If you’ve ever looked into ways of selling products online, two options probably jumped out quickly: white labelling and dropshipping. Both can be profitable, relatively low-risk, and fairly simple to start. But when it comes down to sheer profit margins—how much money actually ends up in your pocket—which is really the better bet?
Let’s cut through the usual noise and look at both models realistically, based on what entrepreneurs actually experience in practice.
Profit Margins in White Labelling: The Real Story
First, let’s get practical about white labelling. The idea is simple: you buy products made by another company, brand them as your own, and sell them directly to customers.
Typical White Label Profit Margins:
On average, white-label products—especially physical items like supplements, skincare, or accessories—often yield margins of around 30% to 60%. Digital white-label products (like SaaS platforms or online courses) can even stretch margins to 60% to 80% or more, because you’re not dealing with shipping or inventory.
Why so high? You’re typically buying products directly from manufacturers or wholesalers in bulk, allowing lower costs per unit. Plus, white labelling lets you price your product higher due to custom branding, positioning your products more exclusively in the market.
But there’s a catch:
White labelling usually requires upfront investment. You often need to purchase inventory beforehand, handle warehousing, packaging, branding, and manage shipping yourself (or pay someone else to do it). Those expenses can chip away at your profits, especially at the start.
Dropshipping Margins: What’s the Actual Deal?
Dropshipping feels simpler: you sell products without handling inventory yourself. When someone orders from your website, you buy the item from a supplier who then ships it directly to your customer.
Typical Dropshipping Profit Margins:
Dropshipping margins tend to be slimmer. Realistically, you’ll often see margins of 10% to 30% per product. Why lower? You’re typically buying one item at a time from a supplier rather than bulk purchases, so your cost per unit is higher. Additionally, competition in dropshipping is fierce, pushing many sellers to lower prices.
The upside:
Your upfront risk is minimal because you don’t buy inventory beforehand. You only buy products after customers have paid. Plus, no warehousing or shipping logistics to worry about means simpler operations.
However, tighter margins mean you need higher sales volumes to make meaningful profits. Your marketing and advertising spend also eats heavily into margins, so you have less room for error.
Comparing Profit Margins Side by Side (Without Sugarcoating)
Let’s summarise this clearly and honestly:
- White labelling: Generally higher margins (30%-60% for physical; 60%-80% digital), but requires upfront investment, higher operational complexity, and carrying inventory risk.
- Dropshipping: Typically lower margins (10%-30%), but minimal upfront investment, simpler logistics, and less risk of unsold inventory.
Which Option Actually Makes More Money in Practice?
The truthful answer? It depends heavily on your strengths, patience, and long-term goals.
- White labelling makes more money per sale, but only if you’re good at branding, marketing, and operational management. It works best if you’re comfortable investing upfront, building a recognisable brand, and patient enough to handle inventory logistics.
- Dropshipping lets you start faster with less upfront risk, but to make good money, you’ll need exceptional marketing skills, careful product selection, and the ability to consistently generate high volumes of sales.
In practice, successful white-label businesses often earn higher absolute profits per product. Dropshipping can still be profitable, but you need consistently higher sales volumes or extremely efficient marketing to match the profitability of white labelling.
Real-Life Experiences From Entrepreneurs
To avoid theory, I spoke with several business owners who’ve tried both:
- Ben, an e-commerce entrepreneur, said: “I started dropshipping first because I had no money for inventory. Margins were okay—but marketing ate up most profits. Later, I moved to white labelling once I had more cash flow, and my margins doubled almost instantly.”
- Clara, who runs a beauty brand, shared: “Dropshipping sounded easy, but profits were tiny unless sales exploded. Once I switched to white labelling, I made fewer sales overall—but earned way more actual profit per sale. It was worth the extra effort.”
- Mike, in digital products, mentioned: “I skipped dropshipping entirely. White labelling digital courses gave me amazing margins immediately, with far less competition. Upfront investment was mainly in branding, not inventory, which felt manageable.”
Practical Advice to Help You Decide
Still undecided? Here’s a quick, realistic checklist to figure out which might suit your goals:
- Do you have money to invest upfront?
- Are you comfortable managing inventory and logistics?
- Do you prefer selling fewer products at higher margins, or higher volume at lower margins?
- Do you have strong branding or marketing skills?
One Final Thing Most People Don’t Say Clearly
Neither model is permanently “better.” Many successful entrepreneurs start with dropshipping, build experience (and cash flow), then switch to white labelling later to increase margins. Others thrive purely on dropshipping because they’re marketing masters who can sell high volumes profitably.
Instead of getting stuck worrying about the “perfect” option, pick the one that suits your immediate resources, skills, and comfort level best. Focus on execution and adjusting as you learn, rather than getting paralysed by analysis.
In short, white labelling typically offers higher profit margins—but dropshipping can still provide strong profits with excellent execution and smart marketing. Your business goals, skills, and resources matter far more than any theoretical comparisons.