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7 Steps to Selling Private Label Items on Amazon
Many sellers today are diversifying their catalogs to include private label items because the products provide them with the opportunity to drive incremental revenue, create a unique private label brand therefore allowing them to avoid direct competition, and have a stake in the race for private label market share — which has recently been priority for Amazon, given their private label line of more than 125 brands. We have compiled seven actionable steps to help ensure a sound private label process on Amazon at every stage, from sourcing to fulfillment to ensuring a positive post-sale customer experience.
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1. Find the Right Manufacturer.
Although cost will be a significant factor in determining your supplier, it can not be the sole variable. You should take labor and material costs, as well as currency appreciation if sourcing from overseas, into consideration when weighing your options. Additionally, isolate your search to only the suppliers that are experienced with products similar to the ones you want to produce. Speak with them on the phone and do a site visit if possible.
Find out about their minimum order requirements and have them provide detailed examples of how they will scale as your business grows. Ensure that their products go through a quality assurance process and that the items have the level of quality that you are looking for. Make sure that the supplier has experience exporting to your market of choice. For example, if you are selling on amazon.com, find a supplier with experience exporting to the United States.
2. Take the Proper Steps to Ensure Brand Protection.
Register your brand with a formal trademark. Without trademark registration, another brand can claim your name and you will no longer be able to sell your product. Do your research to ensure that you are not unintentionally copying another company’s concept. If your trademark is available for use, you can file your application. Registering a trademark for your private label brand not only protects your portfolio but also helps your case when applying to Amazon’s Brand Registry. The registry gives registered brands greater influence and control over their brand’s product listings on Amazon and helps protect your brand experience by proactively removing suspected infringing or inaccurate content.
3. Follow Amazon’s Rules for Eligible Products.
Amazon has a comprehensive list of restricted products that are prohibited from being sold on the platform. Before listing any items online, review the Restricted Products Help pages for proactive best practices and actionable guidance by category. If you sell a product in violation of the law of any of Amazon’s policies, the company has the right to take appropriate action, including but not limited to suspension or termination of selling privileges, having your inventory destroyed without reimbursement, termination of the business relationship, or permanent withholding of payments.
4. Find a Competitive Differentiator.
Although you can face indirect competition with private label items, a key advantage of selling private label products is that no one else is selling your exact same item — with your exact brand, packaging, or value-added benefits. You can differentiate your private label brand through a strong value proposition and brand story, which can both in turn serve to drive brand awareness and consumer engagement.
With regard to your unique product packaging, you can leverage colors, fonts, your logo, and various design elements to draw the attention of prospective buyers. Keep your target customer profile front of mind when creating the design that will pique their interest and be sure to experiment and test packaging and product prototypes with a group of prospective buyers to garner feedback.
5. Analyze Your Products Before Deciding on a Fulfillment Method.
Understand your items before deciding whether you will fulfill your Amazon orders via a merchant-fulfilled operation (FBM or SFP) or through FBA. Do your items require special handling or particular packaging? Are they easily prone to damage with extreme temperature fluctuations? Do you want the Amazon Prime badge on every item you sell? When deciding on a fulfillment method, it is critical to remember that Amazon businesses are not one-size-fits-all, so the method you choose needs to align with your business goals and needs.
A general rule of thumb is that FBA is optimal if your items have fast turnover, are small, lightweight, and expensive, you do not mind commingling, and you do not have the manpower or bandwidth to fulfill efficiently and would prefer that Amazon handle the customer service portion of each transaction. On the flip side, FBM may make more sense if your items are larger and heavier, if commingling would pose a risk for your items, and if you have storage locations and manpower to fulfill effectively while still providing a strong customer service experience. Whichever route you choose, consider the size of your operation and what kinds of items you sell.
6. Keep Track of Your Returns.
One of the most important aspects of launching a successful private label brand on Amazon is learning how to handle returns and adopting an efficient returns management strategy. Online retailers selling on the marketplace are expected to either match or exceed the standards of Amazon’s return policy — which states that any item, regardless of its condition, use, or defects, may be returned within 30 days of the purchase date for a full refund.
If your returns strategy is not optimized, you run the risk of receiving negative feedback, dealing with A-Z Claims, or even getting your account suspended. An A-Z Guarantee Claim can be filed for any of the following reasons related to returns: the customer has returned an item but hasn’t received the refund from you, you haven’t accepted a return request according to Amazon’s return policy, or the customer wants to return an international order and you have not provided a return address, prepaid label, or a full refund without the item being returned.
When one of your customers wants to return an item, you will be notified by email that a return request has been submitted. The email will include the customer’s reason for the return and Amazon will include a note if the reason doesn’t fall within the parameters of their return policy. Then, you will be able to decide which actions are best to take toward a resolution. Being proactive about returns and monitoring customer reviews will help strengthen your credibility as a private label seller, as well as protect your seller performance metrics.
7. Drive Positive Feedback.
One of the best ways to attract net new incremental customers is by ensuring that you have multiple positive reviews on your items. In many cases, customers are reluctant to purchase an item if it has very few reviews. Reviews should demonstrate that customers are familiar with your brand and have had a positive experience using your products.
Although Amazon does not allow sponsored or paid reviews, you can add notes to your packaging or website asking for feedback. You can also ask consumers to contact you first with any problems before leaving a negative review, so you have the opportunity to swiftly correct the situation. At the end of the day, positive reviews are critical to creating trust between you and the buyer, as well as increasing your overall sales.
In Feedvisor’s The State of the Amazon Marketplace 2018 report, we surveyed more than 1,200 Amazon merchants about their challenges, ventures, and strategies to maximize profitability on the platform. Among those respondents, more than half (56%) reported revenue from private label brands. As evident through Amazon’s commitment to their private label lines, there is definitely a newfound attention on these types of products from both a buying and selling perspective.
These items have the ability to provide high profit margins and brand growth for private label sellers. Be sure that you are taking the proper steps to increase your discoverability and stand out in Amazon search, such as by advertising, as well as to protect your brand equity on an ongoing basis.