Shopify Dropshipping vs Private Label: Full Comparison 2025

If you want to open an online store in 2025, it can be hard to decide between Shopify dropshipping and private label. There are good and bad things about both models. The best one for you will rely on your budget, goals, and brand vision. With dropshipping, you can start a business for less money, take less risk, and test products faster. With private label, you have full control over branding, profit margins, and long-term growth.

This tutorial explains the main distinctions so you may choose the optimal Shopify business model for your success with confidence. If you want to develop a successful eCommerce site in today’s competitive industry, you need to know how to compare these two things.

Table of Contents

What is dropshipping on Shopify and how does it work?

With dropshipping, you don’t have to keep any inventory. When someone orders from your store, you send the order to a supplier who ships it straight to the client.

You just:

Create a store on Shopify
Bring in goods from providers like AliExpress or Spocket
Put in your markup
Market and sell

No packaging, no inventory, and no cost to stock up front.

What does private labeling mean on Shopify? A Summary

Private label means that you make your own products and sell them with your own brand name. You work with manufacturers to change things like the design of the product and the packaging.

Think of it like having a brand and a store. You’re selling one-of-a-kind items, such skincare products, vitamins, and more, with your own logo, packaging, and even recipe.

You take care of (or outsource):

Designing and making products
Branding
Managing inventory
Fulfillment (either in-house or through a third party)

Important Differences Between Private Label and Dropshipping

Here’s a short look at the differences:

Feature	Dropshipping	Private Label
Inventory	No	Yes
Branding	No branding needed	Completely branded
Product type	Products that are the same	Unique products
Startup cost	Low to Moderate	High
Shipping	Slow (typically coming from China)	Faster if local fulfillment is done
Profit margin	Low to moderate	High (because of how much people think it’s worth)
Control	Low	High
Risk	Lower	Higher

Costs of Starting Up: Dropshipping vs. Private Label

One big difference is the price. Starting a dropshipping business is inexpensive because you only need a name, a Shopify plan, and maybe $100 for applications and basic marketing.

But private label frequently needs:

Minimum order quantities (MOQs)
Design of packaging and branding
Testing samples

You should plan to spend at least $500 to $2000 to start a private label product.

Which business model has higher profit margins?

In this case, private label typically triumphs. You can charge more for the products because they are distinctive and have their own brand.

For example:

Dropshipping Bluetooth earbuds: Buy for $8, sell for $20 (make about $10)
Private label earbuds: Make them for $6 and sell them for $40 or more (profit: about $30)

But with dropshipping, you can quickly test out a lot of different things without spending a lot of money.

Comparison of Product Control and Customization

Private label gives you full control:

Design
Things you need
Packaging
Sending messages

This implies that people will trust you more, your brand will be stronger, and your customers will be more loyal.

When you use dropshipping, you have to take what the supplier gives you. You can’t change much, and other people might be selling the same thing.

Who has the upper hand when it comes to shipping and fulfillment?

When you dropship, it can take a long time for things to get to you (10–30 days from China). This could make customers unhappy and leave bad reviews.

Private label lets you be flexible. You can:

Use local fulfillment centers that are faster
Keep your inventory closer to your market
Give people better experiences when they open their packages

Customers are happier and there are fewer refunds as a result.

The Power of Branding: Private Label vs. Dropshipping

In eCommerce, branding is everything.

Dropshipping means selling generic goods under the name of a store.
Private Label means you’re making a brand that people know and trust.

Private label enables you to:

Make a strong identity
Stand out in crowded markets
Charge more than usual

If you don’t pay close attention to customer service and content, dropshipping can feel like a “cash grab.”

Risk Factor: Which Shopify Model Is More Secure in 2025?

There is less danger with dropshipping because of:

No inventory up front
Simple to switch between products
Low costs to start up

But it also has less potential for rewards.

Private label is riskier because:

Cost of inventory
Commitments to MOQ
More complicated logistics

But it does add value and equity to a brand over time.

Which Shopify model is better for beginners?

If you’re new to this:

Dropshipping is a great way to learn the basics of marketing, sales, and Shopify.
Use it to try out different niches and learn about how customers act.
Once you feel more confident and are making money, think about switching to private label for more control and larger revenues.

What marketing strategy works for each type of business model?

Dropshipping marketing:

Facebook advertising
Ads on TikTok
Shoutouts from influencers
Videos of products

Private label marketing:

SEO and content marketing (blogs, etc.)
Building an email list
PR and collaborations with influencers
Storytelling and packaging for brands

Many people buy from private label businesses more than once, but dropshipping depends on getting new clients all the time.

Shopify’s Best Tools: Private Label vs. Dropshipping

Tools for Dropshipping	Tools for Private Label
Spocket / DSers	Alibaba / Printify
Oberlo (if you turn it back on)	Fiverr (for branding and logos)
Ecomhunt / Minea	Canva (for designing labels)
TikTok Creative Center	ShipMonk / ShipBob
CJ Shipping	Zoho Inventory and QuickBooks

Profitable Stores in Real Life (Case Study)

Dropshipping example:
A Shopify store that sells pet grooming gloves using TikTok adverts.

Made $100,000 in three months
Problems include long shipping periods, refunds, and too many products

Private label example:
A skincare brand that uses organic ingredients and eco-friendly packaging.

Scaled to $500,000 a year through email and partnerships with influencers
Problems: keeping track of inventory, logistics, and the supply chain

The Final Decision: Is Dropshipping or Private Label Right for You?

Choose dropshipping if you:

Want to get started quickly
Don’t have a lot of money
Love testing items and markets

Pick private label if you:

Want to create a brand
Can put down more than $1000 right now
Think on long-term growth, branding, and keeping customers

A lot of successful merchants start out dropshipping and then move on to private label.

Last Thoughts

There isn’t one answer that works for everyone. It all depends on your goals, experience, and budget, but both strategies can work.

Dropshipping is a terrific way to learn quickly and try out new ideas
Private label is for people who want to create a brand and make money in the long run

Dropshipping can help you get started. Get the hang of things, build up your cash flow, and when you’re ready, switch to private label to start a business that will last.

Questions that are asked a lot

Q1: Is it possible to use both dropshipping and private label on Shopify?
Yes! Begin with dropshipping, then when a product sells well, switch to a private label version.

Q2: Is private label more profitable than dropshipping?
Yes, since you can set prices and brand names, which means bigger profits.

Q3: Which model has fewer problems with customer service?
Private label usually has fewer problems because the shipping and packaging are better.

Q4: How long does it take to build a brand with your own name?
From 4 to 8 weeks to find, test, and brand.

Q5: Can a beginner do well with private label?
Yes, but it’s more difficult. It’s best to get some expertise with dropshipping initially.

Shopify Dropshipping vs Private Label – Which Is Better?