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How to Manage Your Amazon Private Label Supply Chain
No matter what product you sell, it takes a journey through the supply chain to reach your customer.
Staying ahead of your competition on Amazon can appear to be an impossible and expensive goal. Whether you’ve been running a private label Amazon business for a while or are new to the game, you’re likely to have issues with your supply chain management.
Being a top seller on Amazon is not easy, but one way to get ahead of your competition is to source quality products and put your own brand on them. This is called “private label,” and going this route with your e-commerce business has many benefits but is also full of challenges.
Let’s talk about how to manage selling private labels on Amazon and what exactly supply chain management for a private label looks like.
Further Reading: Amazon Wholesale vs. Private Label
Regardless of your role in supply chain management, it is crucial to understand how your business syncs up with other parts of the supply chain
Amazon Private Label Supply Chain Management: The Basics
No matter what product you sell, it takes a journey through the supply chain to reach your customer. Depending on the product, there are also nuanced steps in between each point along the way.
In short, here is the supply chain journey for most products sold online and in brick-and-mortar stores:
Supplier → Manufacturer → Distributor → Retailer → Customer
As an Amazon FBA private label seller, you are the retailer in this supply chain. Regardless of your role in supply chain management, it is crucial to understand how your business syncs up with other parts of the supply chain.
Good supply chain management creates a cohesive, streamlined, and high-performing business model. When all of the elements of the journey coordinate to make everything from design to shipping to marketing run smoothly, everybody wins.
Supply chain management aims to keep costs as low as possible for everyone on the chain, leading up to the customer. So, how exactly do you do that?
Stay on top of the latest e-commerce and marketplace trends.
Amazon Private Label Supply Chain Management: Step by Step Strategy
Remember our journey through the supply chain?
Let’s refresh: Supplier → Manufacturer → Distributor → Retailer → Customer
The Logistics Bureau recently calculated that reducing supply chain costs from 9% to 4% can double net profits for the average company. That’s why supply chain management is an aspect of your business that you need to pay attention to, yet only 6% of businesses say they even have full visibility of their supply chain.
You may think that you don’t have a lot of options or control over most of the process, but you’d be wrong! We will show you how to sell on Amazon with a private label product using a no-nonsense strategy.
1. Pick the Right Product
It all starts with the product.
Unless you are into trend forecasting, it isn’t likely that you know what top ten items are selling on Amazon or Alibaba right now. Luckily, Amazon lists their best sellers so you can see what categories are saturated and what items stick out like diamonds in the rough.
Focus on newer products, and try to avoid products that have already been branded and sold by larger retailers.
Further Reading: How to Find the Best Private Label Products to Sell on Amazon
Check out the “Hot New Releases” sorting feature on Amazon to discover new gems. A best practice is picking a niche product to sell on Amazon. You won’t be for everyone, but marketing a niche product has advantages and a higher potential for virality.
A lot can change depending on the category you choose. We’ve broken down some tips for the top categories, including:
Reducing supply chain costs from 9% to 4% can double net profits for the average company.
2. Select a Manufacturer for Your Private Label Amazon Business
There are thousands of manufacturers to choose from as a third-party seller on Amazon. The best approach is to find one that makes the product you want to sell and is willing to work with you regarding your private-label management and branding.
Assemble a list of manufacturers and start contacting them; be sure to ask the manufacturer about minimum order quantities/values and turnaround times.
Further Reading: How to Find a Manufacturer for Private Labels on Amazon
3. Test out Your Product
It is best to test out your product and see it in person by ordering samples of your product from your manufacturer. What appears to be an excellent product online may be a poorly made product that you would not want to put your name on, let alone sell on Amazon.
Set a quality standard and never lower it. Once you have finalized your product choices and branding, place that order!
Only 6% of businesses say they have full visibility of their supply chain
4. Send Your Private Label Products to Amazon or Do it Yourself with FBM
Your order for private label products is completed and ready to ship! Now, how to get it on Amazon and beat out the competition? FBA, or Fulfillment by Amazon, handles storage, packaging, and shipping items to customers. Delivery and returns are supported entirely by Amazon.
Another option is FBM, or Fulfillment by Merchant. You may prefer to receive your products from the manufacturer and handle the rest of the supply chain internally. If you go this route, you can still sell your private label product on Amazon by using Amazon’s supply chain management software. This process ensures that your company conforms to Amazon’s rigorous shipping and delivery times.
5. Invest in Optimized Amazon Product Listing Copy
Amazon product listings that perform the best are ones that offer detailed information about the product.
Customers read product descriptions for the specifications they’re looking for in a product. Include high-quality product photos in your listings.
Further Reading: The Private Label Optimization Guide
6. Show Up on Social Media
So many trends begin on social media. It’s not only a great way to discover upcoming trends, but you can also generate buzz and redirect users to your product page on Amazon. While the virality of a trending product may be fleeting, interest in such a product continues to grow.
Amazon’s supply chain is just one of the ways you can streamline your private label supply chain management. The platform isn’t perfect, so it’s crucial to understand what types of challenges or additional costs are involved when partnering with Amazon as a private label business.
Further Reading: The Amazon Private Label Checklist
Risks of Selling Your Private Label on Amazon
Your private label product is available on Amazon, and you offer Prime shipping to your customers. Your product’s journey does not end there. Potential delays and additional expenses are hard to plan for, but knowing what to expect can keep your business from hitting a wall.
Here are some downfalls of using Amazon FBA to sell your private label products:
- While Prime customers enjoy free shipping, sellers are responsible for covering the cost of shipping. Sellers cannot choose which items have free shipping but must cover the cost as if they all do.
- Inventory updates are essential for an e-commerce business, primarily if you sell a particularly popular item. Inventory update delays with Amazon can lead to unhappy customers.
- Amazon’s supply chain analysts’ trend forecasting isn’t 100% accurate. This can lead to making large buys of your private label product that you cannot sell since it’s no longer popular.
- No matter how you ship your products, there is always a risk that one will get lost in logistics.
All of the above risks of selling your private label on Amazon eat into your bottom line, so include losses and shipping costs in your budget.
Further Reading: 3 Tips for Selling Private Label Products on Amazon in 2022
Amazon Private Label Supply Chain Management: Final Thoughts
Like nearly all businesses, having a successful e-commerce business is dependent on a multitude of factors. The best part is that you have control over the majority of them. Selling a private label product on Amazon FBA doesn’t require any certifications or prior selling experience. If this model appeals to you, conduct market research and produce a small batch of your product.
So how can Feedvisor help? Finding the right pricing for private label ASINs can be complicated. Feedvisor’s sophisticated dynamic pricing technology lets you set floor and ceiling price boundaries. This helps you create pricing that reflects your brand value, maintain equity, and stay profitable even during seasonal and market fluctuations.
Find out how Feedvisor can help you manage your entire catalog and provide you with data you can leverage to set optimal product prices.