If you’re looking for a way to sell products online with minimal overhead, becoming an Amazon FBA private label seller could be the way to go. Amazon FBA private label gives you access to a huge audience of potential customers and allows you to sell popular products under your own branding, so that you can build up a loyal customer base. In this guide, we’ll explore the private label business model and how Amazon FBA helps you sell products online with minimal risk and outlay.
- Private label selling involves purchasing a base product from a manufacturer and making it your own with logos, packaging, and a unique customer experience.
- As a private label seller, you reap numerous advantages, such as increased profit margins, building brand credibility, and having complete control over the brand you present to shoppers.
- Getting started with Amazon FBA private label involves similar steps as building your own retail business on Amazon, including designing your brand, setting your price, and launching your product.
What is Amazon FBA private label?
Amazon FBA private label combines the concept of private label products with Amazon’s convenient “Fulfilled by Amazon” fulfillment process. This helps reduce two of the biggest challenges online retailers are faced with:
- Finding products to sell,
- Managing stock and deliveries.
What are considered Amazon private label products?
Private label products are made by one company and then branded and sold by others. A manufacturer may make identical products for several different clients. Their clients then print their brand and logo on the items, and make other small tweaks. Then the company will sell the product under their own brand.
Private labeling is not a new practice. Large supermarkets have been using private labeling for many years. You may have noticed how many grocers have own-branded products that look or taste a lot like premium products, but are in different packaging. Those products are often made in the same factories as the premium products, but undergo private labeling.
22 Rules To Increase Amazon Sales Up To 450%
Find out the proven framework we used to increase Amazon sales by 450%.
Why sell Amazon FBA private label?
Selling these products on Amazon offers several potential benefits. Primarily, it’s relatively easy to get sales and fulfill those orders as an FBA seller.
Increase profit margins
When you sell private label products, you work directly with the manufacturer. This means the price you get your products for is much lower than it would be if you were buying a unique product and reselling it. Even if working with a wholesaler, you have to pay a premium to them because they have their own overheads to deal with.
By going directly to the manufacturer, you avoid a markup. You can buy inventory for the lowest possible cost, potentially even negotiating bulk purchase discounts with them.
Have your own brand
Instead of selling another company’s brand and being at the mercy of their reputation and actions, you can simply build your own brand. You have full control over the brand image, the type of products you’re selling, and the price you sell them for.
You’ll always have control over your inventory, product range, and pricing, as well as the way the brand is portrayed in marketing, from campaigns to social media.
If you’re selling another brand’s products, you can offer only the options they have available. When you opt for a private label product, you have more freedom to customize it. That could be something as simple as adding your logo, offering different sizes, changing the packaging, or tweaking the design.
For example, if you’re selling sports clothing, you might want to build an inclusive brand by offering sizing for different body types. If you can find a manufacturer that offers a wide variety of sizing options, you can make a trial run of those sizes to test demand. By doing this, it increases your chances of gaining loyal customers by being on-trend and shopper-focused
Win the Buy Box
When you’re selling a major brand’s products on Amazon, the site will put you in competition with other marketplace sellers to be shown in the Buy Box. If your listing doesn’t appear in the Buy Box, you won’t get the sale. It’s as simple as that.
As a private label seller, you don’t have to worry about winning that Buy Box appearance. You own the brand, so you’ll be the only seller who appears on the listing, and 100% of the sales will go to you.
Consumers are conditioned to trust brands. Some consumers are nervous about buying major brands from unknown sellers because they aren’t sure whether the product they get will be genuine or not. If they see a brand-named product listing that’s from that brand’s Amazon marketplace account, they’ll feel more at ease because they know they’re getting “that brand.”
As the brand owner, you can invest in marketing campaigns, social media outreach, and building an online presence so that people become more familiar with your brand and the products you have to offer. After you’ve been selling products online for a while and have lots of positive reviews, you’ll have a credible presence on the Amazon marketplace.
If you’re selling another brand’s products, it can be difficult to respond quickly to changing trends. When you own a brand, you have complete control over how the brand presents itself, who it markets to, and what sort of image you cultivate.
It’s also important to note that Amazon’s algorithm currently rewards private label products and ranks them favorably compared to reselling other products.
Cons of Amazon FBA private label
So, we’ve covered the benefits, but what about the downsides?
You’ll need to purchase some inventory to get started, and this can come with a substantial upfront cost. However, it’s generally a reduced expense compared to selling other brands. That’s because you can get products quite inexpensively from the manufacturer of the items.
Time and effort
There’s plenty of time and effort required to identify the products you want to sell, find a manufacturer, come up with a brand, and start selling online. And the work doesn’t stop there, either. You’ll need to market the brand and do ongoing research to respond to any changes in the marketplace.
Most FBA brands aren’t an overnight success. It takes a while to build up positive reviews and make your products popular. If you want a business that will grow steadily and sustainably, with less overhead and complexities than running a traditional online store, you can be successful with FBA.
How To Start With Amazon FBA Private Label (Step-by-Step Guide)
Depending on the industry you’re looking to build your brand in, there are a few ways to get started with FBA private label. If you’re familiar with marketing, the 4Ps are an ideal jumping-off point that consider the future growth of your business. But if you’re on the ground level, here are some detailed steps to give you a hand:
1. Product/Market Research
Start with a product in a niche you know well. It’s easier to market products if you’re familiar with the niche. In addition, look for items that sell well on Amazon, so you won’t end up having to wait a long time for products to sell to recoup your investment.
Some popular niches for private-label products include:
- Small household items,
- Cleaning products,
- Clothing basics,
Many sellers don’t do the research when it comes to increased shipping costs or complex import restrictions. To keep things simple, avoid anything with batteries that might be subject to shipping restrictions and anything delicate or perishable. It’s also a good idea to stay away from seasonal products when you’re just getting started, especially if you have a limited budget and need to see a return on your investment quickly.
Look for products that will fit into a small flat-rate box and weigh less than two pounds. This will save you money on Amazon FBA fees.
After you have some ideas for products to sell, browse Amazon and look at who has the most popular products in those areas and what they cost. Can you identify a gap in the market? Is there a way you could differentiate your products from theirs? Make a note of the prices of those products, and consider how much margin you’d need to make it worth launching your own line.
2. Source manufacturers
Once you know what products you want to sell, you’ll need to find a supplier or manufacturer. You can buy one-off products from a site such as AliExpress, but these will be generic, Plus, you’ll be paying extra to deal with a supplier. In the long term, it makes more sense to buy a private-label product from a manufacturer directly.
- Choosing the right supplier is critical. Get quotes from several manufacturers.
- Negotiate between the ones that are the most reputable to ensure you get a good deal.
- Keep in mind that price is important, but you’ll need a manufacturer that is reliable and responsive.
- If possible, visit their factory to see for yourself how the product is made.
- Take the time to ask them for information about their quality control procedures, too.
It can be tempting to go with the lowest quote, but if you end up with electronic products that break after a couple of uses or a garment that falls apart after the first wash, you’ll end up harming your brand’s reputation.
It can be difficult to win consumers back after a bad experience, so err on the side of the better quality product. Target consumers who want quality rather than the cheapest option.
3. Get product samples
Always ask for a product sample before you settle on a supplier. You can save a lot of time by ordering samples early on in the vetting process. Only move forward with the companies that provide a sample you’re happy with.
4. Design your brand
When you’re a private label seller on Amazon, you become the only company that’s selling your products. You will still face competition when people search for the name of your product, but you’re going to be the only brand selling your product with your logo, packaging, and specific configuration.
It’s your job as the brand owner to take advantage of those benefits by making your brand eye-catching and appealing. Take some time to think about the different elements of your brand:
- The name,
- Any tagline or slogan,
- Your mission, vision, and values,
- The logo,
- The back story,
- Your brand colors.
Consider how your brand will look and present itself not just on Amazon but also on social media, any off-Amazon web properties, and in communication with customers.
- Are you a serious, luxurious brand?
- Are you aiming yourself at young consumers and looking to appear slightly cheeky?
- Or, is your target audience busy executives who want something efficient and reliable?
Your target demographic will likely inform much of your brand. It’s worth having a professional graphic designer come up with your logo and other elements of branding, such as social media headers, letterhead, etc. Ask them to provide you with a full brand package, so you can have a consistent appearance across all of your company’s online properties and marketing channels.
Consistency is vital for any brand. Even if you carry multiple items that cover a few categories, those products should all reflect the brand’s image and values. For example, you could have a brand that sells environmentally friendly cleaning products made from sustainable materials, it might make sense to eventually add household items. However, if your business sells high-fashion items, adding a line of low-cost children’s toys wouldn’t exactly line up with your brand.
5. Create your Amazon listing
So, now you’ve got a name, a logo, and some eye-catching products to sell. The next stage is to plan your Amazon listings.
Start with some keyword research. Look for long-tail keywords that see what shoppers are looking for but also what has low competition. These are the keywords that will have the highest conversion rates.
Make sure your listing follows Amazon’s rules for titles. There are strict requirements for each product category, and if you get them wrong, you’ll be told to modify the listing before it goes live. In particular, take care not to include superlatives, subjective terms, or offensive terms in your title or your listing.
- A good product listing will explain what the product is and what it does well and will include your main keywords.
- Have some bullet points highlighting the key features and specifications of the product. This makes it easy for prospective customers to scan the listing and decide whether it’s what they’re looking for.
- You’ll need some images of the product to include with the listing. These will be shown as thumbnails on the search results page, and when the customer opens the listing. Use professionally shot photos where possible. Include several photos of your product, taking care to follow Amazon’s rules about the size, what else is included in the shot, and if/how human models are used.
- Include any relevant keywords in the photo’s file name and in the alt text.
6. Set your price point
As a good rule of thumb, you should try to set your prices to within about 20% of the average price for a similar product from a competitor. Go higher than that, and you might lose out on sales. Go lower than that, and your margins will be too thin.
When you’re deciding on a price for your products, try to keep your expected sales volume in mind. It’s fine to have thin margins if you’re confident you’ll move a lot of inventory every week. If you’re expecting slower sales, you’ll need to see higher returns on each product.
When you first launch your Amazon store, you may end up doing limited runs of each product. If a product sells well, you can go back to the manufacturer and try to negotiate volume discounts for a bigger order. Over time, you’ll know which manufacturers you can trust. You’ll also find it easier to scale up your operations not just in terms of inventory but by the number of products your business offers too.
7. Get set up with Amazon FBA
As an FBA merchant, you can send your goods to an Amazon warehouse, and they’ll take care of the storage, packaging, and shipping. They’ll even handle returns and refunds for you.
Amazon prioritizes FBA products in the search results, making it easier for you to get noticed on the platform. In addition, many shoppers prefer FBA products because they usually have faster shipping times, making them the most convenient option.
Amazon offers two different plans for sellers.
- The individual plan is aimed at smaller merchants who have relatively low sales volumes.
- The professional plan is aimed at bigger merchants.
When you’re deciding between an individual or seller plan, consider your overall brand. Individual FBA accounts have no monthly fee but are limited in terms of which categories they can sell items in. Professional FBA accounts get access to advanced reporting tools, sponsored ads, and other useful features and can sell to gated categories.
8. Launch your product
Once you’re set up on the Amazon marketplace and have your listings ready to go, you can launch your product. In addition to making your listing live, it’s a good idea to do some external marketing.
- Run a giveaway or flash sale to generate some buzz,
- Run a PPC ad campaign on Amazon itself,
- Run some advertisements on social media or Google,
- Use blogger outreach and social media influencers to create interest in your brand.
Plan your marketing well in advance, and take advantage of busy periods such as the holiday season. Offering discounts around these times could greatly increase your sales. It’s also an affordable way to attract some positive reviews to help your brand build its reputation.
Don’t forget that in addition to individual product pages, you also have your own dedicated Amazon storefront. While many of your customers will find you through individual product listings, it’s worth taking some time to customize your online store. According to Amazon, stores with three or more pages hold the attention of visitors for longer and generate almost one-third more sales per visitor.
Even after launch, spend time tracking the performance of your products. Tweak your advertising efforts, your price, and your product descriptions to ensure you stay ahead of the curve.
Examples of Amazon private label products
There’s a huge number of private-label brands on Amazon. In fact, Amazon has an extensive list of private label brands that they promote on the platform, including:
- Amazon Elements: A line of health and household products.
- Amazon Essentials: The store’s own clothing range.
- Amfit Nutrition: Supplements and vitamins.
- Pinzon: Bedding and towels.
- Lifelong: Pet-related products.
The private-label products listed above are just a few of the ones sold by Amazon. They have other brands aimed specifically at various verticals, like fashion-conscious men or women, athletes, etc. Each brand serves a clear niche, and many of the higher-end ones omit Amazon from their name, making it less obvious that they’re a private label product.
In total, Amazon is thought to have more than 100 different private label brands. The list of brands it maintains has grown rapidly in the last few years, too. In 2019, it was reported that Amazon sold 158,000 private label products across just 45 brands. While it has shuttered some storefronts, Amazon continues to embrace the selling of private label items showing its effectiveness.
Amazon does a good job of marketing its own brands and highlighting how they’re different from their rivals. For example, Fire tablets run a variant of the Android operating system, but it’s locked down to the Amazon app store. The tablets are popular with parents, and with some older adults, in part because of this streamlined user experience. They’d rather have an affordable tablet that works well rather than worry about mistakenly installing malicious apps.
Final thoughts about Amazon FBA Private Label Selling
As a relatively new seller, you’re probably not going to want to go head-to-head with Amazon in selling Kindles or even kitchen appliances. However, if you can find a product that’s in high demand, such as phone charging cables, headphones, or consumables like stationary, you could carve out a competitive niche.
The beauty of selling products via FBA is that Amazon does much of the day-to-day work for you, freeing you to focus on the job of market research and advertising. That’s where Trellis comes in. Our software uses AI and automation to help bolster your listings in more ways than one. From dynamic pricing to uncovering promotions that drive conversions, we’re here to lend a hand. Reach out to us to book a demo today.
22 Rules To Increase Amazon Sales Up To 450%
Find out the proven framework we used to increase Amazon sales by 450%.