If you’ve ever tried to start a clothing brand, chances are you’ve heard of drop-shipping.
Drop-shipping is absolutely the easiest and most reliable way to produce clothing. All you have to do is create your design, paste it onto a few articles of clothing offered by your chosen supplier, and put it out into the world. Poof—all of a sudden you're making tens of thousands of sales, and you didn’t even have to choose what type of cotton to use. Why, then, would you ever want to switch from drop shipping to private label, where it's just you and your design ideas against the looming force that is the apparel supply chain?
It’s a great question, and for many e-commerce brands, drop-shipping really is the smartest option. However, it does have limits that some brands are destined to move beyond. If you’ve ever found yourself wishing you could make your own patterns and designs, or grown frustrated by the amount of direct competition amongst e-commerce brands, or even thought to yourself that if you could find some way to make your product just a little bit more unique then your brand would really explode, then it’s time for you to consider private labeling.
Private labeling refers to a sector of brands that sell their clothing with a unique personal label, rather than a generic one provided by a supplier. It means that you are sending your orders directly to a third-party manufacturer, receiving an inventory from them, and then selling the products yourself under your own brand name. For companies who have found drop-shipping to be limiting, it is a great option to refine your product, expand your reach, and drive profit.
Here are the five main reasons a brand should switch from drop-shipping to private label.
Gain more control over your design.
Working directly with a manufacturer means creating a fully customizable product. That means a pattern of your design, fabric of your choice, finishes and hang tags advertising your unique brand, and packaging that makes your product feel like a true gift. In essence, it means that your wildest visions for what your brand can be are brought to life. It also means that you can create an exclusive product that can’t be as easily replicated by other drop-shipping competitors. More on that in the next tip.
Establish your unique brand identity.
One of the most frustrating parts of drop-shipping is the abundance of competition. Anyone who uses your same distributor can make essentially the same product as you. It is difficult to find any degree of exclusivity in your product. That means whichever competitor can offer the product at the lower price will get the business. However, once you private label you can create one-of-a-kind garments that can’t be so easily copied. This will help you develop a brand identity and guide people towards recognizing you as unique. It also gives you more control over your pricing. If you reach a certain level of exclusivity, it becomes impossible for anyone else to offer your same product at a lower price. You are free to determine exactly what your product is worth, driving profit and allowing your business to grow.
Remove the middlemen.
The biggest obstacle in the apparel supply chain is the huge amount of middlemen involved who take tiny cuts of your profit until those cuts add up and make it really difficult to grow your brand. With drop-shipping, this problem is exacerbated because of the reliance on your supplier’s practices and capabilities. When you switch to private label you will find that it’s easier to avoid losing money throughout the process. However, it is an issue even for private label brands. If you use a factory-direct platform like Dhakai to connect with manufacturers, you can avoid a lot of these unnecessary middlemen costs and remain competitive with your pricing.
Produce more consciously.
When you private label your brand, you make it a lot easier to produce your clothing sustainably for two reasons.
Firstly, now that you are in charge of designing, ordering, and facilitating the delivery of your clothes, you can see each step in the supply chain. That means that you can ensure that you are choosing the most eco-friendly options at every juncture.
Second, every manufacturer has something called a minimum order quantity (MOQ) that is the fewest items they can produce in one order. You can’t produce your clothing to order anymore like you could with drop-shipping. Having an MOQ means that your products will be shipped in bulk, reducing the amount of shipments necessary and seriously shrinking your carbon footprint. While having an inventory may seem like a risk, the impact of shipping on the environment is staggering, and whatever you can do to reduce it counts.
Let your business expand.
Drop-shipping is reliable, low-risk, and convenient. But that means that it's easy to settle as a small e-commerce brand that barely breaks even on sales. When you don’t have an inventory and have each product produced depending on incoming orders, there is very little room to grow your brand and not much incentive to do so. With private label production, you have every possibility at your fingertips. You can do bulk orders, meaning your cost to produce will drop significantly. Then, you can sell your inventory and watch how much larger your margins become. You don’t have to rely on the capabilities of an e-commerce platform. The limits to what you can do extend to the edges of your imagination. As you develop your identity you will form your own following and community, allowing you to make your mark on the fashion industry as a whole.
It can be scary to move from drop-shipping to private labeling as a small brand. Our company, Dhakai, aims to help founders get their feet under them, find a manufacturer who aligns with their needs and values, and start making headway. If you are interested in switching to private label or learning more, check out our website at dhakai.com or schedule a free one-on-one consultation here. You can also email email@example.com for more.