White label drop shipping is referred to as an eCommerce terminology, which states that the manufacturer will allow the seller to re-sell the product under the seller’s brand. In this agreement, the manufacturer makes a deal with sellers where they can sell the product under a different name as long as they do not alter or change the product. In today’s climate, many Chinese manufacturers are resorting to these dropshipping business deals.
With the market currently at a low, the recent epidemic has caused quite a ruckus. However, the drop shipping business has not been affected as much. White label drop shipping has been the savior of the wholesale industry, and in this post, we will take a deeper dive into white label drop shipping and its benefits.
What is White Label Drop shipping?
During drop shipping generally, the vendor takes the products from the manufacturer and then sells the product under the name of the manufacturer. But in white label dropshipping, the vendor re-brands the product under his/her name or brand before selling it to the customer. In this method of drop shipping, the transaction between the wholesale vendor and the manufacturer is completely anonymous.
Many prominent drop shipping experts also define white-label drop shipping as when any prominent order is placed, and the wholesaler has to fulfill the order and have to place it in a general package setting that usually has specific names and addresses of the manufacturer and the vendor. During a white label shipment, the package does not have any name or logo of the manufacturer but will have specific instructions in case the customer wants to return it. In this way, the customer never knows where the package comes from.
As shady as this sounds, it is not really illegal, while it is a common practice during times like these. Just like any other drop shipping business structure, white labeling is a new and resourceful model that can businesses during times of mass hysteria.
Once a manufacturer agrees with the terms and conditions of this form of drop shipping, then the business becomes very smooth and has the potential of growing quickly.
What Kind of Products Can Be White Labeled?
A vendor or wholesale retailer can white label everything that is legal to sell. Be it accessories, cosmetics, electronics, furniture, shoes, clothes, and sometimes even medicine. Any vendor can have a successful quarter by choosing the product that is most in demand.
Pros and Cons of White Label Dropshipping
White Label drop shipping has its own set of merits and demerits. So, it is always advisable to know about certain challenges that any vendor might face in this business. If you do the right branding that depicts a strong and trustworthy brand, you can make a huge profit by setting your own desired prices.
One of the sad, but one-sided truths about white label drop shipping is that if anything goes wrong with the product, the manufacturer is the one who has to spend to fix the problem. The brand might take a hit, but the overall solution will be dealt with by the manufacturer alone.
However, any vendor might face specific issues like limited branding options, whatever product a wholesale vendor would design the manufacturer has to produce that, but if the manufacturer operates from another country and decides to make his/her design, then the vendor has to settle for the product, you will not be able to create something unique and suitable for your market.
There is a lot of competition in the drop shipping industry. You might come across another drop shipping social company that can be selling the same products as you (from the same manufacturer) using white label just like you.
Things To Know Before White Label Drop shipping
1. Always communicate with the merchant
Constant communication is a good trait of a healthy business. A vendor should always be in touch with the merchant or manufacturer to avoid delays, make a few design changes, and maintain transparency. This is very useful when there is a large order placed, here the best method to stay in touch is through a group chat or an email line. The merchant would have to always keep you updated on everything from his/her end.
2. Form a contract with your manufacturer
Make a strong and straight forward contract with your manufacturer and make sure to have a firm set of terms and conditions, policies, and regulations before going into business with each other. If you need several meetings, then sit through them and make sure everything is on paper.
3. Partner with an international shipping carrier or make sure your manufacturer does
Shipping is one of the biggest tasks for any drop shipping company. There are plenty of companies that offer very economical rates for shipping overseas; these usually end up delaying and even losing cargos. Always choose a reliable international shipping carrier that fulfills all your requirements and has large coverage, insurance, and tracking tools.
Have a look at their policies and do thorough research on the company’s history. As for the company’s services, delays, cancellations, and exchanges. The shipping company should offer outstanding customer support and a strict work ethic when it comes to delivering and shipping large orders. Finding the right company can be tricky, but once you do, most of your worries will vanish.
4. Timely Payments
As a vendor, payments to the manufacturer can be a stressful situation. Many manufacturers do not cooperate with the payment method, and many ask for large amounts of advances at times. Make sure in the terms and conditions it is explicitly mentioned about the payment and that both the parties must adhere to this contract.
Sometimes, delaying payments can be a problem; manufacturers often have to deal with different situations for the whole manufacturing process. For instance, they might have to pay the labor suddenly, or they might need some raw material or new equipment to replace a broken one. In times like these, the manufacturer and you have to mention such situations in the contract beforehand exclusively.
A white label dropshipping business can be a gamble if you are not able to maintain a brand image or if you do not find the right product. But if you get the right manufacturer and a good contract in place, you can dominate the dropshipping market like no one else. White label drop shipping is a genius and clean method of making it in this business.