Private Label Dropshipping: Steps, Fees and a Worked Cost Example
Quick answer: In private label dropshipping, a factory makes or labels a product with your brand, and an agent stores that branded stock and ships each order to your customer. The steps are: prove the product, sample it, brief your logo and label, agree the minimum batch, check the label rules for your markets, buy the first batch, inspect it, store it and connect your store. Costs come in four parts: the product, a sourcing fee based on the batch value, a per-order packing fee and shipping. At PackQuay, a $4,000 first batch carries a $500 sourcing fee: 10% for the tier plus 2.5% for private label.
The one thing that changes from regular dropshipping
In regular dropshipping, the item is bought after your customer orders it. With private label, the branding happens at the factory or in the warehouse before anyone orders, so you need stock in advance. You still don't run a warehouse or pack parcels; your agent does that. Think of it as dropshipping from your own branded inventory.
That has one practical consequence people overlook: if you run out, you can't fill the gap with an unbranded unit from a marketplace. Reorder timing becomes part of the job.
Private label dropshipping in 9 steps
- Pick a product that already sells. Test the generic version first. Branding a product nobody buys only makes the loss bigger.
- Sample the unbranded product. Decide what you want changed: logo position, color, inner packaging, a small fix based on customer complaints.
- Prepare your brand files. Logo in vector format, the exact label text, colors, and the information the label must carry (see step 6).
- Agree the branding method and minimum batch. Printing, engraving, stickers, woven labels and printed retail boxes each have their own minimums and lead times at the factory. Ask for them before you commit to a design.
- Approve a branded pre-production sample. Physical, or at least clear photos and video of real units with your logo, before the full batch is made.
- Check your name and label rules. Make sure the brand name is free to use in your markets, then confirm what the label must say. More on this below.
- Buy the first batch and inspect it. Goods are checked on arrival so print errors and defects are caught before they reach customers.
- Store it and connect your store. Shopify and WooCommerce orders flow in automatically (WooCommerce connects with a REST API key, no plugin), or upload orders by CSV from other platforms. Stocked orders ship within 24 hours.
- Plan reorders. Watch daily sales against stock and the factory's lead time, and reorder before you run low.
What it costs: a worked example with real fees
Here is a hypothetical product at $5.00 a unit, using PackQuay's published fees. The sourcing fee is a percentage of the product cost in each transaction, falling from 10% for batches up to $5,000 down to 4% above $200,000. Private label and branding add 2.5% on top.
| First batch | Reorder | |
|---|---|---|
| Units | 800 | 2,400 |
| Product cost | $4,000 | $12,000 |
| Sourcing tier | Tier 1 (up to $5,000): 10% | Tier 3 ($10,001–$20,000): 8% |
| Private label add-on | +2.5% | +2.5% |
| Sourcing fee | $400 + $100 = $500 | $960 + $300 = $1,260 |
| Total before shipping | $4,500 | $13,260 |
The unit price is kept the same in both columns to keep the maths simple; in practice factories often price bigger batches lower. The larger batch drops the combined rate from 12.5% to 10.5%, but don't buy stock you can't sell just to reach a cheaper tier.
Then the per-order costs, once the stock is in our warehouse:
- Pick and pack: $2.00 per order on days with 1–19 paid orders, dropping in steps to $1.00 from the 149th order of the day. Each extra SKU or extra unit in an order adds a smaller fee (see pricing).
- Shipping: at cost, depending on weight, destination and shipping line.
- US duties: every parcel from China now owes duties, since the $800 duty-free rule no longer applies. Build them into your price and ship duties paid.
- Inspection: 20% of each batch checked free; extra inspection, and labels applied in the warehouse, at $7 per person per hour.
- Storage: free for the first 2 months and while you have orders to process; long-term storage is priced per cubic meter.
The label rules that come with your name
When your brand is on the label, you are the company customers and regulators come to. Three examples worth knowing before you print:
- Country of origin. US customs rules require imported goods to be marked with their country of origin in a way the end buyer can see, and repackaging must not hide it. "Made in China" belongs on your label or box.
- US cosmetics. Under the FDA's cosmetics law (MoCRA), the business named on the label is the "responsible person". It must list each product with the FDA and put contact details on the label for adverse event reports. Businesses with small US cosmetics sales can be exempt from listing, but not for certain products, such as those that touch the eye's mucous membrane.
- Selling into the EU. Since December 13, 2024, the General Product Safety Regulation requires consumer products to show the manufacturer's name, postal address and email, and an EU-based responsible person, on the product, its packaging or an accompanying document. The same details must appear on your online listing.
Rules differ by product type and country, so check what applies to your category. Children's products, electronics and anything worn on skin usually carry extra requirements.
Where private label dropshipping goes wrong
- A logo minimum bigger than your sales. If the factory's minimum is a year of sales, start with a branded box or label applied in the warehouse instead.
- Label errors found after printing. A spelling mistake or missing origin mark on thousands of units means relabeling by hand. Proofread the proof.
- Running out of stock. Branded units can't be swapped for marketplace ones, so a stockout means orders wait for production.
- Skipping photos of the branded product. Your listing images should show your version, not the factory's generic one.
Not sure you need your own spec at all? Private label vs. white label explains when a standard product with your logo is enough. If you are earlier on, the four stages of branded dropshipping shows where private label fits.
How PackQuay runs private label orders
We find the factory, agree the logo work and minimums, follow production, inspect the batch, and store it in our own warehouse in Xinxiang, Henan. Orders from your store are packed with your branding and shipped on 30+ shipping lines. Everything goes through one account manager on WhatsApp: send the product link and your logo, and we'll come back with a quote for the branded version. See the branding options on our packaging and branding page.
FAQ
How much does private label dropshipping cost?
You pay for the product, a sourcing fee, per-order packing and shipping. At PackQuay the sourcing fee runs from 10% down to 4% of the batch value, plus 2.5% for private label, so a $4,000 first batch carries a $500 fee.
What is the minimum order for private label products?
It depends on the factory and the branding method. Printing on the product, woven labels and custom boxes each have their own minimums, so ask for them at quote stage and compare them with your expected sales.
Do I need to hold stock for private label dropshipping?
Yes, because branding is done before orders come in. You don't store it yourself; your agent keeps the batch and ships each order from it.
Who is responsible for a private label product's safety?
The brand named on the label. In the US, for example, the business on a cosmetic label is the responsible person under FDA rules, and EU rules require manufacturer and EU responsible person details on the product or packaging.
Can I start private label with a small budget?
Start with branding that has low minimums, such as your own label or box applied to a standard product, and move to printing on the product once it is a regular reorder.