Explain how your business plans to make sales and generate profit.
Exploring Different Value Delivery Models for Your Online Business:
- Once you have listed the products you wish to sell, the next step is procuring those products.
- There are different business models you can follow.
- Let’s understand the different types of Value delivery models for your online business.
- These models define how businesses operate and deliver value to their beloved customers and clients.
- Imagine a value delivery method as the secret recipe for creating a product that brings maximum value to its users.
- You might operate with either one of these models or use a combination of them to maximize your value delivery.
- Manufacturer
- White labeling
- Private labeling
- Dropshipping
Manufacturer
- In this model, businesses create their products from scratch.
- They use raw materials or assemble pre-made components to craft something truly special.
- Think of clothing brands that design and manufacture their products in-house or cosmetic brands that create their formulations and perform batch production.
- Most handmade businesses fall into this category.
Private Label:
- In this model, you partner with a third-party manufacturer who produces products specifically for your brand.
- You can call the shots, from the product packaging to the specifications.
- It’s like having your very own line of products without the hassle of manufacturing them yourself.
- A private label product is one in which a business gets its products produced by a third party but sells them using its brand name.
- An example would be: Let’s say you want to sell lipgloss and find a supplier who can make them for you and even add your brand name to them.
- This is how most online brands operate. They have a design and have it made by a third party. A fully finished product is delivered to your business for sale.
- As for the consumers, they’re the company’s ‘own brand’ products
White labeling:
- Imagine this: You want to sell a fantastic product under your brand name but don’t have the means to create it from scratch.
- That’s where white labeling comes in.
- With this model, you work with a supplier or manufacturer who creates the product for you and sells it as your own.
- It’s like having a trusted partner who handles the manufacturing while you focus on building your brand.
- This is also one of the cost-effective options.
- White labeling is when a business brand sells a product under its name and logo, but it is manufactured or purchased from a third party.
- You procure your products from a supplier or manufacturer and sell them as your own. This can minimize your manufacturing cost. Also, this is a very popular choice in industries such as fashion and cosmetics.
- Most businesses online operate on this model. They source their products from a wholesale supplier or manufacturer for a very low price and add a markup to sell.
Dropshipping:
- Imagine running an online store without the hassle of managing inventory or shipping products. That’s what dropshipping is all about.
- In this model, you are the middle person between buyers and manufacturers.
- When someone places an order on your website, the manufacturer or supplier fulfills it on your behalf.
- Your job is to focus on marketing and driving traffic to your website. It’s a hands-off approach to running an online business.
- Typically, dropshipping owners only need to have a functioning website and relevant traffic.
- They market their brand, and when someone places an order, it is fulfilled by a third-party supplier. This means you run the business without storing inventory.
Private label vs white label vs manufacturing vs Dropshipping
| Manufacture | Private label | White label | Dropshipping |
| Make your products. Make everything from start to finish from scratch. | You get to custom-make your products from another manufacturer | Choose from a variety of products from the supplier and sell them as your own | Selling similar products. It is the same as many other businesses |
| One of a kind. | One-of-a-kind products. | and can be expensive. MOQ is high | selling similar products. Same as many other businesses |
| The setup cost is high | and Can be expensive. MOQ is high | Can be affordable. MOQ is fairly low | No setup cost. No inventory storage. |
