Amazon is one of the most reliable and valuable brands in the world. It has facilitated various entrepreneurs to build and grow successful businesses internationally over time. It has become an iconic example in e-commerce through its unique selling tactics. One of which is private labels. This article, How to private label on Amazon, will help you a lot to get to know and Private label on Amazon.
Branding through private labeling and getting associated with a platform like Amazon is an incredible way of building a loyal customer base. Amazon provides owners with a cushion against many hassles and lets them focus on their primary goal. Therefore, you just need to have desirable generic products to begin with.
Competition is there, but a positive approach with a good action plan can take you a long way. Making a brand is not as complicated as you think. When you offer high-quality products and market them well, your brand gains a reputation eventually.
Now the question is how to do private label on Amazon. This article will guide you through the effective practices you must exercise and your course of action before starting or selling private labels on Amazon.
What does a private label on Amazon signify?
Private labeling involves selling products that are not widely advertised but are high in demand. These products are manufactured by another company but labeled, marketed, and sold under your brand name. What you essentially do is upgrade the original product and make it yours.
The private label products may comprise categories such as cosmetics, skincare, kitchen goods, fashion accessories, tools, apparel, or electronics. Selling these products seamlessly with one of the world’s most advanced fulfillment networks is an added advantage. With FBA (Fulfillment by Amazon), you can outsource your shipping to Amazon.
Amazon is responsible for inventory management, picking, packing, shipping, and delivering products to customers. It also manages after-sales service and returns for orders.
Example:
- Amazon Basics is Amazon’s private label brand selling products such as kitchen gadgets, tech accessories, and everything small and comparatively inexpensive.
- IKEA is famous for furniture and home accessories.
- Original Use offers private-label merchandise for young men’s street clothing.
Hence, a private label on Amazon is the most profitable option to launch your own brand. In 2021, 66% of the top 10,000 sellers on this e-commerce giant were using FBA for their businesses. The third-party sellers using FBA solutions recorded a 30%-50% increase in sales.
How to register a private label on Amazon?
So, to begin with, you must know how to register a private label on Amazon? It is a simple process. You will set up your account first and then go to Amazon FBA main page. There you will click on Get Started.
Your account should be of the seller’s, and if you do not have one, you can create it by clicking Register Now. However, if you are already registered as an Amazon retailer, you can click Add FBA to your account.
While creating an account, you must submit multiple types of identity verification, including a national ID card, driver’s license, or passport.
Additionally, you can avail of two options when creating an account. These are:
● Individual seller account
You are required to pay a $0.99 commission per sale to Amazon along with a 15% consolidated fee on those sales. It allows you to sell 40 products, which does not include restricted categories such as Streaming media players, Sports, nutrition, OTC Medication, etc.
● Professional account
The professional account will cost you $39.99 monthly, with referral fees and variable closing fees. Amazon charges different amounts depending on the category of each product you sell, mostly between 8% and 15%. However, it allows you to list your products in bulk.
7 Key Practices for How to Sell Private Label on Amazon
Before getting into the core of how to sell private label on Amazon, consider the following:
- You will need an upfront cash investment to purchase the products from the retailer and adjust them to your brand.
- Selling through a private label is a long-term investment. It is not something to make quick cash but will generate steady revenue. It will take time for your brand to get established, and you will start reaping substantial benefits.
According to the 2022 State of the Amazon Seller report, it turned out that 59% of the sellers on Amazon are using a private label model for their brand and product line. It portrays that this market is on the rise. Hence, to start selling private label on Amazon, you must execute the following:
Research and pick a profitable product
Product research is what gives your business the best chance to succeed. You need to analyze the products the customers want so that you may improve them to gain a competitive edge in the market. You can visit the Amazon Best Seller page to look for the hottest and top-selling products. It will give you an idea of what products interest customers the most.
This research would enable you to determine the market niche for your business. Given this data, you can position your brand and create a unique impression of your product. Dig deeper into the sub-categories to find a potential product that is newer and unsaturated. You can look into the “Hot New Releases” columns. Also, Amazon Movers and Shakers provides valuable information regarding the biggest gainers in sales rank.
While searching for the private-label products, you must keep the following attributes in mind:
● Small products weighing 1kg or less
If your product fits into a small flat-rate box and weighs 1kg or less, it will save you on shipping costs from the supplier and when Amazon fulfills it.
● Non-Seasonal
Avoid seasonal products (Christmas decorations, Easter goodies, etc.) as they come with high stress and are not a suitable option to start your venture. The financial downturn is unavoidable, which might harm your business’s survival rates. Therefore, you should stick with year-round products.
● Unregulated
Ensure your products do not require that much legal work and certifications. Toys, food items, or battery-operated products are somewhat difficult to sell, so avoid the hassle and choose what is untroubled.
● Price
For a brand yet to be developed, price is essential to help achieve an edge over your competitors, receive the value you deserve against your product, and secure the profits for future growth. Preferably, your product should lie between the price limit of $15 to $50. If you sell for less than $15, you will earn a low profit, and anything above $50 will make it unreasonable for an unestablished private label brand.
● Easy and simple
Products such as electronics and tech items can bring high-profit margins, but you will have to deal with after-purchase customer services. Similarly, with apparel, you will need to stock up on various colors and sizes and accommodate customers for returns and exchanges.
Identify and analyze your competitors.
After reaching a particular product idea, the next task is to identify your competitors and assess their marketing strategies, tracking their performance and sales. You can do this by opening the top 5 to 10 products you want to sell on Amazon and reviewing their listings in detail. What you need to do is:
● Keyword analysis
It involves focusing on the keywords audiences are looking for and how your competitors use them to describe their products. It allows you to create unique and competitive content to outrank others.
● Reviewing customer feedback
Diving into the pool of product reviews and ratings will help you identify their strengths and weaknesses, which you can use to your benefit by filling the gaps in your private label products.
You can also use Jungle Scout’s Chrome Extension app to evaluate the average monthly sales and reviews of the products in the competition.
Choose a supplier for your private label products.
Make sure to pick a supplier who is reliable and accurate in his words. Never go for the cheapest one; rather, use the lower price quotes by contacting different manufacturers to get the best reasonable prices. You can find reputed suppliers through platforms like Alibaba and Global Sources.
Do not miss any detail while communicating your requirements with the supplier you have decided to work with. Here, you have to mention that it is a private label business model and discuss the following points:
- The product you want them to supply.
- The required quantity.
- The location for products to get shipped to.
- How do you want them to be shipped.
- Per unit product price
- Terms and payment methods such as PayPal or Alibaba’s Trade Assurance (for secure payment processing).
- Product labeling.
Product designing and branding
A good product design communicates its value and the meaning it will add to people’s lives. However, branding (name, logo, and design) helps create the product’s recognizable identity. So, both work hand in hand to offer to make your product stand out and in prompting the customer to buy the product. The visual elements speak volumes, and Amazon A+ content can contribute with its improved image and video content.
Watch my video: How To Private Label on Amazon
Create a listing of private label products
Selling private label products on Amazon requires you to create rich and informative listings using high-quality images and relevant keywords. It is vital to drive traffic and generate sales. You can optimize your listings by adding the following components:
● Product title
Please keep it simple and add essential details to your product title. Make sure you mention the brand name. You can use up to 200 characters with spaces included.
● Images and videos
Use high-quality media content to give a visual understanding of your product features. You should add minimum of 6 images from different angles. The recommended pixels from Amazon are 1280 on the longer side. Include a video if feasible.
● Product price
You can use SellerApp’s FBA fees calculator to estimate your profit margin and set a competitive price.
● Product description
Using keywords, you should write bullet points to describe your product, making it brief and easier to read.
Test-market your product
It is vital to test-market the product you are going to invest in. It helps to determine the viability of your product. The feedback will help you improve your marketing strategy to surpass competitors.
Use FBA (Fulfillment by Amazon)
Using FBA will help you achieve greater visibility, invest more time in boosting sales, and have greater inventory control, etc. Moreover, sellers with private label on Amazon using FBA receive Prime badges on their product listings, giving them more exposure to Prime customers.
Indeed, it helps access the lucrative audience and increase sales as this symbol is familiar across the marketplace. Amazon has over 200 million prime sellers worldwide. You just need to send inventory to FBA, and the rest will take care of by Amazon.
Pros & Cons
Pros of private label on Amazon
- It will give you flexibility in positioning your brand. You can access an exclusive audience through Amazon willing to spend more. Hence, you can set relatively higher yet affordable prices.
- Being associated with Amazon will increase your credibility and build a loyal customer base consistent with your private label branding and marketing.
- You can enhance your product features to cater to customers’ demands through ratings and detailed feedback.
Cons of private label on Amazon
- Success is not guaranteed.
- You cannot stop other sellers from selling a similar version of your products and stealing the buy-box.
- It takes time to build brand loyalty, so you need to be patient and invest ample time, money, and hard work.
- There is a higher risk of failing against a seller with an enormous investment than yours.
Conclusion
I guess the above discussion must have adequately clarified your doubts about how to sell private label on Amazon. It is about going steady, step by step, securing every end to eliminate the risks as much as possible. Private labeling requires you to be determined and persistent in your efforts, make the best decisions, and keep innovating. You can make a brand of your own.