You don’t have to invest in product development to start selling products online. In fact, there are many ecommerce business models that allow you to sell merchandise without ever even touching the products themselves.
Private labeling is one such business model. With private labeling, you work with a third-party manufacturer to create your own custom branded products. Private labeling is great for people and brands that already have established audiences and want to find a way to start generating passive income online via product sales.
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What is private labeling?
Private labeling is when a manufacturer creates products that are sold exclusively by a third party under a different brand name. Private labeling allows the retailer to outsource the production of goods to the manufacturer.
How does private labeling work?
To begin private labeling, a retailer must determine what product or niche they want to operate within. Next, they will locate a supplier they want to work with and see if they offer private labeling. From there, the retailer can order samples and determine if they'd like to bring that product to market.
Remember, a business owner selling private label products is looking for a product they can put their own brand name on and sell as if it’s their own. Clothing and cosmetics are common private label products, as are condiments sold in grocery stores.
Total retail sales in the US for private label products hit $5.15 trillion in 2021 and are projected to hit $5.35 trillion in 2025, according to data from Statista. That’s no surprise, considering you see private label products in most major retail stores. Target has its Archer Farms private label, for example, Walmart has Great Value, and Costco has Kirkland.
Advantages of private labeling
Private labeling has a number of advantages that span beyond simplifying the product development process. Some of those advantages include:
- Control over production. You direct third-party manufacturers in terms of materials and ingredients, quality, and production rate.
- Control over pricing. As the seller, you determine your pricing strategy and have control over how you optimize production costs, which helps with creating a healthy profit margin.
- Adaptability. Smaller retailers can move quickly to get a private label product in response to rising market demand for a new feature, while larger companies might not pursue a niche product.
- Control overmarketing and branding. You choose how to promote and package private label products before making them available for sale.
Disadvantages of private labeling
While there are many benefits to private labeling, it doesn’t come without its challenges, including:
- Manufacturer dependency. Because a third-party manufacturer handles production, you’re largely at their mercy. That’s why it’s so important to find a reputable and reliable manufacturer to work with.
- Difficulty building loyalty. It can take time to get traction when starting a brand from scratch. This is one reason why private label products are great for people and brand names who already have an established audience that trusts them.
- Poor consumer perception. Private label products commonly have a reputation for being cheap or low quality. However, this is not always the case.
How to start a private label business
When you sell private label products, you don’t have to worry about product development—or inventory investments in many cases. But before you begin, it’s important to consider a few things:
1. Find a niche market to sell products
There are lots of white label products you can sell, spanning pretty much every industry. Some of the most popular private label products are:
- Hair products
- Body products
- Pet products
- Baby products
- Beard grooming products
- Health products
To figure out specifically what to sell, explore different niche markets within those categories. When you sell to a niche market, you can use highly targeted marketing and advertising strategies to get your brand and products out there.
2. Contact the manufacturer
Once you know what you want to sell, look for manufacturers and suppliers who have those items. Some manufacturers, like Dripshippers, may specialize in a specific product category.
Get your shortlist of manufacturers and contact them to see if they offer private labeling. If so, inquire about setting up an account. Since most manufacturers carry a variety of products, this strategy will allow you to quickly source products within the niche you’re exploring. Also be sure to ask if the manufacturer has a minimum order value, as you’ll need to navigate if you want to hold the stock or set up a prepay account with the manufacturer.
3. Order samples
It’s important to test the product yourself before you make it available for purchase. While something may look great online, and even sound great once you’ve gotten in touch with the manufacturer, the reality may be completely different. So you’ll want to do your due diligence to ensure the quality of products is up to your standards and expectations.
4. Set up an online store
You have your manufacturer and your products—now it’s time to set up your online store. With Shopify, you can choose from and customize free and paid ecommerce templates.
Once you’ve set up your online store, you can browse the Shopify App Store to find the apps you need to manage your private label business, including any of the options listed above. With the available apps, you can sell across different channels like Amazon and eBay, run marketing campaigns, and more.
Ready to create your private label business? Start your free 14-day trial of Shopify—no credit card required.
5. Add your products to your store
When adding products to your store, you’ll want to do the following:
- Write compelling product descriptions. Product descriptions should be information- and benefits-oriented, as opposed to focused on listing features and specs.
- Get high-quality product images. Product photos give shoppers an idea of what the item looks like—it’s the best they can get without being able to see the product in person. Sometimes the manufacturer can provide images to you.
- Determine your pricing strategy. It’s important to price high enough to make a decent profit, but not so high you outprice your customers.
6. Launch and market your store
When you’re ready to reveal your store and private label products to the public, it’s not as simple as turning on a switch. You have to build awareness and drive traffic to your site if you expect to make any sales.
For new stores, paid advertising on channels like Google, Facebook, and Instagram are a great way to get your name out there. Then you can supplement those efforts with email marketing, social media, content marketing, SEO, and customer loyalty programs.
Best private label manufacturers for creating a custom-branded product line
While many private label manufacturers may seem similar, it’s important to vet them carefully to find the one that suits your online business, now and in the future. You have to consider what types of products you want to make and sell, where you want to sell and ship them, and how high you can price them.
Below is a quick overview of some of the best private label manufacturing services and product sourcing apps for all kinds of goods. Most have a Shopify app you can use to connect directly to your online store.
SupplyMeDirect is a supplier that ships from the US, the EU, and China. Features include automated order processing, local shipping when available, and a responsive and helpful customer support team.
Merchants who use the private label manufacturer’s app like that it syncs with their Shopify store, is easy to use, and even helps save time and money.
Note that all payments are in USD, regardless of where you or your customers are located.
AOP+ Easy Print on Demand
Focusing on the EU, UK, and US, AOP+ Easy Print on Demand is a platform for selling on Shopify and Etsy, specializing in organic print-on-demand products and services. Like SupplyMeDirect, the AOP+ Shopify app syncs with your Shopify store and automates order processing and fulfillment. It’s easy to use, and you can create a new product in as little as 30 seconds.
AOP+ executes all the printing itself, as opposed to using a third-party supplier, and it will even work with you to create your own custom private labeled products. It specializes in apparel and accessories, including things like t-shirts, flip-flops, totes, and wall plaques.
Merchants also find their live customer support team to be extremely helpful and informative.
Apliiq - Print On Demand
Los Angeles–based Apliiq is another private label supplier and print-on-demand company that specializes in apparel items. It focuses on trendy products like woven labels, pocket tees, liner hoodies, and patch beanies.
Like SupplyMeDirect and AOP+, Apliiq automates order processing and fulfillment, and it ships every order within a week. The Shopify app also sends tracking information directly to your customers, so they can see when their order will arrive.
Modalyst - Dropshipping
Modalyst is a dropshipping supplier that works with US-based providers and is also an AliExpress Partner. This means it has one of the more extensive product catalogs on this list—you can choose from more than a million products to dropship.
As far as private labeling goes, it specializes in athleticwear. Subscribing to Modalyst’s Pro plan, which costs $90 per month and has a 5% transaction fee, gets you unlimited products, custom packaging and branding, and fast shipping—typically three to eight days for US orders and under 15 business days for international shipping.
Like other manufacturer apps for private labels, Modalyst automates order processing and fulfillment. If you run into any issues or have questions, you can get in touch with live chat support seven days a week.
Alibaba Group is one of the largest ecommerce companies in the world (if not the largest)—its revenue hit more than $109 billion in 2021. Alibaba offers one of the most comprehensive directories, connecting suppliers and distributors with merchants everywhere.
Though Alibaba doesn’t have a Shopify app and you can’t integrate the two, there are so many private label products available that it’s worth a mention. You can find just about any product you can think of on Alibaba’s massive directory.
While Shopify apps automate a lot of the process, when you work with Alibaba you purchase a large quantity of private label products directly from the manufacturer. This lowers your inventory costs and results in higher profit margins, but also requires a larger upfront investment. You need to hit the manufacturer’s minimum order quantity (MOQ), or the fewest number of units they’ll sell you at once. Manufacturers will also work with you to create custom designs and logos.
We’ve put together two guides to help you navigate Alibaba and its sister site, AliExpress:
- Alibaba Dropshipping: How to Safely Source and Manage Products From Alibaba
- AliExpress Dropshipping: A Complete Guide to Sourcing From AliExpress
If you’re looking specifically to private label and sell coffee online, look no further than the Dripshipper Shopify app. You can create and customize your own branded packaging, logo, pricing, and labels.
Dripshipper is based in the US, but it ships worldwide. All shipments go out within five days of when orders are placed—and the coffee is always fresh. Whole beans ship the same day they’re roasted, while ground beans are sent the next day.
Pricing starts at $30 per month, and higher-priced tiers come with added support, coaching, and training. The Elite plan, at $197 per month, also gets you access to Dripshipper’s in-house design team.
Thomasnet is a supplier directory for North America, with over 500,000 suppliers and six million products. To use Thomasnet to find private label products, type “private label manufacturing” or “contract manufacturing” into the search bar. You’ll land on a results page with many product options, including:
- Beauty products
- Skin care products
- Personal care products
- Food and beverage products
- Dietary supplements
- CBD products
You’ll find information about each manufacturer, like its capabilities, certifications, and contact info, as well as an option to request a quote.
Best private label products to sell
Working with a private label manufacturer gives you access to millions of items to sell, from generic products like shampoo and conditioner to trending products like cleaning supplies and beauty accessories.
Here are some top categories of private label goods, with the amount of searches per month (MSV) the product receives on Google.
Apparel and accessories
- Women’s tank top (135,000 MSV)
- Women’s hiking boots (165,000 MSV)
- Women’s yoga pants (49,500 MSV)
- Men’s dress shoes (201,000 MSV)
- Maternity dress (368,000 MSV)
- Backpack (1,220,000 MSV)
- Workout shorts for men (9,900 MSV)
- Women’s jeans (368,000 MSV)
Skin care and cosmetics
- Natural facial cleanser (6,600 MSV)
- Exfoliating toner (18,100 MSV)
- Hyaluronic acid (550,000 MSV)
- Polypeptide cream (590 MSV)
- Eye cream (110,000 MSV)
- Moisturizer (450,000 MSV)
- Sunscreen (550,000 MSV)
- CBD face oil (920 MSV)
- Breakfast foods (110,000 MSV)
- Pasta (1,500,000M MSV)
- Soup (550,000 MSV)
- Cakes and pies (2,700,000 MSV)
- Candy and chocolate (1,200,000 MSV)
- Fair trade (12,100 MSV)
- Gluten-free (135,000 MSV)
- Organic foods (60,500 MSV)
- Non-dairy products (1,000 MSV)
- Condiments (165,000 MSV)
- Shampoo (673,000 MSV)
- Conditioner (246,000 MSV)
- Hair oils and serums (110,000 MSV)
- Dry shampoo (165,000 MSV)
- Hair wax (74,000 MSV)
- Hair gel (60,500 MSV)
- Mousse (74,000 MSV)
- Hairspray (368,000 MSV)
- Curl enhancing cream (1,000 MSV)
- Omega-3 fatty acids (90,500 MSV)
- Liposomal melatonin spray (390 MSV)
- Vitamin D3 liquid (3,600 MSV)
- Zinc with elderberry (1,600 MSV)
- Probiotics (673,000 MSV)
- B vitamins (368,000 MSV)
- ADK (480 MSV)
- Tri-Mag (22,200 MSV)
- Niacinamide (550,000 MSV)
- CBD (1,600 MSV)
Launch your private label brand
Starting a private label brand takes the hassle out of product development, a big challenge for many entrepreneurs. You can start your own private label and work directly with manufacturers to create products your customers will want to buy—all with your unique branding and logo on it. Private labeling is a great way to get started selling your own products online.
Illustration by Till Laurer