What is Selling Private-Label Products on Amazon?
As Amazon continues to expand its Marketplace, it is offering sellers more and more ways to build their business and market a wide variety of SKUs. Selling private-label products on Amazon is a growing business strategy that many online sellers have come to adopt. The idea is simple – purchase generic products that are already selling well and remarket them under your own packaging and logo.
While the concept is fairly straightforward, getting your private-label products up and running on Amazon takes a great deal of time, dedication and research. Selling private-label products can be a wonderful way to boost your business, but you won’t get rich overnight. If you are looking for a legitimate, strategic way to grow your Amazon business over time, you can launch your private-label products by following these eight steps.
Step 1: Pick Your Product
Researching and choosing the product you wish to sell can be tedious and time-consuming, but it’s also the most important step you’ll take when selling private-label products on Amazon.
Look Out for Best-Sellers
A good place to begin searching for products is on Amazon itself. The platform keeps a list of its best-selling products to help consumers find popular items, but it’s also a great resource for sellers looking to start a private-label business. Using this list as a starting point helps you find generic items that already sell well on Amazon and takes much of the risk out of creating a product and then testing its popularity among consumers.
Beware of Branded Products
The key to private-label selling is picking products that are generic, lightweight and rank high on Amazon. Generic items that can be easily distributed with your own branding at a low cost, such as small kitchen utensils or electronic accessories, are your best bet. Be careful to stay away from products that are clearly branded, as these are protected and can get your in a lot of trouble if sold under your own private-label.
Other Factors You Will Want to Consider
Some good tips and tricks to keep top-of-mind when choosing a private-label product are:
- Your product should be able to fit inside a standard size shoebox
- Aim for an item that weighs less than 3 pounds
- Consider products often purchased alongside other popular items, such as phone chargers or cases
- Choose a product that qualifies for Amazon Pay Per Click in case you want to advertise
- Make sure your product is non-perishable and durable
Step 2: Research Your Competitors
Once you find an item you’re interested in, do some digging to see how other brands are marketing that product on Amazon. A good strategy is to do a deep dive into a few of the top brands that appear in the search results for your chosen product. Assess each listing’s content, reviews, pricing and best-sellers rank to get a feel for the level of competition.
What you’re searching for is the perfect balance of competition and demand. A good balance usually meets the following criteria:
- The price among competitors falls anywhere from $10 to $40, on average
- There is a relatively low number of reviews across competitor listings
- Most of your competitor’s best-seller rankings fall below 1,000
- You assess your competitor listings to be of low- or at least average-quality
Don’t be discouraged if your first, second or even third product choice comes up short. It’s not uncommon to exclude several products before landing on an item that seems to present a good private-label opportunity.
Step 3: Find The Right Supplier
Once you find a product that offers the right level of competition, you’re ready to search for a supplier. While you might find one within the United States, the most cost-effective suppliers are usually international.
Use the same keyword you used to research Amazon competitors to help find a supplier you like. When comparing possible suppliers, be sure to keep the following factors in mind:
- Minimum order size
- Cost of goods
- Variety of product options and styles
- Order lead time
- Private-label policy
Many suppliers are willing to negotiate their prices, even with first-time orders, so it’s always best to get in touch with your frontrunners before committing to a supplier.
Step 4: Develop Your Branding
While some sellers like to wait to create their packaging and logo designs until after they’ve nailed down a supplier, you can often save time by working on step three in conjunction with step two.
There are countless freelancers, design studios and advertising agencies available to help you quickly develop cohesive and attractive branding for your private-label items. At this stage, it can be helpful to once again reference the brands you researched in step two to ensure that you are developing a look and feel for your brand that will differentiate your product from your competitors.
Once you have your packaging in place, just provide your supplier with the files and you can begin production. Also, securing a trademark for your brand name as soon as possible is important. This is because it can take upwards of 6-9 months or even more to register a trademark, and Brand Registry through Amazon is not available to you until the trademark process is fully completed.
Step 5: Create Your Listing
Now that you have a product to sell, it’s time to list it on Amazon. Use the time you have while your supplier fulfills your order to craft a compelling, educational and differentiating listing. You can build a listing yourself by creating an Amazon seller account, or you can work with an Amazon expert to put together a comprehensive listing for you.
Amazon does have some constraints on what it does and does not allow within product listings, especially among certain product categories, so it may be wise to save yourself time and revisions by having a professional do the heavy lifting for you.
While this step can often be overlooked and hurried through, we cannot underestimate the importance of a well-crafted listing. Unlike a brick and mortar store, Amazon doesn’t give shoppers the luxury of seeing and interacting with your product. Therefore, the words, images and videos within your listing go a long way toward providing shoppers with a comprehensive view of your product.
Step 6: Protect Your Product
The whole point of selling a product under a private label is to create stronger brand equity and perception among shoppers. Once your product hits the Amazon Marketplace there are steps you can take to ensure your brand is protected.
- Include the brand name in your listing title and at least one photo
- Make sure your logo is included on your product packaging
- Consider trademark registration if you plan to sell outside of Amazon
- List your product on the Amazon Brand Registry
Step 7: Take Advantage of Fulfillment by Amazon (FBA)
At this point, you might be thinking, “There’s a lot of upfront work that goes into preparing my items for private-label selling.” And you’d be right. But luckily, this step is where all that begins to change.
With FBA, all you have to do is store your products in an Amazon fulfillment center and Amazon will complete all orders on your behalf. FBA does take a small piece of your profits, but it’s worth it when you consider the following benefits:
- Avoid the day to day work of preparing and shipping orders
- Your items automatically qualify for complimentary Prime shipping
- FBA sellers frequently see higher search rankings
- When a sale is made you enjoy the profits without lifting a finger
- Amazon will handle returns and customer service concerns
Talk to a professional to learn more about FBA or to get started today.
Step 8: Start Selling
Like most industries or marketplaces, your first sale is often your most difficult. Without the support of word of mouth referrals or recurring customers to rely on, getting your foot in the door can be tough. Some common and effective ways to drive traffic to your listing include:
- Running promotions to entice new customers to try your product
- Using internal Amazon tools to pay for your listings to appear in search results
- Driving external traffic to your site with Google AdWords
While these are frequently used tactics, there are almost countless ways to market your new private-label product. Have fun with it and don’t be afraid to experiment with different methods.
Once you make that first sale, it only gets easier from there. With steady sales and the support of FBA, all you have left to do is sit back and enjoy the rewards of your hard work.
Can I Make a Real Profit Selling Private-Label?
The answer is, absolutely, yes! While profits vary by product, items that rank within the top 100 for their category on Amazon typically accumulate thousands of dollars in sales every day. With a comfortable profit margin (we recommend at least 50%) and adherence to the above steps, you can grow your entire Amazon business around private-label sales – or at the very least, enjoy a nice supplemental income.