The overhead costs involved with starting your own business can seem insurmountable. Without sufficient capital, many would-be entrepreneurs’ dreams of small business ownership are dashed before they can ever get off the ground. But what if there was another way to start your own business—one where you don’t have to invest thousands of dollars to stock and store inventory. Believe it or not, there is.
By starting a dropshipping business, people can sell products like CBD without maintaining a physical inventory. Here’s how it works:
What Is Dropshipping?
In a standard retail model, business owners pay upfront to purchase large quantities of inventory and then pay to store it either in a brick-and-mortar retail store or in a warehouse. These basic operating costs can add up extremely quickly, and the necessary startup capital excludes those without an affluent background or access to business loans.
Dropshipping is an alternative to this traditional model that involves operating as a middle man between a manufacturer and customer base.
How To Dropship
So if a dropshipping business doesn’t keep any inventory, how can they fulfill orders?
Most dropshipping takes place online. When a dropshipping business receives an online order, they purchase the item directly from the manufacturer and have it shipped to the client. By removing the manufacturing element, the dropshipper is free to focus on branding and marketing.
By using an e-commerce service like Shopify, dropshipping business owners can start their online store easily. However, just because it’s easy to start a dropshipping business doesn’t mean they are easy to run or necessarily successful.
The key to starting a successful dropshipping business is sourcing a reliable manufacturer. Not only do you want to find a supplier that creates a well-made, reliable product, but you’ll also want to take into account where the supplier has locations. For example, if you’re planning on marketing products in the US and Canada, then using a manufacturer based in China could create problems with your shipping line. If customers have to wait months on in to receive their orders, it’s unlikely they will purchase from you again or recommend your product to their friends.
You’ll also want to consider whether you want to use a private label manufacturer or white label services. If you’re new to dropshipping, you’re probably thinking, what is private label, what is white-label, and what’s the difference?
What Is A Private Label Brand?
Private label products are items that have been manufactured specifically for one retailer. Think Kirkland brand and Costco, for example. By using a private label CBD manufacturer, burgeoning CBD companies can help separate themselves from the competition by offering a more customized product.
What Is A White Label Product?
On the other hand, there are white label products that are created by manufacturers to be sold by numerous different retailers. The white label definition includes mass-produced products that are rebranded by a separate company and sold at a premium cost. White label CBD products, for example, may appear as though they were manufactured specifically for a certain brand since resellers are free to apply their trade dress to the packaging. However, the product itself would be indistinguishable from the products of other companies sourcing from the same white label supplier.
Private Label vs White Label—Which Is Better?
Both white label and private label products are viable choices for someone considering starting a CBD dropshipping business, but each option will come with its own set of advantages and disadvantages.
White label products are the fastest way to get your products to market. Since the generic design is already in production, the dropshipper will only have to focus on distinguishing their brand from other retailers of the same product.
However, with a private label manufacturer, business owners are offered more say in the product’s design. Things like color, content, and sizing can all be modified by the reseller. This will require a little more effort on behalf of the dropshipper, but the end result can help separate their products from other similar brands. In a market as oversaturated as CBD, this can make or break a business.