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How to Start an Amazon Private Label Business
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The top 2019 business goal for 32% of Amazon sellers is launching new private label brands.
While investing in a private label brand from conceptualization to hands-on execution takes thorough time and research, an increasing number of sellers and brands on Amazon are doing so because they have witnessed the success of others and are enticed by the lack of direct competition on private label ASINs.
What exactly are private label products? Private label products are manufactured by a third-party manufacturer and sold under your own brand name. The manufacturer has no rights over the label or brand and you get to decide on the product design, your brand logo, labeling, packaging, and all other creative elements.
Launching an Amazon private label business can be quite lucrative if approached with a detailed strategy, the proper resources, and industry expertise. In this article, we explain how you can get started with a private label business model on Amazon and provide practical advice on how to ensure success.
Getting Started With Private Label
1. Do Your Research to Identify the Right Product to Add to Your Catalog
When figuring out which products would make sense for you to white label, find a product that you stand behind and can realistically become a best seller. Brainstorm activities, services, or product categories that are interesting to you, then list the products associated with each. Start with a wider list that you can gradually narrow down to help make sure you cover your bases.
Be sure to take the existing or potential demand into consideration, including any sales fluctuations or seasonality. Moreover, ask yourself if you will be able to create recurring demand. You should scour Amazon, including the Best Sellers and New Releases lists, for products that perform well and have little to no competition. You can also perform research on social media to discover any budding consumer trends.
2. Partner With an Experienced Supplier or Manufacturer
Your supplier plays a significant role in the success of your private label products. While cost will be critical in determining the right supplier, it cannot be the sole factor. You should take labor and material costs, as well as currency appreciation if sourcing from overseas, into consideration when weighing your options.
Isolate your search to only the suppliers that are experienced with products similar to the ones you want to produce to ensure they are credible and reliable. Establish a rapport over the phone and do a site visit to their manufacturing facility to gain a clear understanding of how and where your products will be created.
Regardless of whether you choose a site like Alibaba to connect with manufacturers or establish a direct relationship with a supplier on your own, be sure to balance product quality and cost to ensure that you do not end up paying an extremely low price to receive a product of poor quality. Inquire about minimum order quantities and find out about their quality assurance (QA) process to mitigate the risk of any defects or quality issues.
3. Conceptualize and Confirm Your Brand’s Logo and Your Product’s Design and Packaging
A key benefit of selling private label products on Amazon is the lack of direct competition, meaning that you automatically win the Buy Box on the ASIN. While you can face indirect competition, no one is selling your identical product — with your exact brand, packaging, value-added benefits and features, or competitive differentiators.
Aside from the physical components of a product such as the product itself and the packaging, you can also set your brand apart from the competition with a compelling value proposition and engaging brand story. Both of these more intangible elements of your brand can help promote brand awareness, consumer engagement, and social proof.
To entice prospective buyers, infuse unique and bold colors, fonts, and design elements into your logo and packaging and remain consistent across any additional products that you add to your private label line in order to demonstrate brand consistency. When creating the brand concept and physical design, keep your target customer in mind and make sure your decision is one that would be appealing to them.
4. Request Product Samples for Quality Control
After you have developed your product, be sure to ask your supplier for samples so you can make sure the quality and other specs are exactly what you are looking for before you go to market. Share the prototypes and packaging with various groups of people, including prospective buyers, to garner any feedback that should be addressed prior to placing your initial bulk order.
5. Decide on Your Amazon Fulfillment Strategy
Before you decide if you will fulfill your Amazon orders via a merchant-fulfilled operation (Fulfillment by Merchant or Seller Fulfilled Prime) or through Fulfillment by Amazon, you need to understand which products have proven success with each fulfillment method.
Do your products require special handling? Are they easily prone to damage with extreme temperature fluctuations? Do you want the Amazon Prime badge on every product you sell? Do you have the bandwidth to take care of customer service and returns or would you prefer that Amazon handles those logistics?
To discover which products are best suited for each fulfillment method, you can access our fulfillment playbook here to help inform your decision. Whichever route you ultimately choose, consider the size of your operation, your product categories, and your business objectives for the year.
While there is a level of risk involved in starting a private label business on Amazon, it is clear there is a seemingly unlimited income potential, given the low per-unit costs that you can attain from suppliers with whom you have established mutually productive relationships.
Private label products require time, research, effort, vetting, and cash flow, but if you maintain control and involvement throughout the entire process, you will be able to increase your margins and generate incremental revenue on Amazon.