Planning on entering online business using the Amazon platform? Well, do you know, you can sell products using your own Amazon private label.
Amazon was founded back in 1996 and since then, it has changed the way we conduct businesses. The solution allows a user to create an account and sell their products in the rest of the world. The organization takes all the responsibility that includes packing the product and shipping products to the customer.
Amazon has introduced “Amazon private label” that allows FBA sellers to sell existing products using their own label, brand, logo. There are some steps that make it possible for a seller to sell the products and encourage their private label brands.
The guide we are presenting you includes all essential details about Amazon’s private label and how you can utilize the service to create your own brand. With this guide, you will be able to create your own brand and compete with other sellers out there.
The pioneer in online retail marketing owns over 100 different private label brands that are operating in a wide range of markets like electronics, food/beverages, and the auto sector. But, the question is what is Amazon Private Label and how it is changing the world.
1. Brief history of Amazon’s private-label brands
In 2019, Amazon introduced its first domain called Amazonbasics that specialized in selling household goods. But in 2017, the company realized the potential of private labeling and focused on taking this to a whole level.
Some of the Amazon Private label brands are very popular and that includes Kindle and Echo. But, there are plenty of other brands that are dominating the market. Some of which are North Eleven, Mama Bear, and Belly Snacks. The company has added almost 22 new brands, making a total of 30 brands in 2018 .
2. When do you need to do Amazon Private Label?
If you are interested in starting your own online business, Amazon is the perfect solution for you. And the best way to do that is to sell your private label products using the Fulfilment by Amazon (FBA) program.
But before Amazon’s private label, you should learn about how to sell unbranded items using the FBA. After getting through that process, and learning about it, you will have an idea about how to change white label products into private ones and selling them under your own name.
3. Why create an Amazon private label product?
The private label brand’s strategy is an explosive weapon for sellers who make their living using Amazon. The reason for that is private label products are relatively cheap than the brands and due to that, the sales are spiked among the market.
Doing business in today’s market is relatively difficult due to the competition offered by famous brands. By sourcing a white label product and selling it under your name can help you in avoiding that competition.
There are other advantages along with this one that will help you in scaling the business.
Customers tend to avoid items that are not branded and that can lead to lower profit margins. And that is why customers tend to move towards products offered by brands. By creating a private label brand, you can divert the customers to your products and can boom the profits.
Your brand along with the name of Amazon will create a convincing buying pitch that will attract customers. Plus, the move will help you in gaining the trust of the customer, raising your credibility in the simplest way.
Yes, an Amazon private label brand can help you in gaining the trust of the customer. But, it can also lead to more exposure. When your customer buys a product that contains the same name, logo, and color, he/she will surely track you down when buying an item in the future.
Chapter 2: Differences between Private Label vs. Retail Arbitrage
Retail arbitrage is a simple algorithm where you buy products from a retail store like Marshalls or TJ Maxx, and sell those products to some else for higher profits, making a good amount of profits.
Most retail stores sell products at a lower price and that can result in high reselling value. Plus, you can sell the products from your home. The reason this model works perfectly is that not a lot of customers have access to retail stores and are willing to pay full price at Amazon.
On the other hand, Amazon’s private label is selling items that are under your own brand name.
This model works by first you have to buy products in bulk from China. And then use your own branding (provided manufacturers are allowing you to label your brand). And then use Amazon FBA to sell the private label products in the rest of the market.
1. Pros and Cons Amazon Private Label
People who sell their products using Amazon have a lot of options available and one of them is Amazon Private Label, where you sell the products using your own branding. This method has amazing advantages and some of them are.
Sellers can keep their prices lower and that can attract more customers. The formula for lowering the cost is you avoiding the cost of branded products, allowing you to keep the prices lower.
Another advantage of selling private label products is you can offer multiple products under the same name. And sellers can also add different qualities with varying prices.
With this method, you have control over your profit margins. Sellers can negotiate with the suppliers and can buy at any price they like because they can select any supplier that is offering the product at an affordable cost.
The main advantage here is you can adapt to the latest trends. If you think that a different product is getting more attention from customers, you can quickly list the product and can gain the benefit.
With the advantages, there are some disadvantages that you should go through when talking about Amazon’s private label.
Sellers may have a harder time building customer loyalty. Because in the front foot, Amazon is selling the product and you customers will think they are buying from Amazon rather than you.
Sellers are depending on their suppliers to make a high-quality product. Any defect will make a bad impression on you even though you had no control in the manufacturing stage.
Different types of costs like branding, ordering in bulk, and storage costs are related to this business. And a lot of online business experience is needed for this.
2. Why Retail Arbitrage won’t help to scale the business
The issue with retail arbitrage is that you are depending on Amazon and you will need to find items to be listed on the platform. This means that retail arbitrage will not help in scaling the business since you will speed most of the time in bargaining, adding listings, and preparing items for shipment.
Another reason that this won’t be a successful move is according to new Amazon policies, you cannot sell a brand without express approval from the manufacture. For example, Amazon recently banned products from Lego and if you have bought $1000 worth of inventory, you are now stuck with it.
Chapter 3: What are Private Label Products?
A private label product is the one that sellers source from overseas manufacturers, and then rebrand them using their own logo and color scheme. Then uses techniques to advertise the product and sell it to the customer. Here, the seller has complete control over the products offered.
1. How can you tell if a product in private label
Now that we have established what private label products are. Let’s talk about how you can tell whether an item is a private label or not.
Let’s say you are buying the same product offered by different sellers. You will see different brands offering the same specs, features, but the logo and company name will differ. That item there is a private label and the chances are all of the sellers have the same manufacturers.
2. How do private label brands work
Now, let’s talk about how private label brands work and what are the processes that a product goes through before reaching the customer.
-Sourcing the product
After analyzing the market, sellers source the product. Most of the time sellers use the services of sourcing agents like Ejet.com who will help in getting the product from the manufacturer to the warehouse.
-Design the branding and logo
For a seller to be labeled as a private label, it is important to place a trademark logo. After the product has been sourced, sellers apply their own logo and branding and move to the next step.
Then after getting the branding done, sellers go through the step of creating brand awareness and advertisement. Different solutions like Facebook ads, Amazon ads, and Google ads are available at the disposal.
3. What is an example of private label products
Now that you have designed your logo and branding, the question is where are you going to put it? Well, water bottle is of the examples that you can use under Amazon Private Label business.
Water bottles are getting a lot of attention because customers prefer something that is more environmentally friendly. An example is brands like a hydro flask that are offering reusable features, making them increasing the market cap.
Chapter 4: How to Find and Sell Private Label Products?
If you are interested in creating your own online selling business, Amazon FBA along with private labeling is the best option. And the best part is it is very easy to do. Here is how you can start.
1. Brainstorm Product Ideas
The first and most crucial step is getting the ideas for your new business. The simplest method to brainstorm an idea is to visit the market and analyze in what type of categories does the market is lacking and what the customers are demanding.
Visit sellers store, IndieGoGo and you can also use Facebook to find a solution.
2. Consider Specific Product Attributes
These are some of the parameters that you should consider while looking for a product to sell on Amazon.
-Small and Lightweight
The product that you are going to offer should contain a standard size by the standard we mean it should fix in a box of 8 11/16″ x 5 7/16″ x 1 3/4″. Plus, it should contain a weight of 1 or 2 pounds.
-Seasonal or Non-seasonal
This is one of the important parts here. Avoid products like valentine’s gifts, Christmas lights, or winter clothing because these items are only sold on specific occasions and seasons.
Items that lie under food and beverages are a red flag because there is a lot of paper for this type of category. Similarly, avoid products like chemicals and pharmaceutical items.
Items are phones, LEDs, and other electronic products that are good, but they can make you pull your hair out because of customer service issues. The same is the case with fashion items as you have offer a list of different sizes and colors.
3. Analyze the competition
Once you have decided on an item, do a little research on your competitors. Look through their products and what they are offering aside from the product. Check their selling price, requirements, and reviews to get an idea.
4. Conduct Market Research
After you have selected few amazing products that you will sell under Amazon Private Label, you will need to do a little research. This research is linked to whether selling it will be worth it or not. Follow these steps
Open Amazon and search for each product one by one
Use extensions like Jungle Scout to review the product
Verify the product data by looking at the sales, reviews, and many more.
5. Create a Feasibility Report
After that, create a feasibility report. The report is only meant to give an idea about whether the action is beneficial for the business or not. This plan consists of the financial structure, analysis report, and logistics needed for the product.
6. Find the right suppliers and manufacturers
Now that you have a perfect product idea and have conducted an absolute search in the market, it is time to source the product from the manufacturer. But, first, you have to find the manufacturer.
The amazing thing is Alibaba has got you covered with that. The reason for selecting Alibaba is that it is easy to use and safe. Use these steps to find the manufacturer.
Create an account on Alibaba.com.
Type the keyword related to the product you are going to the source, in Alibaba’s search bar.
When found, send a message to the supplier to get more information about the items (samples, MOQs, delivery location, payment methods).
When satisfied, order the product.
Note: Repeat the third step with different manufacturers.
7. Create stunning logos and packaging
For a private label, you have to create your logo and branding. And after you have sourced the products, it is that time.
Hire a graphic designer to design the logo. Or you can also visit free logo maker sites to create a one on your own.
Chapter 5: Cost of doing Amazon Private Label
If you are getting into Amazon private label business, you need to know what you are getting into. And the important factor is how much it costs to ship the product and deliver it to the customer. These are some of the cost sections that you should consider.
1. Unavoidable costs of doing Amazon Private Label
The first section refers to the cost that you cannot avoid whatsoever. These are the costs that you need to pay no matter what.
-Product cost: This is the cost for a single product. It is recommended to go for a low priced product. For example, if an item is priced at $10 on Amazon, you should be paying a max of $2 to the manufacturer for that item.
-Shipping cost: The shipping cost is calculated using the weight of a single unit. And it is also dependent on shipping methods (by air or by sea). On average it is around $0.05 to $2.00 per unit.
-Customs: For this business, you have to pay a specific amount to customs in order to clear the product.
2. Essential costs of doing Amazon Private Label
-Product samples: Sellers who are getting into the business need to check the samples before ordering the product. And most of the time they have to pay in advance for these samples to the supplier.
-List optimization service: You can do wonders in this business by properly listing and optimizing products along with adding a detailed description. Plus the use of tools like Keyword inspector ($20/month) can also help in this.
3. Optional costs of doing Amazon Private Label
Under optional cost, only one factor lies and that is inspection services. On your first order, either you have to inspect the products or hire an inspection agency.
The agency will go through the order quantity, defective items, branding, and quality of the material. Agencies take around $100-$300 for this kind of work.
4. Amazon Monthly fee
Amazon also charges its own fee and is divided into two categories.
-Amazon sellers account: When you register with Amazon, you have an option to select the account type (individual or Professional).
It is recommended to go with that professional account because with that, you can run the ads. The pro account is charged at $39.99/month.
-Amazon storage fee: Amazon charges an amount for storing your product in its fulfillment centers. This is a monthly fee calculated using different parameters.
5. Barcode purchase
In order to start your own Amazon private label business, you need to buy a UPC barcode from a UPC seller or GS1. Use the websites like Speedy Barcodes (charged at $10 per barcode) to buy the barcode.
6. Product research tools
If you want to search for a product that will give you a lot of profit, you need some product research tools. These tools will give you an idea and statistics about the product. Tools are used for this purpose are
Jungle Scout ($39 a month)
Viral launch ($59 a month)
7. Photography cost
If you are a professional photographer, then you can avoid this cost. If not, then it is recommended to hire a photographer.
The reason for that is to save cost, Amazon sellers try to take pictures of products on their own and that becomes sluggish, resulting in a decline in sales. Go for freelance photographers and they will charge you $15-$20 per picture.
8. Logo and Packaging design costs
You can leave this cost to the manufacturer. But, if you are looking for selling a product in the longer run, then you can hire a designer to create the branding and logo for you.
This can cost you around $30-$300 depending on the complexity of the logo.
Chapter 6: How to price Amazon Private Label products on Amazon
There are a number of factors here that contribute to pricing the Amazon private label products.
1. Find the market price for your products
When doing the research, look through prices offered by other sellers in the same category. This will give you an idea of how to set the price of your product that you are going to list.
2. Include all costs
Before setting a confirmed price, make sure you are adding all costs that are relevant to the item. For example, these prices include the product price, profit margin, shipping cost, storage fees, customs, freight charges, and other items. (Read the section above that contains all the prices that put an effect on the business)
3. Consider differentiating your product
One of the ways to gain more customers is by differentiating your products. And by that we mean, adding different sizes, color schemes, or listing the same product under a different name. Sellers can also change the product packaging or adding a simple feature.
4. Setting your initial price below the market price
This is not as healthy as it seems. But, it can affect a lot in the Amazon business. Check your competitor’s prices and then decide a price that won’t affect your sales margin but is lowered compared to the price offered by other sellers.
5. Know your competition
The last factor is to know your competitor. Go through the listings that are placed by your competitor. Check what are they offering is there any sale item or are they selling combo packs at that price.
Then, create a similar strategy and quote your price.
Chapter 7: How your Private Label Brand can compete with other brands
Now that you have launched your product under your own name and branding, the thing is how your private label brand can compete with other brands. Well, this is how you can do that.
1. Build great products
When launching a product, check whether it is going to help your customer or not. The key thing to being a seller is this one. Check how it will help. Once you have given a solution to that problem, your customers will start buying the product.
2. Have a strong new product pipeline
A product pipeline starts with brainstorming the idea and then giving that idea a life. The same is the case with this. After you have added a product, consider going for a new product that will also help the customers.
Then create a strong pipeline that includes steps from doing the market research to ordering the product, adding the label, and delivering it to the customer. Make sure you have a good hold on these steps.
3. Make your brand worth more
To complete with this market, the first thing is to understand the customer. Look for what your customers are demanding. Then give them a solution under your own name (logo). Try to put promotional offers, and keep advertising. And of course, maintain the quality and trust.
4. Drive demand for your brand
To do that, you can feature the customer reviews. By doing so, customers will feel that you are giving importance to them. Other than that, if you are launching a new product, offers customers a deal to get the item at a discounted price.
Or if there is a repeated customer, create a club for them that will offer additional benefits of buying from you.
5. Provide extra value to your retail partners
Don’t forget to consider your manufacturers/ retail partners. Give them a sense of trust when doing business. Provide them the ease of doing business with you. It can be by handling the packaging or by giving them a cut.
Chapter 8: 10 Examples of Private Label Products to Sell in 2021
The huge demand for cosmetics has also spiked the use of essential oils. These oils are not only useful in food items but are also popular in therapy and massages.
One of the largest profitable categories on the private label is partying games or also known as board games. Games like “Card against humanity” have been rising among individuals, covering almost $9.6 billion in 2019.
Yes, Apple and Samsung are in competition with each other. But, their accessories are also making the way into the market. Accessories like pop sockets, chargers, and covers will have an estimated value of $107 billion by 2022.
Putting a brand on phone accessories is not that hard so you should consider this one.
Again, customers are looking for a way to make a change in the environment, hence making them boycott plastic bags. This has increased the demand for reusable bags made of bamboo and fiber. This market is expected to grow 4.66% annually. It can make you a lot of profits.
Cigarette smoking is declined by 15% in the United States and that is all because people want to quit smoking because of health issues. So, E-cigarettes are replacing this and that has a lot of growth rate. From 2015-2016, the rate is been inclined to 22.6%.
Today’s world is all about technology. And everyone uses a backpack to carry these technologies. So, to help with charging the electronics, smart backpacks have risen. This category spiked to 4.89% from 2017 to 2021.
Led lights are considered more economical than traditional lights and due to their energy-saving features; many people are incorporating them in their houses. Try to add this one of the lists when searching for Amazon Private label products.
Due to COVID-19, a lot of individuals have realized that health is important, so many of them are trying to adapt to activities like Yoga, resulting in a boost in Yoga accessories.
Tracking devices are also getting a lot of attention due to the rise in sales of vehicles. This market is estimated to reach $2.98 by 2023.
People are inspired by nature and are trying to create small gardens in their homes. And terrariums are the perfect way to do that. According to the National Gardening Report, about 37% of individuals grow plants indoors. That can be a source of huge profit.
Chapter 9: FAQs about Amazon private label
1. How do you make a private label on Amazon?
There are the steps required for creating a private label on Amazon
Get the product idea
Search for the product using Alibaba
Order the product from the supplier
Rebrand the product by adding your own name and logo
Create an account on Amazon
List the product on Amazon
Sell the product to the customer
2. Is it very costly to customize a product from China?
China is known for its cheap products. And that is all because of the cost of manufacturing and customization of products. The average manufacturer of water bottles will take around 2-3 dollars more for creating the bottle under your own name.
3. What is Amazon White Label?
A white label is a product that is made by another company and sold by another one. White label products are the ones that are purchased by a company without any branding.
4. How many Private Label brands does Amazon Have?
Amazon currently has 147 private label brands that are selling almost 72,000 products. These products lie under categories like electronics, baby care products, furniture, and household items.
If you are ready to start your own Amazon private label brand, gather up the motivation and start working on this. It is viable, but keep in mind, the start is always the hardest. Then, you will get to know the business.
No matter what route you take, just make sure that you have all the important weapons when jumping in this battle. That is because there is a lot of competition here.
To help you with that, we have created this guide on Amazon Private Label, so you can get a heads-up. In the end, we would like to support you by adding that patience is the key to everything.