What’s the Best Business Model: Drop Shipping, White Label or High Ticket?



Hey! In this post, I’m answering another great question plucked from a live Q&A for my Smart Social training:

Q: If you were starting from ground zero with a $50 daily budget, how would you go about monetizing a weight loss brand for women?

Essentially, this student is in the weight loss market and is trying to decide on the best business model.

Here are the options he listed:

    1. Drop ship weight loss products
    2. Create a line of supplements
    3. Run webinars to high-ticket weight loss programs

Well, which would you choose? Drop shipping, white label brand, or high ticket offer?

Keep reading for my answer.

 

Option A: Drop Shipping

If I had to choose between these 3 options, it would depend on how much money I had.

In this scenario, if I really had only $50 a month to spend, then I would start with drop shipping.

The upside to drop shipping is that, because there’s almost zero overhead, you can immediately put all of that $50 into ads. Then, once you find something that works, you can start generating some profit and reinvest it into creating your own brand.

The downside is that you aren’t building an asset that you can one day sell…

And because you aren’t bringing anything new to the market, you likely aren’t growing a customer base that is loyal to your brand and will continue to do business with you in the future.

 

Option B: White Label Brand

But if you have $50 a month to spend on a new business, then why not just save up until you can launch your own white label brand?

That way you are building something with ongoing, compounding value.

By creating your own product, you’re bringing something new to the market that no one else can sell, which means your brand can attract real customers (not just sales), and build a relationship with them so they will return for repeat purchases.

So how much does it cost to start a white label brand? Let me break down the numbers for you.

 

The Cost of Starting a White Label Brand

First thing’s first: You need to build the basic infrastructure of your business, starting with the most important thing, your product.

You’ll need to source products, go back and forth with suppliers, and test labels and packaging.

Next, you need to build and optimize your website and set up your technology stack. (I recommend checking out Zipify Pages, my sales funnel and landing page builder for Shopify.)

All of this will cost about $750, or to be safe, $1,000.

Next is your first inventory order.

Let’s say you buy each bottle of supplements for $6, and since you’ll probably want a couple hundred on them, this will cost you about $1,500.

Now that you have your products and a platform to sell them on, it’s time to run ads.

I would set a daily budget of $50 a day, and plan on setting aside a month’s worth of ad spend, so that’s another $1,500.

So to get this brand off the ground (and again, we’ll pad the numbers a little to be safe), you’ll need about $4,500.

With the original scenario of a $50 daily budget, it’d take you about 3 months to save up and launch your own white label brand instead of putting your resources toward drop shipping.

By doing this, you’d be launching a real brand with a unique product, growing a customer base that will return for repeat purchases, and building an asset with compounding value (instead of just going after individual sales).

For these reasons, I’d choose white label over drop shipping any day.

 

Option C: High Ticket Webinar

As far as high-ticket webinar offers, this is a very different business model than the first two options.

First off, you have to create a 90-minute piece of educational content that you will use to attract leads and pitch your offer.

Next, you have to create the product, which might be more difficult than in first two options because it’s not as easy as sourcing from a supplier.

Are you an authority on weight loss who can create a program that sells for $1,000 or $1,500? Are you ready to get in front of a camera to film this thing, edit it and put it into a consumable package? You’ll have to answer these questions.

Once the product is created, you have to run ads, get people to consume the content, then follow up with retargeting.

When all is said and done, to create a quality product and sell it right, it’s probably going to cost about the same as your white label offer — about $4,500.

And personally, even though I run both these business models, I prefer ecommerce to information businesses.

Selling physical products is the more scalable and less risky option.

 

Summary

While drop shipping has very little overhead and is easy to break into, you aren’t creating an asset with lasting, compounding value.

And while a high ticket webinar offer is doable, it’s a little risky and not very scalable.

Your best option: If you save up $4,500 over 3 months, you can start your own white label physical products brand. You’ll have enough funds to build the infrastructure of your business, source products and start running ads.

That’d be my recommendation. I hope this helps, and thanks for reading!

Highlights:
0:23 What is the best business model?
0.57 Drop shipping
2:14 White label brand
2:40 Your own brand has lasting, ongoing value
3:00 High ticket webiner
3:50 Ecommerce business or information business

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