White-labeling somehow became a dirty word in startup circles. It gets lumped in with “lazy,” “low quality,” and “no moat.” Dropshipping gets it worse, written off as a short-term internet hustle. That framing misses how consumer markets actually work.
In large consumer categories, the moat is not the product. The moat is distribution.
Most everyday consumer goods are commodities by design. Moisturizers, shampoos, face washes, supplements, people don’t buy these because they want novelty or deep tech. They buy them because they need the same thing, again and again, without surprises. Formulation differences are usually marginal, and the manufacturing reality reflects that.
Brands like The Minimalist and Mamaearth didn’t win by inventing skincare chemistry from scratch. They built strong brands on top of existing manufacturing ecosystems, often working with overlapping contract manufacturers. This isn’t an edge case. This is the industry. In most of these businesses, the product is the least interesting and least defensible part.
This is where the critique of dropshipping and white-labeling starts to fall apart.
These models are dismissed because the product isn’t “owned” in the traditional sense. But many of these businesses quietly generate real cash flows. They work because customers in these markets aren’t searching for innovation. They’re searching for availability, price, speed, reviews, and familiarity. When someone needs a moisturizer today, they care far more about delivery timelines and trust than about whether the formula is proprietary.
Switching costs are low. Attention is scarce. Winning attention is harder than tweaking a formulation.
The real advantage lives in distribution. Who gets seen. Who gets bought. Who scales. Brands that win understand customer acquisition, control channels, move logistics well, and play pricing better than competitors. White-labeling lets founders start lean, avoid high MOQs, test demand fast, and reinvest early profits into reach. Surviving thinner margins while scaling volume is far more defensible than a slightly differentiated product in a commodity market.
Commodity demand isn’t a flaw. It’s the point. People want the same face wash every morning and the same shampoo every week. These markets reward consistency, recall, and availability, not novelty. Shelf presence, quick-commerce placement, and top-of-mind awareness matter more than patents or proprietary blends. The market has already decided these products are interchangeable. Businesses that accept this reality tend to outperform those that fight it.
A better lens isn’t “do they white-label or dropship?” It’s distribution.
Can they acquire customers cheaper?
Can they deliver faster?
Can they sustain discounts longer?
Can they stay visible across channels?
If yes, the origin of the product barely matters.
White-labeling and dropshipping aren’t shortcuts. They’re distribution-first strategies built for markets that reward scale, speed, and access. The mistake isn’t using these models. The mistake is pretending product defensibility matters more than distribution in categories where the product has already been commoditized.
One more thing I’m increasingly bullish on, and this is my bet going forward.
Distribution is only getting harder from here.
As more products converge on similar quality, pricing, and availability, attention becomes the real bottleneck. Sourcing, manufacturing, and fulfillment are increasingly table stakes. Consistent visibility is not. That is where the next layer of defensibility is forming. We are already seeing companies spend serious money on people who understand distribution as a craft. Not just performance marketers, but operators who can leverage avatars, AI tools, and high-velocity UGC pipelines to stay present across feeds. This content is not polished brand advertising. It is native, fast, and repeatable. It blends into timelines, tests hooks aggressively, and converts quietly over time. AI Avatar App Market size stood at USD 1.5 Billion in 2024 and is forecast to achieve USD 10.2 Billion by 2033, registering a 28.3% CAGR from 2026 to 2033.
The advantage is not a single viral moment. It is sustained presence. Shipping content daily. Iterating messaging quickly. Letting distribution systems compound the same way traditional businesses once relied on shelf space. In a world where products are interchangeable, the ability to manufacture attention at scale becomes the real moat. This is where modern white-label and dropshipping businesses will continue to win, not by changing what they sell, but by changing how relentlessly and efficiently they show up.