Why selling Private label on Amazon is a profitable business

Selling on Amazon, when done correctly, can turn into quite a lucrative venture. But many sellers miss out on some important concepts that could boost their sales number significantly, settling for simply making ends meet or pulling in a marginal profit. One of the biggest missed opportunities has to do with selling private label products through the Amazon platform.

What Are Amazon Private Label Products

Sales and marketing of products is a cocktail that is one part of consumer necessity, one part market demand, and one part brand name. Branding is one of the most pivotal attributes of any product being advertised and offered for sale. That is why we see brand names everywhere. Brand names help to distinguish a product from the rest that is similar, setting it apart, most times only by name alone.

If you think about it, most products sold to cater to a specific niche or to fill a specific need, are by and large the same, or at least similar enough to be interchangeable. But you do not walk into an electronics store, and see 30 identical TVs mounted on walls with no insignia or brand label associated with them. If there were no brand names, who would purchase them? It is unlikely that these products would even get a second glance, as all eyes turn to the brands that carry recognizable names….or any names at all.

You may be wondering how this relates to Amazon sellers. Well, Amazon, much like a brick-and-mortar has clientele who follow the same psychological shopper queues as in-person shoppers in that they naturally gravitate to a product with an associated brand. What Amazon sellers often fail to recognize is that the appeal to brands does not extend to solely recognized brands, but to any brand names in general. That is to say, sellers could purchase brandless, generic (white label) products, then brand them, market, and sell them as their own.

One of the biggest assumptions made by those who make a living by selling products on Amazon is that they will only stand a chance at good sales by selling products belonging to existing brands, and while that could also be a lucrative endeavor, that is not the only way to pull in some healthy profits. Existing brands have a lot of competition to consider, and with so many sellers on the Amazon marketplace of branded products, there are too many but privately labeling white label products, the competition is reduced as consumers look for alternatives to meet their needs, and avoid big named brands altogether.

Private Label Selling Advantages

Generic products typically command lower price points and are narrow to within a particular niche, but branded products command a higher asking price by the mere virtue of being tied to a particular brand, even if it is not one that is well known. Creating a private label and attaching it to an otherwise generic product immediately asserts a feeling of legitimacy and reassurance with the consumers, raising the brand’s credibility.

To boost the credibility of a product is actually a very simple process. Your Amazon store or website name can be altered to match the brand name tied to the products you sell, and marketing your products under a brand name, pushes the buyers to subconsciously trust your brand and feel confident in spending their money on the products that you are specifically offering to them.

The other, most obvious advantage of branding your products is that if the buyer is happy with the purchase, they are more inclined to associate the positive experience to your particular brand, and therefore are a lot more likely to make future purchases from you. When they need another product that you may be offering, they are more likely than not going to consider your brand as their preferred purchase.

Selling Private Label Products On Amazon

While you certainly can manufacture your own products and sell them on Amazon, if the business was to take off, you would need staff to assist in the production, not to mention a facility where large scale production would take place. Alternatively, you can sell products offered by existing brands, if you are permitted to do so. But one of the most popular and lucrative (when done right) methods to run an Amazon sales business is through private label sales. While it might be one of the better methods, it is far from the easiest one. There is a multi-step process, with several important considerations and points of preparation to consider when setting up your private label online business.

Step 1: Research

A mistake that many Amazon sellers make is that they look for what they want to sell rather than researching what segment of the market the demand is in. Before picking a product you are into it is important to thoroughly research the market and make an informed determination about which products are best to sell in this manner. Some criteria to keep in mind include selecting a product based on it being sourceable, in-demand, without heavy competition, and are easy to ship. These ideas can be acquired by checking out Amazon’s Best Sellers listing, as well as research of other e-commerce mediums and social media platforms such as Reddit, Alibaba, Flippa, Jungle Scout, eBay, and more.

Step 2: Find Suppliers

Once the idea for a product is carefully considered and decided upon, it is time to find a partnering manufacturer who will produce the products for your selling business with a generic label. Online marketplaces like IndiaMart and Alibaba have compiled a massive list of global manufacturers for you to consider. They can be sorted by price, materials, and minimum order requirements in order to help better inform your choice.

Alternatively, you can run a simple Google search that will yield you results on private label suppliers for your particular niche. You can also look into wholesale markets for ideas on a large collection of white label product categories.

Step 3: Choose And Design

Once you have chosen your manufacturing supplier, you will need to request samples of their products, as well as quotes for how much it would cost you upfront to purchase a set amount of products. When you order the products it is important that you feel they meet your standards for quality. After all, it’s your brand name one the line if they are not quality products.

Then it is time to consider your label. Designing a label is an important part of the process as this will be the symbol or insignia that is associated specifically with your brand. Beyond that, depending on the product you aim to sell, you will need to figure out if a simple label on your package will suffice, or an entire branded packaging will be needed for your product. Substituting the former for the latter is also not a good plan. This is something that is important to consider for a few reasons:

  • Poor packaging can result in your products being damaged
  • Packages that are too big for the product is a waste of money and materials
  • Sites outside of Amazon that people rely on honest opinions about brands sold on Amazon could sour your reputation by deeming your packaging a failure.
  • Your ratings could be impacted in a negative way if the packaging is inadequate or improper, and it can affect your relationship with Amazon who puts their name on the line to help you sell and reach consumers.

If designing your packaging and logo is not something you can professionally do on your own, it is best to hire an expert for the task. After all, your marketing and sales efforts will depend on quality work, making this investment worthwhile in the long run.

Step 4: Quality Assurance, Product Testing, Audience

If you wish to have business longevity with your Amazon sales, assuring the quality of your brand’s products is imperative. It will not take consumers long to lash out at poorly made products, and while you might be getting a great price from the manufacturer, you may not make back the money on product development costs if all of the reviews tank your product’s chances of making sales.

To assure quality, your products will need to be inspected after they come in from a manufacturer, and no, it cannot be by you. There would be a bit of a conflict of interest if the party profiting from the sale claimed the product was great when it really was not. But your personal involvement is required, especially when just starting on the platform. You should want your items to be high quality so you should actively test them, but you cannot watch a manufacturer make every unit, and it’s not sustainable to travel to the location to observe its make up. For that reason, you can invest in your own representative third-party inspector who is more local to the production plant and will do the work for you.

Additionally, quality audits are an important piece of the inspection process, as it reveals the consistency of production, as well as training on the manufacturing of your product, and the turnover rate of the staff working on it. In the same breath, it is important to have a social responsibility audit. While you want to find a quality supplier that produces a good product for costs that help you keep your business sustained, it cannot be at the expense or suffering of others. Products manufactured in a facility that is unsafe for any reason or having products made by workers forced to do so, oftentimes children, is against any type of social etiquette. Once this information gets out, and it more than likely will, your selling business and sustainability may go down in flames.

Step 5: Fulfilment Logistics

Next, you will need to decide if your orders will be fulfilled by Amazon’s FBA program, or if you will be handling the fulfillment yourself. There is also the option of using fulfillment centers. Make sure you consider the cost of any of these options as there will be one of varying degrees associated with all of them. Shipping, packing, picking the product, and warehouse storage, as well as the expediency of orders getting out the door, are all crucial aspects to consider. This is not an aspect to dismiss either, as your shipping and fulfillment rates will have a direct impact on your Amazon sales ratings. So be sure that you have an efficient supply chain, and your fulfillment choice is ready to handle the job.

Step 6: Sell Your Product

Don’t rely solely on Amazon to have your product discovered. You need to promote it to put it in front of the eyes of prospective buyers. Paid Amazon ads and social media promotions are a good start. On top of that, setting up a website to specifically market your product, and linking to the Amazon purchases is another good strategy. Make sure your product description leverages the most effective keywords and that you are using analytics to set competitive prices in order to optimize the number of interested buyers who will consider your private label product as their choice for a purchase.