Amazon isn’t just the biggest digital marketplace worldwide. It also gives multiple chances for entrepreneurs to earn a living online. Moving private-label goods on Amazon is one of the most common ways to make money on the platform. If you’re an individual seller who strives to get a name for your brand, selling private-label items is the way to go. Thus, this guide will walk you through some of the main aspects of this selling method and explain how you can make Amazon FBA private label work to your benefit in 2022.
What Is a Private Label on Amazon?
Private-label goods are products and services produced by one company to be branded and sold by another company. Selling private label on Amazon can be a lucrative business opportunity. Private-label products are manufactured by a third-party supplier but sold under the seller’s name. Private-label products on Amazon can include a wide range of categories, such as health and personal care, beauty, home and kitchen, electronics, and more.
Such products include Target’s Mainstays, Amazon’s Essentials, and Walmart’s Great Value brand.
Besides physical goods, services and intangibles, for instance, web domains, freelance work, or insurance products may also be private label products.
Advantages of Selling Private Label on Amazon
There’s a reason why many sellers decide to work with private label items on the platform. Private-label goods have many benefits on AMZ, including:
- Increased credibility. You may capitalize on in-demand items by selling goods and services under a private label while adding to your brand’s credibility.
- Better profit margins. White-label goods are generally less expensive, so you can achieve better margins.
- More market exposure. The AMZ marketplace values private-label goods and will give better exposure to such sellers on its platform.
- Possibility of customization. You may stand out from your competitors by customizing your goods depending on clients’ demands and needs.
Disadvantages of Selling Private Label on Amazon
- Moderate initial cost. Manufacturers or suppliers usually require large orders, so you will likely need at least $2,000 for stock, plus $600–$2,000 for additional business expenses.
- Moderate risks. If everything goes wrong, you will lose more than beer cash, but probably not the shirt off your back.
- An average number of competitors. You’ll need to work hard to make your brand stand out from others that operate with the same producer.
The private label is not for everyone. If it sounds like too much expense and risk, you are always free to consider other Amazon business models for alternatives.
What Are the Best Products to Sell as Private Label FBA?
Choosing the product, you will sell as a private label is just as – if not more – crucial than your strategy.
Because you cannot sell an item that is not in high demand.
The most suitable types of goods to sell as the private label are inexpensive to buy and produce, with the prospect of adding your label and reselling at a higher price.
Some of the widespread goods to private-label include:
- Phone cases and accessories
- Vaping pens
- Electronic chargers
How to Sell Private Label Products on Amazon in 2022?
Many online companies prefer to purchase popular goods already in high demand and resell them under the private label. However, to be done successfully, there’s a procedure you should follow when launching your brand that begins with adequate research.
Select your goods
When starting your private-label business, the first step is to analyze successful, in-demand goods to private label and move in the marketplace. Popular private label merchandise included household products, electronics, and groceries.
Choosing your first private label items should take time, so ensure to take the following into account:
- Lightweight and small products like cosmetics and supplements (saving your shipping and fulfillment costs).
- Uncomplicated and easy to sell products (no customer service issues, no batteries, and no paperwork).
- Avoid seasonal goods when you’re just starting out.
Source those products
There’re two different methods sellers can use when sourcing their products. You may go directly to a manufacturer or a supplier to secure a private-label item or order merchandise on platforms like AliExpress to avoid negotiating directly with a producer.
We suggest working directly with the manufacturer; however, you need to take some time to negotiate prices and compare supplies. The most efficient way to guarantee you invest in quality goods is by requesting a sample. Although not free, it might save you a lot of effort and help avoid bad reviews if the item isn’t up to snuff.
Create a product listing on Amazon
As soon as you decide upon your goods and source them, it’s time to research search terms for your product description and collect high-quality pictures to develop a winning listing. Take time to come up with the perfect title. If you are not sure where to start, check out your competitors and decide what you want to replicate and what you can improve.
Decide on your shipping process
Before making the first sale, you need to find a way to fulfill your orders. There are a few options you might opt for:
- Fulfill your products on your own.
- Find an outside third-party to package and deliver your products.
- Become an Amazon FBA merchant.
How to Price Amazon Private Label Products?
Most new merchants instinctually put a very low (or even the lowest) pricing point for their goods, but it is a big mistake. So instead, we recommend trying to make your products stand out in other ways.
With better packaging and design, marketing language in your product listings, tighter sales, or even killer client service provided after the sale, you can make sure your goods stand out (think ”purple cow”!).
Yet, as a rule of thumb, you must keep your pricing point within 20% of the competition’s average sales price.
For instance, if you discover that “water bottles” are selling for around $20.00 on Amazon, try not to price yours less than $26 or higher than $24.
How Much Will You Earn with Amazon FBA Private Label Products?
Goods within the top 100 in their niche produce thousands of bucks per day in profits. Items that rank in the top 500 typically bring in hundreds of bucks daily. So even an item in the top 2,000 to 3,000 can make you a steady additional income.
Different goods have different associated costs and price points, so the numbers above are estimates.
How Much Does It Cost to Launch Amazon Private Label Business?
Determining the initial investments for your potential private-label brand is complicated as it depends on your items. However, we can give you an example of how much you may spend on, let’s say, a simple grilling accessory.
Suppose you order 500 items at a per-unit cost of $3. In addition to your $1,500 initial inventory cost, you need to spend around $500 to come up with your logo, design your packaging, launch a website, register your AMZ professional account and cover other minor expenses. Thus, starting your first private-label company may cost you about $2,000.
Nevertheless, there are sellers who spend only a couple of hundred bucks getting their first brand off the ground and, otherwise, those who spend many thousands.
Try to find healthy profit margins and aim for a minimum of 50% per-item profit margin. Of course, it will depend on the products. However, every budget has its niche.
While there is a lot of info, setting up your own online business will take some additional research. So dig around, talk to other sellers and learn what else you should do to make your AMZ business a lucrative and successful endeavor.
Selling Private Label on Amazon: Final Thoughts
If you are looking for an easy and fun way to market your own branded products online, look no further than Amazon private label.
The biggest advice we can give to every new seller curious about this method is to fully trust the process.
A couple of years later, no matter what modifications to the platform pop up— whether it is Amazon changing its rules and guidelines or transforming market trends— the steps to success as a private-label seller mentioned above stay the same.
Moreover, you can save time and minimize risks using trusted FBA software such as SellerSonar for your business processes. This software will make product listing monitoring and optimization much easier. Besides, you will get more time to concentrate on selling your private label products on AMZ.