May. 06, 2024
Packaging & Printing
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It might be easier than you think. Many entrepreneurs have found success by selling private label products on Amazon.
This business model involves creating a unique brand and selling products sourced from third-party manufacturers.
Sounds simple, right?
It is, and it's also highly lucrative.
According to the Private Label Manufacturers Association report, the private label market grew by 11.2% in 2022, reaching $228.6 billion in sales across all channels. Nearly one out of every five grocery products sold in the US is a private label or store brand item.
But how do you get started with Amazon FBA private label?
This ultimate guide will teach you how to find and source profitable products, create your brand, and launch products on Amazon.
By the end of this post, you'll have a clear roadmap to start and grow your Amazon FBA private label business.
Ready? Let's dive in.
Here's a quick overview:
Before diving into how to sell Amazon FBA private label products, you need to understand what it means.
In a private label business, sellers generally sell products sourced from third-party manufacturers under their own brand.
With private labels, sellers have complete control over the product. They can customize it with unique brand logos, packaging, and labels. Additionally, they can control the product's pricing, marketing, and advertising activities.
Amazon FBA stands for Fulfillment by Amazon. This solution means Amazon handles the entire fulfillment process. Sellers don't need to worry about storing, packaging, shipping, or customer service; they just send products to Amazon's warehouses, and Amazon takes care of the rest.
The combination of Amazon FBA and private labels offers significant advantages for online sellers. They can access millions of customers and benefit from the trust and credibility Amazon has built over the years.
Moreover, Amazon FBA private label enables sellers to build their brand and differentiate themselves from competitors. In short, Amazon FBA private label is a great way to start an online business with low risk and high reward.
You might wonder, is it worth the hassle to create a private label brand?
The simple answer is yes. Here are some excellent benefits:
You own your private label brand 100%. This means you can make all business decisions independently, unlike in arbitrage or wholesale, where you rely on the brand's product you resell.
Once you find a reliable supplier for your private label product, focus on marketing and providing excellent customer service to strengthen your brand and customer loyalty.
It ensures long-term profits and business stability.
If you intend to resell items from other brands, Amazon may limit you under its Brand Gating feature for counterfeit management. You need explicit approval from these brands to sell their products.
On the other hand, selling private label products is straightforward. Since you sell items under your own brand name, you don’t need approval from anyone.
Selling private label products under your brand on Amazon opens many opportunities. These include access to Brand Registry, Sponsored Brands, Amazon Storefront, Amazon Live, Virtual Bundles, Amazon Attribution, Amazon Brand Analytics, and more.
Leveraging these options effectively helps you reach your target audience more efficiently, gauge product performance, and enhance the conversion rates of your products.
By analyzing frequently asked questions and reviews on your and your competitor's products, you can pinpoint areas of potential improvement and implement modifications based on these opportunities.
This puts you ahead of your competition and helps you create an excellent product.
As you’re sourcing your products directly from a manufacturer or supplier, you control the CoGS (Cost of Goods Sold). You can negotiate the best prices and terms and avoid middlemen fees or commissions.
You can also control your pricing strategy and charge higher prices for your products based on their perceived value and quality.
All these factors combine to boost the profit margin compared to retail arbitrage or wholesaling.
When selling private label products on Amazon, make full use of A+ content or enhanced brand content to improve brand awareness and boost sales.
A+ content allows you to provide additional information about your product to potential buyers and persuade them to make a purchase. According to Amazon, it can boost sales by an average of 5.6% (source).
Learn more from this detailed guide on Amazon A+ Content.
The Buy Box is located on the right side of the product page, where customers can click to buy the product.
It’s crucial for increasing sales and visibility on Amazon, as 82% of sales are made through the Buy Box.
Resellers usually have to compete with other sellers to win the Buy Box.
But private label brand owners don’t need to worry about that. They can immediately win the Buy Box since they are the only seller. This boosts conversion rates and revenue.
With your private label brand, you have complete control over your product listing. You can offer a diverse range of products that cater to various consumer demographics and improve your business's bottom line.
Additionally, optimizing listing content, including images, descriptions, keywords, A+ content, and prices, becomes easy.
If you were reselling someone else’s product, all these options would have been impossible.
While selling Amazon FBA private label products has numerous benefits, it also has some disadvantages you should be aware of:
Unlike reselling products (where you buy low and sell high), selling private label products requires more upfront investment. Most manufacturers require you to order in bulk to start working with you. You must also pay for branding, packaging, labeling, shipping, marketing, and more.
This means you need enough capital and cash flow to start and run your private label business.
Since you source products from a third-party manufacturer, it’s impossible to check the quality and safety of the products. However, customers don't know that. If they receive a bad product, it hurts your brand reputation and reduces customer loyalty. The product listing also gets affected by bad reviews, further reducing sales.
Related Post: Websites for Amazon Sellers to Find Private Label Product Ideas
Selling private-label products is not a get-rich-quick scheme.
It takes time and effort to find and source profitable products, create a brand, launch and market products, manage inventory and orders, and more.
You also have to constantly monitor competitors and customer feedback and adjust strategies accordingly.
As you can see, selling Amazon FBA private label products is not a walk in the park. There are challenges and drawbacks you need to consider before jumping in.
But don't let that discourage you.
If done right, selling Amazon FBA private label products can be a rewarding and profitable business model.
In the next section, we’ll show you how to do it right.
Now that you understand what Amazon FBA private label is and why you should sell it, let's get into the details of how to create your own private label brand on Amazon.
Here’s a step-by-step guide:
The success of a private label business hinges on selecting the right product.
While many products in a category may seem promising, choose those that are ‘proven to sell well’ rather than what you ‘think’ will sell. There's a difference.
Identify a few potential products based on the following attributes:
Once you identify a few potential products, do some research to determine whether they are worth selling. Here are some criteria to consider:
You can quickly check the listing quality of any product with SellerApp’s Listing Quality Checker tool.
Once you’ve finalized the perfect product idea, the next step is to find a suitable manufacturer.
SellerApp Product Sourcing is a great tool for this.
Keep in mind that the cheapest manufacturer may not always be the best. Look at supplier reviews and focus on a price-to-quality balance to select the ideal manufacturer for your needs.
Check the supplier's minimum order quantity and factor in the exchange rate if the manufacturer is in a different country.
Identify 3-5 manufacturers and email them for more information. Here are some questions you can ask:
Notice their communication style. If the manufacturer replies promptly and is ready to negotiate, go with that manufacturer.
Note: Always ask for a product sample to examine quality and design before ordering in bulk.
Once you select the manufacturer and place your initial order, it typically takes 4-6 weeks for the product to arrive. This is the ideal time to craft a stellar Amazon product listing.
This involves arranging professional product photography, devising a competitive pricing strategy, writing product descriptions, purchasing a UPC, and more.
The quality of your product listing can make or break your private label business.
Optimize the listing by conducting extensive keyword research to identify relevant high-volume and high-converting keywords.
Use the SellerApp Keyword Research tool to identify high-performing keywords from a seed and the SellerApp Reverse ASIN tool to find relevant keywords from competitors' listings.
Incorporate these keywords into your product title, description, and bullet points to enhance visibility when shoppers search with related keywords.
Optimizing the product listing and leveraging relevant keywords can increase your chance of attracting potential customers and driving more sales.
Learn more with this Amazon product listing optimization guide.
For private label products, branding is crucial in setting your product apart from the competition.
To build a strong and memorable brand identity, do the following:
No matter how good the design is to you, it must resonate with the target audience.
New sellers often set very low (or even the lowest) prices to compete with established brands, but this is a big mistake. Don’t set your private label product's price based on competitors’ pricing.
Instead, make the product stand out through better design, packaging, excellent marketing communication, or killer customer service.
Still, as a rule of thumb, try to keep your price within 20% of competitors’ average sales price.
For example, if “aluminum water bottles” sell for around $20.00 on Amazon, try to keep your pricing in the range of $15 to $25.
Note: Aim to sell products between $20 and $50. Below $20, it’s hard to turn a profit after adjusting CoGS and advertising expenses. Above $50, converting shoppers becomes difficult due to their value-based scrutiny.
Knowing what to sell and how to source from a manufacturer is only half the battle. You still need to figure out how to deliver your product to customers.
Amazon offers two fulfillment methods:
With FBM, you handle shipping, returns, refunds, and customer service on your own or with third-party logistics assistance.
With FBA, you send your goods to Amazon warehouses. For an additional FBA fee, Amazon handles storage, packaging, shipping, customer service, returns, and refunds.
Amazon prioritizes FBA products over FBM in its search results. Choosing FBA when launching your first private label product is always preferable.
Learn more about FBA and FBM pros and cons in this detailed guide.
When shipping units to Amazon’s fulfillment centers, it's essential to prepare your inventory according to Amazon’s requirements. Non-compliance may result in Amazon returning or repackaging your products at your expense.
Each FNSKU (Fulfillment Network Stock Keeping Unit) used on a unit must be unique and correspond to only one product.
Each unit must have an exterior scannable barcode or label that is easily accessible. Barcode types include:
Any pre-existing scannable barcodes on the outside of shipping boxes must be removed, covered, or rendered unscannable to prevent incorrect barcode scanning during receiving.
Loose products or products without packaging must be in a single, secure package. Sets must be clearly labeled, “Sold as set,” “Ready to ship,” or “This is a set. Do not separate.”
Poly-bagged units must meet specific requirements, such as having a scannable barcode or label and a suffocation warning if the opening is larger than 5 inches.
Boxed units must have six sides and openings or a lid that won't easily open on its own. If the box can easily open, it must be secured with tape, glue, or staples. Perforated boxes must pass a 3-foot drop test or be placed in a poly bag with a suffocation warning.
Footwear must be packaged with no shoe material exposed, either in shoe boxes or poly bags with a suffocation warning. Highly scented products must be sealed or bagged to prevent scent absorption into other products.
Finally, it's time to launch your product on Amazon and start selling.
However, it's not as simple as creating a listing and waiting for sales. You need a product launch and promotion strategy to generate initial awareness and get traffic and conversions.
Here are some product promotion strategies:
Read more about product launches in this detailed Product Launch Checklist.
Launching a successful private-label product on Amazon requires effort, research, and planning. Ultimately, it's all about marketing – creating a brand and positioning it correctly with proper messaging and pricing.
But don’t worry! You don't have to do it alone.
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