When you hear about selling on Amazon, one of the phrases you might hear a lot is Amazon private label. Amazon private label is basically taking a generic product that sells well on Amazon and beating the competition by branding the item with your own logo and packaging. The product is essentially the same, but since you brand the product you can charge a premium price for it. A popular example of this is Walmart’s Great Value brand. If you have shopped at Walmart before, you’ll notice that there’s a ton of “Great Value” products. Walmart decided to private label a lot of generic items like sugar, utensils, etc. and name it Great Value. Since people recognize the Great Value brand, they are more likely to purchase it in comparison to other unknown products. Today, the Great Value brand is worth more than $27 billion.
Why sell private label products on Amazon?
With so many ways to sell on Amazon like retail arbitrage and online arbitrage, why should you sell private label products?
Scale: Private label is the best business models for sellers that want to scale. Nearly 30% of sellers with over 7 figures in annual sales on Amazon use private label. When sellers do retail arbitrage and online arbitrage, their sales are directly correlated with their ability to find products and send them in. Private label allows sellers to send in hundreds or thousands of a single product directly from a manufacturer. Private label sellers don’t have to store items or have huge overhead for the most part. Instead of buying a lot of unrelated items, private sellers can build brands for several products and that alone can generate six or seven figures annually. For example, one Amazon seller linked here generates over 8 figures annually with just one employee.
Control: When sellers create a private label product, they can choose all of the product’s characteristics. This means packaging, logo, price, amount of products produced, etc will all be chosen by the seller. For retail and online arbitrage sellers, they have to conform to the market for all of these factors. Sellers can protect their products by registering it to Amazon brand registry. This prevents other people from hijacking their product or listing.
Branding: Amazon private label is one of the best ways to build a brand for a product online. When doing retail and online arbitrage, you are selling existing brands. In contrast, private label allows sellers to build their own brand for a product and scale it. Successful brands can bring in a ton of revenue for sellers every year or they can sell the product to another business in the future. By branding a product, you can position your product as a premium product and get premium profits.
Exclusivity: One of the primary challenges that sellers face on Amazon is competing against other sellers on price. When you do Amazon private label, you create and own your own listing. This means all the sales that the product generates go directly to you alone. You don’t have to worry about other sellers pricing your product low and damaging your brand. The only competition you’ll have is other competing private label products.
How does the process work for Amazon private label?
Research: The first step to doing Amazon private label is to do market research and find a niche or product that has low competition and is selling well. While doing research, you should take several factors into account that can determine the future profitability of your product. You should aim for products that are lightweight, generic and have low best sellers rank (BSR) on Amazon. By following these general guidelines, you’ll ensure that your product will be easy to ship, low competition and it can generate consistent sales. These are just broad tips that most private label sellers take into account before choosing a product. You’ll have to do more research on the specific niche of your product, do competitor research and make the most calculated decision before investing in a product. Some additional tips for product research include choosing a product that is Amazon PPC eligible, average sales price between $20-$70, no major name brands in niche, less than 300-400 reviews on top three selling products, opportunity to add value and premium price.
Finding a supplier: Finding a quality supplier is one of the most important parts of having a successful private label product. There are many good suppliers located in the U.S., but their prices will not allow you to be profitable. The best option for most sellers is to find a manufacturer internationally, specifically in China. You have already seen a lot of “Made in China” labels on a lot of the products you use daily. It’s best to find a supplier in China because they can produce goods at extremely low rates.
The best way to find suppliers is on Alibaba.com. You can try to find suppliers on other sites, but there’s a very good chance you can get scammed. Alibaba.com is the best online directory to find suppliers in China because it verifies quality suppliers that American businesses have already worked with. It takes a lot of the guesswork out of finding a real supplier you can trust. Alibaba provides sellers with a ton of options for suppliers to choose from. When you search on the site, it gives you a lot of filters so you can weed out suppliers that don’t meet your standards. Once you do that, you can send several suppliers messages that you’re interested in ordering from them.
For communication, you can talk directly on the Alibaba site. Sometimes, there may be a communication barrier between you and certain suppliers; it’s always best to choose the supplier who has the best communication with you. Most suppliers have english-speaking employees who handle communication. When talking with suppliers, ask them for as much detail on the product. Ask them the logistics like payment details, if they send samples to you, their refund policy and more. The more you can clarify early on, the less headaches you’ll have to endure later on.
This process can take several weeks to get all of the details figured out, but things will get much easier once you find a good supplier. Once you get all of the heavy lifting done, you just have to reorder with your supplier. All you will have to do later is order a new batch of products and the supplier will send it to an Amazon warehouse. This will allow you to get consistent sales and profits for your business and it will set you up to launch a second private label product.
Brand your private label product: The branding for your product happens after you’ve decided on what product you’d like to sell. While prospecting for several suppliers, you can start designing your logo and packaging for your product. You can design the logo and packaging on your own or hire a freelancer/agency to do it. Freelance designers are generally much cheaper and you can find them on UpWork or Fiverr. It doesn’t take too long to get a logo and choose the packaging for your product. Once this is done, you can talk to your potential suppliers and see if they can make sure they put your logo and packaging on the product.
After your branding is done, you can add it to Amazon’s Brand Registry. This prevents other people from hijacking your product and selling it as their own.
Create and optimize Amazon listing: Now that you have done a lot of the dirty work for your product, you have to make sure you have the best Amazon listing possible to maximize sales. None of the hard work you put in by creating logos, talking to suppliers, etc. will mean anything if you make a poor quality listing. Amazon customers do not see anything, but the listing of your product. By creating a high-quality listing, you can literally earn thousands of extra dollars per month. Optimizing your Amazon listing includes:
Title: Along with your first image, the title will be one of the first things customers will see when they search for your product. It’s important that your title is descriptive and tells customers exactly what they are purchasing. It should be less than 250 characters and should include relevant information like your brand name, size, quantity, etc. This will allow customers to see if they want to click on your product page and read more.
Images: Images are one of the most important parts of your private label listing. Many private label sellers get their images professionally done by photographers and upload it to Amazon. This is because customers will use the images as the main factor in their buying decisions. Investing a few hundred dollars in professional photos can result in thousands of recurring revenue dollars. You should have several photos of your product and if you’re able to add a video, that’s even better.
Keywords: Keywords are crucial for helping customers find your product. Without the right keywords in your title and descriptions, customers may not even see your product. Start with core keywords that explain what your product is and you can add other descriptive keywords. For example, if you’re selling bluetooth headphones, make sure that phrase is in the title and description. Other keywords to include can be explaining features (ex. Over-ear), benefits (noise-cancelling) and other related terms.
Reviews: Reviews are important for optimizing your listing because they can generate more organic traffic to your product page. Without reviews, customers are extremely unlikely to buy products. Many sellers do a variety of things to boost reviews like campaigns, connecting on social media with their core customers and more. By doing marketing for their product, they can get the ball rolling and get their first set of reviews. Some sellers increase their reviews with customers by requesting them to leave a review after purchase. All of these help establish social proof for your product and this helps establish your product’s brand.
What do you need to get started with Amazon private label?
Money: In all of the other previous blogs, I’ve mentioned you can get started selling retail arbitrage and online arbitrage on Amazon with just a few hundred dollars. Amazon private label has a much higher barrier to entry. You will likely need several thousand dollars to get started just on one product alone. The truth is if you don’t put in enough work with product research, optimizing your listing, etc, your product can fail. I would honestly recommend at least $5,000-10,000, this allows you to have some wiggle room in case anything unexpected happens. The good thing is if you do it right you can just keep reusing the profits to build your business and launch your second product.
Patience and time: If you’re looking to just start making sales on Amazon immediately, private label is not a good business strategy for you. Amazon private label takes both a lot of time and capital to get started and if you don’t have patience, you will certainly fail. The process of communicating with suppliers, getting samples, shipping products to Amazon and other similar tasks can take several months. Many sellers don’t really understand what this means. This means that for several months you’ll have basically no sales unless you’re doing other selling on Amazon. Your main priority will be making sure everything is going according to plan until your products are ready to sell on Amazon. It can be very difficult if this is your first product to just wait for things to happen, but you can pass the time by doing product research for another product, work on more branding or selling other products. You have to be patient and trust the process and you will see the results for yourself.
Guidance/community: To do private label, I would recommend taking a course, joining a community and connecting with other sellers. If you were doing retail arbitrage or online arbitrage, you honestly don’t need that much guidance because it’s straightforward. In contrast, private label has a lot more risk.
Can you do private label on your own without any help? Yes. Will you likely fall into the same traps as many other sellers before you? Also yes. Finding a community on Facebook or YouTube or taking a course dramatically increases your chances of success. The content is obviously helpful, but the communities of sellers are often the best parts. If you can get access to a group of like-minded and hard working sellers, you’ll have your questions answered and you’ll have support when things go wrong. Make sure you vet any community or any course before buying or signing up.
How can you start your Amazon private label business today?
Now that you have an idea of the road ahead of you, let’s cover what you need to do today to start making progress.
Seller application: The first step to getting your Amazon private label business off the ground is to get approved to sell on Amazon. The Amazon seller application is pretty rigorous so you need to ensure you do it correctly prior to submitting the application.
Some of the requirements for the seller application include:
- Country eligibility: Amazon sells in many countries, but not all. You need to make sure you’re from one of the eligible countries to sell on Amazon. You can check for the eligible countries here.
- Primary contact details: Your primary contact details include your phone number, name, email address, physical address etc. You have to make sure these are entered correctly because they are very hard to change later on. Amazon will often send a mail letter to your home address so make sure the right one is listed in your application.
- Banking and tax info: You will need to provide your routing and account number for your bank during your seller application. Additionally, there’s a tax interview at the end of the application where you will need to provide any tax documents relevant to you and your business.
- Credit card: It’s important to put your credit card and not a debit card in your application. Amazon will reject your application until you provide it.
This whole process can take a few weeks up to a month. Getting this right the first time will save you significant time and headaches. Make sure you provide everything to Amazon exactly how they request it.
Once you are approved to sell on Amazon, it’s time to handle the first order of business: finding a private label product. You can use paid tools like Jungle Scout to find potential products. They generally offer a free trial for a given period, so you can take advantage of this. Product research should be done rigorously because you are investing thousands of dollars in a product. You need to make sure each criteria for a good product is met prior to making your first order.
After you’ve done the rigorous product research work, it’s time to find your supplier. It’s best to go to Alibaba.com because they have some of the best private label suppliers in the world. Use the criteria on Alibaba.com to weed out suppliers that don’t meet your standards. Once you’ve done this, you should have some suppliers to choose from for your product. Reach out to them and start negotiating on products and pricing. Once you’ve chosen a few suppliers, you can start requesting them to send samples.
The suppliers you have narrowed down should have sent you samples and you need to inspect them thoroughly. When you get the product, you’ll get a good idea if it’s similar to what you want to list. At this point, you can ask the supplier to make adjustments to the product and add your branding and logo. This can take some time, but you should request a sample of the final version of the product before you send it in to Amazon.
Do listing optimization
You can start working on your listing at any point. You don’t need to wait for samples to arrive. Optimizing your listing by gathering the right photos, copywriting, etc., will take time. You should get started as early as possible, so you can have it done by the time your products are good to go. The Amazon customer can only see the listing, they don’t know or care how much work you put into finding suppliers and products. Making sure you have the right titles, images and photos will be crucial to your sales. Once you’ve finalized your listing, it’s ready to go live and make sales.
Order first invoice
You can now order your first invoice from your supplier. It’s good to order a good amount (a few hundred), so that you won’t run out of inventory quickly. The supplier can ship directly to Amazon and Amazon will handle all of the customer service. Now you can reap the rewards of your efforts. You can try to maximize sales by running ads or choose to make sales organically. Once your first order runs out, you can make a second one and so on. Make sure to keep all invoices because these will come in handy in the future in case Amazon requests them. Also, you can start exploring how to expand your brand by registering it in Amazon Brand Registry. To learn more about Amazon Brand Registry, check out this blog.
That covers exactly how you can go from a brand new seller to launching your first product. Once you have this process down, you can launch a second, third, fourth product, etc. and expand your catalog. The success of your private label business will depend on how well you do your product research, your listing and how much you invest in your products. The better you do these aspects of your business, the more success you will likely have. To learn more about private label, check out this free video guide.