Private label products are goods manufactured by one company, to be branded and sold by another. These products typically already exist in the market; as a private label retailer, you are simply putting your own branding twist on a product. And chances are, your manufacturer is producing the same product for another brand.
This means that you don’t have to reinvent the wheel or develop a brand new concept to sell products under your own unique brand.
Private labeling is a common practice amongst the biggest retailers in the world — not just Amazon sellers. Think of any grocery store you frequent; most have their own private label products, such as Costco’s Kirkland Signature brand. Kirkland Signature offers products similar to those by more prominent brands — but at a much lower price.
Why sell private label products on Amazon?
With all the other ways to sell products on Amazon, there are many reasons why selling private label products is the most common sales model. Here are five benefits of selling private label products on Amazon.
1
You own the brand
Private labeling means the brand belongs to your company; unlike in arbitrage or wholesale, where you would resell products from other brands. The private label model allows you to market, grow, and price your products how you see fit.
You don’t need to seek brand approval or jump through hoops to find discounted products to resell at a higher price.
2
Higher profit margins
Since you’re sourcing your products directly from a manufacturer or supplier, your costs are much lower than if you were reselling products by other brands. If you’re selling wholesale products, you’re buying from the brand owner or a distributor who has marked up the product’s price, leaving you with a smaller profit margin.
With private label products, there is no middle person. You’re purchasing inventory at the lowest possible cost.
3
Customize your product
Completely customize the product however you want. You can look at customer reviews on competing products and pay attention to what issues people have with their purchases — these are fantastic cues. You can then assess how to make your product even better than the top-selling brands.
With this sales method, you can be strategic, figure out ways to improve the product and beat what already exists in the marketplace. Simply placing a logo on a product isn’t enough — here’s where you can work with your supplier and graphic designer to make your product stand out. If you sell something that looks the same as every other product on Amazon, it will be hard to compete.
4
Creative control over the Amazon listing
When you launch a private label product, you create a brand new listing in the Amazon marketplace. This means you’re able to easily edit images, pricing, listing copy, and keywords to your advantage, whenever you want.
If you’re reselling on an existing Amazon product detail page, it’s not easy to edit the images or copy if needed since you were not the seller who listed the product.
5
No competing for the Buy Box
If you’re reselling other brands’ products on Amazon, you are likely competing for the Buy Box with other marketplace sellers. If your offer is not in the Buy Box when a customer makes a purchase, that sale will not go to you.
With private label, you will be the only seller on the listing, and you will own 100% of the Buy Box.
How to sell private label products on Amazon
So, you want to sell your private label product on Amazon? Awesome! Let’s go over what you need to do before launching.
Product research
Researching the right product to sell is one of the most critical steps in this process. If you rush through it or don’t analyze the data, you could pick a product no one wants.
When choosing a product to sell, make a decision based on data. Don’t choose a product because you like it or are passionate about it. You can start gathering ideas based on your hobbies but make sure you validate those ideas based on how similar products are selling on Amazon.
Here are our criteria when conducting product research:
Price: $20-$70
Sales: At least 300 sales per month
Number of reviews: The top 10 products have an average of 500 reviews or less
Rating: Try to find products with a lower rating and a maximum of 4 stars. This tells you there is room for improvement in product development.
Listing Quality Score: 5 to 7 LQS; this tells you the competitor’s listings need improvement.
Following these criteria, give or take, will help you find high-demand products with lower competition.
Find a supplier
After you find the perfect product to sell on Amazon, you need to find a supplier to manufacture the product. The best way to do this is to search on Alibaba or use Jungle Scout’s Supplier Database.
Contact a few different suppliers to see who can offer you the best quality product at a reasonable price. Once you agree on the terms, you can place your order and arrange to ship it to an Amazon FBA fulfillment center.
