Cost Comparison: Branded Dropshipping vs. Private Label

In the world of e-commerce, there are two approaches to selling your own branded products: Branded Dropshipping, a relatively new trend, and Private Labeling, the traditional method. Both methods have advantages and disadvantages, but their cost structures differ significantly. This article examines the key cost factors: products and product development, warehousing, and design and images.

1. Costs for Products and Product Development

Branded Dropshipping

With Branded Dropshipping, there is no need to invest in product development. Providers like Chance2Brand offer a variety of pre-developed, lab-tested products. You only pay when a customer orders the product. The cost per unit varies depending on the product and already includes:

• Production costs
• Branding customizations (e.g., labels with your logo)

Typical costs: Between €7 and €15 per unit, depending on the product category.

Private Label

The Private Label method requires investment in product development. This includes:

• Research and development (formulations, ingredients)
• Prototype creation
• Product certification (e.g., lab tests, legal requirements)

Additionally, minimum order quantities must be met, leading to high upfront investments. Development costs can range from €0 to €10,000 depending on the formulation. These costs apply to a single product.

For a complete product range, investments can quickly reach €150,000 - €300,000. 

With Chance2Brand, these costs are already included, significantly easing your entry into the market.

2. Warehousing Costs

Branded Dropshipping

Branded Dropshipping eliminates warehousing costs since products are shipped directly from Chance2Brand to the end customer. This saves:

• Rent for storage space
• Costs for warehouse staff
• Risks from unsold inventory

Typical costs: None.

Private Label

Private Label sellers must provide storage space for their products. Ongoing costs include:

• Warehouse rent (depending on location and size)
• Energy and operating costs
• Administration and inventory management

Unsold inventory can also lead to write-offs and tie up liquidity.

Typical costs: At least €500 per month, depending on warehouse size and product volume.

3. Costs for Design and Images

Branded Dropshipping

Most dropshipping platforms offer pre-designed templates. Providers like Chance2Brand enable quick and cost-effective label customization using tools like Canva. Professional product images are automatically generated by Chance2Brand using advanced technology and synchronized with your Shopify system. Conveniently, both the branding feature and the creation of product images are included in the starter subscription starting at €29 per month.

With this subscription, you not only gain access to high-quality designs but can also launch with your unique branding without additional costs for professional photographers or graphic designers.

Private Label

With Private Label, the design is entirely customized. This includes:

• Creating a brand design (e.g., logos, color scheme)
• Professional product photography
• Packaging design (including printing and material costs)

Several iterations are also required to optimize design and branding.

Typical costs: Between €1,000 and €5,000, depending on complexity.

Conclusion: Cost Comparison

Summary: Branded Dropshipping is ideal for beginners and sellers who want to minimize costs and avoid risks. Private Labeling offers more control and individuality but requires a significantly higher initial investment.

If you're considering entering e-commerce, you should carefully weigh the pros and cons of these two approaches. Platforms like Chance2Brand make starting with Branded Dropshipping easier and more affordable than ever.