Amazon is a fantastic resource for businesses. Whether you want to resell branded products as a vendor or create and sell your own private label products, you can find a place on this world’s largest online retailer and marketplace.
Selling private-label products is a good idea and can be very lucrative if you find the right niche and understand how Amazon works. Even Amazon itself has invested a lot in developing Amazon private label brands, including Amazon Basics, Amazon Elements, Amazon Fresh, and so on.
This guide fully explains how Amazon’s private label business works and how this business model benefits Amazon sellers. The guide also provides a detailed step-by-step guide on how to sell private labels on Amazon from scratch.
So, if you are interested, read on.
Private Label Products: What Do They Mean?
This is when you should consider creating a private-label product.
To do so, you need to further research your competitors’ products and see how their customers react to the products.
For instance, there might be some design defects in the products that can be fixed.
Or the customers resorted to the product to solve their problems but still have unmet needs.
Then it is your chance to take the existing products as a basis and add your design to better fit customers’ needs.
Why Amazon Is A Great Marketplace For Private Label Products
Amazon is now the largest eCommerce & Shopping Marketplace retailer, with the largest customer base globally.
Selling products under your brand on Amazon will give you a higher chance to reach your audience than a block-and-mortar store or website.
If you enroll in the Fulfilled by Amazon (FBA) program, you can leave the order fulfillment and customer service part to Amazon and focus on your business, which helps streamline your business structure.
Here are the other benefits of selling private-label items on Amazon:
Have Your Own Unique Brand
Unlike arbitrage or wholesale, private labeling gives you full control over the brand identity. In the private label business model, you can market, grow, and price your products as desired rather than seeking approval to remove brand restrictions from brand owners.
With private labeling, you have much more room to be creative in building up a unique product line with different branded products that cater to consumer demand while being profitable for your business.
Customize Your Own Product
By starting private label selling, you have the power to customize in any way that you desire and add features that will make them stand out from other brands.
Private label sellers are free to enhance the product and outpace what is offered in the marketplace to cater to customers’ needs.
Since the Amazon marketplace is getting increasingly competitive, it is also harder to stand out if your product looks similar. By selling a private-label product, you can make it unique and set it aside from the rest.
Talk to your graphic designer and supplier and ensure that your product impresses your audience at first sight.
Increase Profit Margin
Meanwhile, since your private label products are the only ones that can meet certain customers’ needs, you can sell them at a relatively high price, leading to a good profit margin.
More Control Over Your Product Listing
Launching a private label product grants you the amazing advantage of creating an entirely new listing in Amazon’s online marketplace.
In addition, you’ll have full control over your product listing, including product images, pricing, product details, and keywords.
Once you enroll in Amazon Brand Registry Program, you can unlock your Enhanced Brand Content, a powerful tool to help you further increase your conversion rate.
If you are reselling something on Amazon, you must compete for Buy Box, which requires much effort.
But if you run a private label business on Amazon and are the only provider of this product, then the Buy Box will 100% go to you.
Step By Step Guide To Selling Private Label Products On Amazon
Our guide starts from the beginning, so if you don’t have a product yet, you can still get the help you need.
Step 1: Research Your Product Ideas
To start an Amazon business, you need to find a niche. There are multiple ways to do this, but because you’ll need to design this private-label product yourself, you should start with a topic you’re familiar with. For example, it could be something related to your career or hobbies.
Here are a few ways:
- Search through Amazon’s best-selling products: Once you’ve thought of a general idea, consider what’s lacking in that area. To help you along, search through Amazon’s best-selling products in the niche. Here you’ll get an insight into what customers need. If you notice one product has high demand and low competition, then it is time to make it your own private-label product.
- Search through Google and see what people are typing about the niche: Scroll down to the “People also ask” section for a direct correlation between your original search and other common searches.
- Look on Kickstarter: Kickstarter is a hub filled with new start-up businesses. They all have ideas they believe customers will enjoy but don’t have the financials to make them happen. If a similar thought to yours has no contributors, it’s likely a bad idea.
- Check your competitors’ listing reviews: Read through the comments and take inspiration from the customer’s ideas. Use this data to learn what people want.
Step 2: Easy Product Attributes
Because you’re new to this business, you want to start simple. With your research in hand, try to pick an idea that is small, unregulated, unseasoned, and easy to do. Let’s explore them in detail.
- Pick small, or lightweight products: Small or lightweight products are easy to ship. If you can put it in a regular flat rate box that doesn’t weigh more than two points, the shipping fees will be easy to manage, and you can absorb them into the costs. By absorbing the shipping fees, your business will seem cheaper overall.
- Avoid seasonal products: If you sell seasonal products, you will limit yourself to specific times in the year, reducing your sales times. It doesn’t mean you can’t advertise the products by season. Items can be present during the holidays and still sell all year round. Christmas lights are one example.
- Avoid highly regulated products: Certain products are highly regulated. Batteries, toys, food, and others require regulation checks before going on the shelf. You should abandon these heavily regulated concepts unless you are already in this field. Otherwise, a mistake could lead to fines and business closure. Your items should be easy to produce and have a small amount of paperwork to sign off.
- Select products that are simple to understand and repair: Electronic or fiddly products can break easily. If your customer service personnel can’t explain how to fix the issues, you may receive multiple refund requests or bad reviews.
Step 3: Research The Competition
Ideally, you should invest in something in high demand and low competition.
Several Amazon analytics tools, such as Jungle Scout, tell multiple facts about your competition. These include sales data, projections, related fees, relevant keywords, and more.
You can use the sales data and projections to see the market competition and project how many units you will sell.
You can also calculate your profit margin by considering all the related fees before you start private label selling.
The keywords are also helpful. They help you understand how customers search for the products. Ensure you insert these keywords in the product listings and include them in your PPC campaign.
Step 4: Find Reliable Suppliers For Your Private Label Product
There are many high-producing private label manufacturers to choose from. Among them, Alibaba is among the most common resources for Amazon sellers specializing in private-label models.
You can start by searching for your product on Alibaba and then contact a few suppliers you want to cooperate with.
Request product samples from the manufacturer and check their design or product quality before placing any order.
Other factors to take into consideration are as follows:
- What is the minimum order quantity
- How long will the factory need to manufacture the products
- What payments do they accept
- Who will cover the shipping costs
- Can they customize your product according to your needs
- Do they have a quality inspection team
- How they provide you with quality assurance
Step 5: Finalize Your Designs
Because you are creating a private label product, the design choices are all yours, including engineering the product to logo design. Some manufacturers will offer suggestions if you need help, but this may cost extra.
Regardless, you should consider multiple logo designs to see which best represents your brand. The logo should tell the target audience who you are, what you’re selling, and the overall vibe of your company.
Step 6: Set Up An Account With Amazon
You’ll have two options, either an individual seller account or a professional account.
The individual account is commission based, meaning there are no upfront costs to using the service. However, every time you make a sale, you need to pay $0.99 to Amazon.
If you subscribe to a professional selling plan, you must pay $39.99 monthly to extend your subscription. If you plan to sell more than 40 items monthly, then the professional account is more suitable for you.
However, if you don’t know which account to pick, start with the individual account and upgrade to professional once the price structure change makes it more profitable.
Step 7: Figure Out Your Shipping Strategy
When starting Amazon private label business, you can fulfill the orders yourself (FBM) or by Amazon (FBA).
- Fulfilled by merchants (FBM): In this case, your manufacturer or yourself must manage the inventory. Once a customer orders from your Amazon store, you must print the label and ship the product to the customer.
- Fulfilled by Amazon (FBA): If you enroll in this program, simply pay for the service and send your products to one of Amazon’s fulfillment centers. When customers place an order from you, Amazon will handle the fulfillment. They will also take care of customer service issues for you.
Step 8: Create Your Amazon Listing
You can set up your listing before or after creating a shipping agreement with Amazon. However, the manufacturing and shipping times mean your customers could wait a while for their packages.
Creation from the manufacturer can take five weeks, while shipping from the manufacturer to an Amazon store could take two weeks or more, depending on which manufacturer you’re using.
In the seven-week waiting time, create your Amazon listing. Then, you’ll have enough time to set up your listings while waiting for your products to be ready.
- Title: with relevant keywords and easy to read
- Bullet points: with keywords and all the product specifications
- High-quality images
- Enhanced brand content: once enrolled in the brand Amazon Brand Registry Program, one can unlock the EBC section
- Product videos
Step 9: Use Sponsored Ads
Amazon FBA is a source of passive income. Their slogan is “set it and forget it.” But the best way to make money on this site is to watch your competitors, bid on sponsored ads, and keep your brand awareness vigilant.
Amazon has an internalized advertising system called Amazon PPC. To use it, you need to bid on a placement. The highest bidder will see their product on the first page. When you bid, you’re hoping for the top spot when a customer searches for the keyword.
You should first search to see which keyword is the most popular. Next, list the most to least used keywords for your brand. Then see how much each keyword’s highest bid is.
Sell Private Label On Amazon: Final Thoughts
Following this guide, you can create your private label product and sell them on Amazon within a few months.
This Amazon private label business will cost a few thousand dollars upfront, but you could repay your payments if you’ve hit a strong niche.
Frequently Asked Questions
Are private-label products profitable on amazon?
Private-label products are more profitable than traditional brands. Traditional brands sell the same concept for a larger price because their name carries a reputation.
Modern-day consumers want affordable prices and are less likely to commit to brand loyalty. As a result, private label brands can sell similar products for less money and steal big brand audiences.
Is private label on Amazon still profitable?
Yes, the private label on Amazon is still incredibly profitable. Unfortunately, this trend has not stopped and will continue to be successful if consumers desire affordable products without sacrificing quality.
Can I sell private-label products on Amazon?
Yes, you can sell private-label products on Amazon. Before selling any product, it’s important to research the competition and see what customers need. You should also research potential manufacturers who will provide samples of your product before you commit to a purchase. Finally, create an Amazon FBA account to list your products and use sponsored ads to attract more customers.