In days past, Amazon was a passive income machine.
All you had to do was find some cheap products on Alibaba, send them to Amazon, and watch the money come in.
Today, it’s not so easy. Competition on Amazon is too high, and so is their dedication to customer satisfaction. Amazon doesn’t want to be known for cheap knockoff products. They want to be known for having all the best, high-quality brands.
This means, today, Amazon’s platform is catered towards private label sellers. Sellers who create branded products are much more likely to have success, particularly in the long-term, than people selling generic brandless goods.
If you want to make money on Amazon today, private label is the way to go. This post will tell you how.
What is Amazon Private Label?
Private label means a product is made by a third-party manufacturer, and sold under the umbrella of another company’s brand.
How it works is, you’ll contact a manufacturer to produce your products. They’ll create everything on their end (to your directions), and at the end your brand name is slapped on the packaging.
This can theoretically be a generic Alibaba product, just with your label on it. But you could (and should) also get the manufacturer to make custom additions or changes, to create a unique product.
Private label is essentially creating your own brand to sell. The only difference being, you have someone else handle the physical production of your products.
Why You Should Sell Private Label
We spoke about the need to differentiate yourself from the competition. This is an incredibly important part of having long-term success selling online.
It’s quicker and easier to buy bulk of some generic product and put that for sale, or to buy branded products and jump on an existing listing. But if you can do this, what’s to stop someone else from doing the same thing and taking away from your cut?
It takes a bit of work, but building brand recognition and a point of difference is much more likely to pay off long-term.
Private label gives you more control over your business, and a base on which you can scale your business much easier. Dropshipping or selling generic products is only profitable as long as competition in your niche is low.
Once you have a private label brand, with a customer base and brand loyalty, you have a ring of protection against any newcomers in the market.
How to Start Selling Private Label on Amazon
As we’ve established, getting started selling private label is not quite as easy as the old days of selling on Amazon. Plus, if you rush into it, you’re probably going to create more work for yourself down the road.
Here are a few key steps you need to know before starting your private label journey. Note, if you’re not yet selling on Amazon at all, there are additional steps you’ll need to take, such as setting up an Amazon account, buying UPC codes, etc. This will specifically cover steps for private label selling.
Find a winning product
Unless you’re an unbelievable marketer, or the pied piper, much of your success relies on the product you’re selling. An average, run of the mill products probably won’t sell.
There are a few things you want to look for in a product to sell.
- Demand: You want something that people want to buy, something people are searching for. If there’s no market for your product, it’s not going to sell. Similarly, if it’s a seasonal item – i.e. something people only tend to buy around Christmas, or Valentine’s Day, it’s not going to offer sustainable year-round demand you’re looking for.
- Profitability: You have to have profit margins big enough that your business can make money and grow. To judge whether your product will be profitable or not, do some research on potential suppliers. Note the price you can buy it for, and calculate the fees you’ll pay Amazon for storing and shipping it. For this reason, you generally want to avoid larger or heavier items. Smaller, lighter products, in the range of $20-$60 are generally what you want to look for.
- Competition: A lot of products simply have too many sellers for you to be able to break into the market. Supplements, for example, is an extremely competitive category. There are so many experienced sellers, it’s very hard for someone new to come in and get visibility.
- Point of difference: Once you’ve found a profitable product, with demand and low enough competition, how are you going to separate yourself from other sellers? A good idea is to look at existing products, and see how you can improve on them. Look at product reviews, and see if there is any common complaint or problem customers have. Now you have an idea of how to improve or add value in your own version.
There is much more to product research – this is just a few things to look for.
There are a number of tools out there to help you with product research, such as finding high-volume keywords and providing estimates on competition and profitability. We recommend using Jungle Scout, the most popular product research tool amongst Amazon sellers.
You can also search for broader product or niche ideas all over the web, like Reddit, Quora, Alibaba, eBay, or Google’s keyword planner.
You want to narrow down your product search in stages.
First, find a niche with demand.
Next, determine whether or not the niche is too competitive to enter.
Then figure out if you can source and sell products that make enough of a profit.
Finally, look at ideas to differentiate your product from the competition.
Once you’ve found something that looks like a winner, you can start thinking about your branding. But the product comes first, always.
Start building out your brand
Now’s the time to begin building a brand. Your branding includes:
- Brand name
When settling on this, take into consideration how you can expand past your initial product. You don’t want to pidgeon-hole your brand too much (though you also don’t want to go too broad).
Say you’ve settled on a garlic press as your first private label product. You wouldn’t want to name your brand “ABC Garlic Presses”. That doesn’t give you much room to expand.
Likewise, “ABC Products” is too broad.
Something like “ABC Cookware” makes more sense. You’re focused on a niche (cooking), but you have a lot of options to expand when you want to sell more than just a garlic press.
Brand name comes first, then you can start looking at getting a logo created, and subsequently packaging designed. You can look on freelancing sites such as Fiverr or Freeeup for people to help with this, if you don’t have any graphic design skills.
It’s good to put some time and effort into this. The visual appeal of your branding, especially your packaging, goes some way to providing a positive unboxing experience. Which in turn helps you get more product reviews.
Once you have your brand name, logo and packaging created, you can start selling your product on Amazon. At this time you should also start building out further brand assets, such as a website, social media profiles, and applying for a trademark.
Enroll in brand registry
Another step you should take as early as possible is becoming part of Amazon’s brand registry program. This helps you protect your brand from counterfeiters or imitators, as well as giving you additional tools to grow your brand’s presence.
For brand registry, you’ll need a trademark. A trademark often takes a number of months to obtain, so it’s a good idea to start applying for this as early as possible.
Learn more about the features, benefits and requirements for brand registry here.
Start thinking about new product ideas
To have the best chance of long-term success, you shouldn’t put all your eggs in one basket. If you only sell one thing, you’re at risk of losing everything if sales suddenly drop for any reason.
That means expanding your product range beyond your initial product. Once your first product is established and selling well, start considering how you can grow your range.
Within your brand’s niche, start doing product research, as you did initially, to come up with additional ideas. Follow the same criteria of profitability, demand, competition and differentiation. Just try to keep it within the same broader category, to ensure your branding stays consistent.
You could also offer different variations of your first product, such as different sizes or colors, though this still leaves you somewhat at risk, compared to having a few different products.
Product research takes a while, as you’ll find out. So even if you don’t think you’re ready to add more products to your range just yet, it’s worthwhile to begin researching as early as possible.
Expanding Your Brand – On and Off Amazon
After you carve out some initial success, there are many ways you can continue to expand, both on and off the Amazon platform.
On Amazon, there’s an ever-increasing number of ways you can build your brand’s image. Enhanced Brand Content and storefronts let you essentially build your own site, within Amazon’s platform. This lets shoppers discover your entire range, and increases conversions on your listing.
Sponsored Brand ads are another great way to advertise multiple products from your range, and grow brand recognition within your niche.
On the other hand, you should develop a presence outside of Amazon. Relying on Amazon alone is risky, since they technically own your customers and your source of traffic. Rule violations (or suspected violations), new competition, or black-hat tactics from existing competitors are all ways your sales could fall drastically in a short space of time.
To protect your brand against these things, build out additional sales channels, and make your brand known outside of Amazon.
The first step is building your own site (you can continue to fulfill products from Amazon FBA even while selling on your own platform).
You’ll also want to start building a customer list, and driving your own traffic to your site.
This is how you’ll set your
Amazon Private Label Selling – In Summary
The changing face of Amazon dictates that sellers change too.
Amazon is not the passive income machine it once was. You need to put in more work to grow and maintain your business. But the payoff, once you put this work in, is greater rewards.
Selling private label on Amazon is the best way to build yourself a business that lasts. Nameless and faceless sellers are easily replaced or overtaken by the competition. Strong, recognizable brands, however, stand the test of time.
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