve got something going.
But if you have the chance, do something else. Create your own brand. You know creating your own brand is not that hard today. If you wanna create your own brand of just about any product that you could go out there and dropship, all you have to do is do a quick Google search for whatever the product is, then private label.
Or just search for the product on Alibaba. So for example, if you’re gonna be drop shipping a regular consumer product like iPhone cases or something like that, if you go on Alibaba and you just search for iPhone cases, you can create your own brand of those in about 30 days.
Then you’re gonna have higher profit margins, and one of the biggest things is you’re gonna have a much more valuable business. Because if you’re just doing drop shipping, chances are there are a million other people doing the same exact thing. Anybody can take your business, and when you go to sell it, it’s not gonna be worth much.
On the other hand, if you own your own brand, nobody can copy that, nobody can take that away because you can have trademarks behind it, you can go after it legally. That’s the kind of business that we see people selling all day long, for three to five times, if not more, annual profits.
Conclusion to Private Label vs. Dropshipping – Which Is Better?
So, to conclude this Private Label vs. Dropshipping – Which Is Better blog post, try and do private labeling instead of drop shipping. You can make money, you can make more cash flow, you can build a more valuable business, and you’ll have a heck of a lot more fun running your business. If you want any more advice on building an E-commerce business, if you have any questions post them below in the comments.
Otherwise, subscribe to our Dropshipping Newsletter, and I’ll see you in the next blog post.