The Top 7 Questions on Private Label Selling, Answered

By Peter Kearns
Published on March 7, 2016 | 4096 views

7 questions on private label selling answered

The surge of private label products on Amazon has big implications for third-party sellers. Selling your own brand on Amazon’s marketplace is a huge advantage but it also presents some tough challenges in terms of promotion and pricing.

We recently hosted Ask the Amazon Experts Webinar with over 300 attendees covering this exact topic. Hosted by ex-Amazonian Eric Heller (Marketplace Ignitions), private label expert Lori Vardi (Feedvisor) and myself, Peter Kearns (Feedvisor), we received over 100 questions regarding Amazon sellers’ biggest concerns with private labels in 2016.

I handpicked the most burning issues you need to be aware of and how you can overcome them. Check out the top seven questions answered below.

 

1. What’s the best way to increase sales on Amazon FBA for new private label products?

It can be difficult to drive traffic to new private label items. If you notice sales aren’t going anywhere, here are some common reasons and fixes.

  1. If the ASIN isn’t selling, check your Detail Page Sales & Traffic Report in Seller Central to determine how much traffic (called ‘Sessions’ in the report) your ASIN is creating.
  2. If the item is not getting any Sessions, then it’s not being seen. In this case, you’ll need to start advertising your product through Amazon Sponsored Products, or even on social media platforms such as Facebook Product Ads.
  3. If your ASIN is getting Sessions but no sales, then you’ll have a low Unit Session Percentage. Evaluate whether your product isn’t selling because the detail page is lacking information or because the item is incorrectly priced.

In all the above scenarios, keep in mind that customer reviews are key for driving sales conversion on Amazon. Amazon places reviews below the product title and above the price for a reason.

 

2. What is the best way to get sales started on a new private label product which has good demand as a generic product?

Generic products are great because there’s usually a high profit margin, but they’re terrible because, well, they’re generic. Start by creating great detail page content with fantastic images. The product may be generic but your content doesn’t have to be. Also, you’re going to need to utilize Amazon Sponsored Products, but don’t just use the automatically generated keywords.

Take time to research how the product is used in people’s lives or if there’s name brand competition. Then create custom campaigns with those words and phrases. Also, make sure you’re using a dynamic repricer that can change according to the customer demand curve. Stagnate prices can hurt sales conversion, so use the on sale feature or create a promotion in Seller Central to sell faster.

 

3. Should I occasionally change my price by a few cents? I’ve heard customers are notified of price changes. Is this true or false?

The decision to change your price should come from a competitive and profit perspective. If you’re competing with other sellers for the Buy Box, then yes, you should be updating your price (Feedvisor reprices every 15 minutes) because 82% of all Amazon sales occur through the Buy Box and price is a very big factor to winning the Buy Box. But don’t assume that you necessarily need to price down to win the Buy Box. If you have top performance metrics, you can often afford to even increase your price while maintaining your share of the Buy Box. Make sure your repricing solutions can help you hit that sweet spot and doesn’t blindly price you down without considering the full context.

As for customers being notified on price changes, yes, that can happen. If the customer has added an item to their wish list, they will see if the price has been reduced and by how much since adding the item. Also, there are services the customers can subscribe to that will alert them when a price has been decreased.

 

4. We have three new product lines that we’re launching this summer on Amazon and tend to lowball our pricing to spark orders and then scale up the price. Is this a good practice? 

Starting with a low price and then scaling upwards isn’t necessarily a bad practice, but the low price could be a deterrent for building your brand or result in devaluing your product. On the other hand, maximizing session conversion is a key element to building search for a new product, and a lower price will most likely incentivize customers to purchase, resulting in higher session conversation. You just want to be careful that customers don’t stop purchasing your product as your raise the price.

 

5. Which is the best price strategy to start with for a new private label product? Is comparing pricing with competitors a smart strategy?

Yes, comparing competitive pricing for similar products is a good starting point for implementing your private label price strategy. However, keep in mind that your product might have unique characteristics or a better value proposition to the customer, which could warrant a higher price. If this is the case, you want to make sure you’re creating fantastic detail pages that really highlight the features and benefits of your product and show why it carries a higher value than your competition.

 

6. What’s the best strategy for launching a new product? What should I do to avoid getting stuck with slow moving inventory?

First, create great product. Spend a lot of time researching your product and insist on high standards. Don’t take shortcuts because all it will take is a few one-star reviews to sink your sales. Second, prepare to spend some money on a marketing strategy for each product to drive traffic to your detail page. You can utilize Amazon Sponsor Products, social media or traditional advertising — it doesn’t matter as long as customers are going to your page. Third, proactively reprice your product according to the demand curve.

A lot of sellers will launch a private label product, set the price and forget it. Many Amazon shoppers have learned to look for dynamic pricing on products that fluctuate. If your price always remains the same, it can negatively impact your sales conversion. Instead of sticking to a price, find a profit range for your product and price within that range to maintain your sales velocity to ensure you sell through your inventory. (Feedvisor can help you with this).

 

7. Do you have any recommendations on methodology to assist sellers in determining what they should private label?

Start with what you know and insist on the absolute highest standards in production that you can afford. Yes, there are a lot of opportunities for creating private label products, but it’s important to remember that a lot of sellers are going into private label as a way to compensate for decreases in profit due to high competition on their catalog, either from Amazon retail or other third-party sellers.

You may be creating a private label product that decreases the offer count on the ASIN, but there’s a strong likelihood that your competition is doing the same thing. Now, instead of competing for the Buy Box on an ASIN — you’re competing for traffic, reviews and sales rank. The brands that sell the most products start by creating great products.

 

Want to know more? Get the Amazon Experts recording on-demand.
Click here to learn more about how our Private Label Repricer can help you.

 

Peter Kearns
About the Author

Peter Kearns has steered the success of hundreds of eCommerce companies and brands in his career. He is a former member of Amazon’s Seller Services Team. He’s also an Amazon seller and partner at eGrowth Partners.

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