Private Label
Selling externally manufactured products under your own brand. The supplier manufactures, you brand and sell. Higher gross margin than reselling, control over pricing, and building a brand asset.
In practice
Private label is the 'next step' for successful dropshippers. Selling a product via dropshipping that's working? Move it to private label: an MOQ of 200-500 units, margin rises from 15% to 45-60%, and you start building a real brand that's hard to copy.
Common misconception
'Private label = low quality.' That's an outdated stigma. Amazon Basics, Kirkland (Costco), Trader Joe's — all high-quality private labels. Private-label quality depends on the spec you give your supplier. Bad private label = a bad spec.
How to fix it
Private label not succeeding? (1) Check product-market fit before going private label — did the dropshipping version work? (2) Check MOQ — don't order over 200 units on the first run, (3) Check quality control — sample every shipment, (4) Check differentiation — private label identical to a competitor means a price war.
Example
Gadget seller: dropshipping earbud cases at 12% margin. Moved to private label: MOQ 300 units, branded packaging, a short manual. Margin: 54%. Six months later: private label = 40% of sales, overall margin rose from 18% to 31%.
Priority
Private label makes sense when you have: (1) a proven dropshipping version (100+ sales), (2) cash flow for the MOQ, (3) dropshipping margin under 20%. Don't launch private label with an unproven product — high risk.
Related terms
Keep learning. Metrics that touch the same area:
- DropshippingOperationsSelling without holding inventory — a supplier ships directly to the customer. Low margin (5-20%), no quality control.
- Gross MarginFinance(Sale price - COGS) / sale price × 100. The basis for every pricing and advertising decision.
- SKU – Stock Keeping UnitOperationsA unique identifier for each product variation. The basis for precise inventory management.
- Inventory ManagementOperationsTracking, ordering, and maintaining inventory. Too much means cash tied up. Too little means stockouts.
- StockoutOperationsA product unavailable for shipping. Immediate lost sales plus damaged trust.
- FulfillmentOperationsThe entire process from receiving an order to delivery: pick, pack, label, ship.
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