Why You Should Sell Private Label Products on Amazon
Once upon a time, Amazon was a machine for passive income. You would find products on Alibaba for dirt cheap, list them on Amazon with a healthy mark-up, and watch the money come in.
These days it’s not so easy. Competition on Amazon is too high, and so is their dedication to customer satisfaction. Amazon doesn’t want to be known for cheap knockoff products. They want to be known for having all the best, high-quality brands.
This means Amazon’s platform is catering more and more towards private label sellers. You’re much more likely to have success putting out branded products, particularly in the long-term, than selling generic brandless goods.
If you want to make money on Amazon in 2019 and beyond, dropshipping or selling white-label products won’t cut it. Private label is the way to go.
What Do You Mean “Private Label”?
Private label means your product is made by a third-party manufacturer and sold under the umbrella of another company’s brand.
You contact a manufacturer to produce your products. They’ll create everything on their end (to your directions), and at the end, your brand name is slapped on the packaging.
This could still be a generic Alibaba product, just with your label on it. But you could (and should) commission your manufacturer to make customizations, so you wind up with a unique product.
Why Private Label is the Best
If you want to have long-term success selling online, you really need to differentiate yourself from the competition.
It’s quicker and easier to buy some generic product in bulk and list it on Amazon. Or to buy branded products and jump on an existing listing. But if you can do this, what’s to stop someone else from doing the same thing and taking away from your cut?
Products tend get one-upped by a newer/better/cheaper option. But brands last. So don’t sell just a product. Build a brand.
With your brand, you have more tools to scale your business and more protection against competition. With dropshipping or white-label products, you’re only profitable as long as competition in your niche is low. Once everyone starts jumping into the fray, price wars begin and all of a sudden you’re not making any profit.
If you’ve got a quality brand with name recognition, it allows you to stay clear of the race to the bottom. You have something the new sellers don’t, and that allows you to justify a higher price point.
How to Start Selling Private Label on Amazon
As we’ve established, getting started selling private label is not quite as easy as the old days of selling on Amazon. Plus, if you rush into it, you’re probably going to create more work for yourself down the road.
Here are a few key steps you need to know before starting your private label journey. Note, if you’re not yet selling on Amazon at all, there are additional steps you’ll need to take, such as setting up an Amazon account, buying UPC codes, etc. This will specifically cover steps for private label selling.
Your Product
Product is everything. A cool brand with awesome service doesn’t really matter if what you’re selling is trash.
Don’t skimp on the product research stage. This could well be the difference between your business taking off, or failure to launch.
Some of the most important things to think about when looking for the right product are:
- Demand: do people actually want to buy the product? Are people searching for this in Google/Amazon?
- Profitability: can you make money selling it? You have to be able to source the product for a low enough price that you can sell it for a competitive price, after taking away Amazon’s fees, storage, shipping etc.
- Competition: check how competitive your product category is. Are there a bunch of established sellers with tons of reviews selling similar products already? If so, how will you break into the market?
- Point of Difference: Chances are, someone is already selling something pretty similar. How are you going to make your product stand out? A great idea is to comb through product reviews to find common complaints from previous customers and alter your product to fix these problems.
There is certainly more to product research, but this serves as a broad guide. If you don’t take note of these points when you consider product ideas, your product will probably fail.
Building Out Your Brand Assets
The product comes first, then comes branding. Start building out things like your brand name, logo, and packaging. Look to freelancer sites like Freeeup or Fiverr to commission someone to design a high-quality logo for your brand, then send it to your manufacturer to have printed on your products.
You also want to start building things like social media profiles and a website for your brand. Eventually, you’ll want to have as many touchpoints as possible, so your brand name has a better chance of sticking in the mind of your target customers.
Amazon Brand Building Tools
Amazon’s trending towards supporting private-label brands over faceless dropshippers, which means they’ve introduced tools to help you build your brand.
Make sure you take advantage of things like Amazon Brand Registry and Enhanced Brand Content, which are free and encouraged by Amazon. Brand Registry requires a registered trademark, which can take a while to get, so it’s important to start on this as early as possible.
Scaling Your Brand
The idea of a private-label brand is to build out a catalog of products in the same niche, which all benefit from each others’ visibility. So after your first product kicks off, you want to start thinking about additional product ideas.
It’s a good idea to consider this in your initial product research phase as well. Don’t just think about one product, think about a product in a niche with potential to expand. Take this into account for your branding too. Instead of building your brand around the name “ABC Garlic Presses”, something like “ABC Cookware” gives you the opportunity to add more products under this label in the future.
Expanding: On and Off-Amazon
Make use of Amazon marketing tools like Enhanced Brand Content, Amazon Storefronts and Amazon Sponsored Brand Ads to grow your brand’s reach on Amazon.
Sponsored Brands are one of the newest Amazon Advertising tools, and is a great option when you have a varied range of products across a common niche.
On the other hand, relying on Amazon for 100% of your business is risky, as many sellers have found out.
A quick search in Amazon seller Facebook communities brings up a host of desperate complaints from sellers who have had their Amazon privileges abruptly pulled, without any warning.
In late 2018, a widely-shared article from The Verge shone a light on a number of sellers who had fallen victim to dirty tactics from competing sellers. Even if you do everything by the book, your own success can put your Amazon store at risk.
Then there’s the risk of competition. Hijackers — people piggybacking your private label product listing with a counterfeit knockoff — are a common occurrence on Amazon. While on the other side, Amazon is launching more and more of their in-house brands, which are reportedly given favorable treatment by their search algorithm.
This is why your end goal should be to expand to channels outside of Amazon, not as a replacement, but as a hedge against unforeseen issues. As soon as your brand starts making headway, start adding additional sales channels, such as:
- Your own site
- Other third-party marketplaces like Walmart and Ebay
- Social media
- A promotional email list
A diverse range of sales channels will help you scale and reach a larger base of customers, as well as protect your business should one sales channel hit a snag.
In Summary
The changing face of Amazon in 2019 and beyond dictates that sellers change too. Amazon is not a passive income venture anymore. You need to treat it like a real business, not just a side-hustle.
Private label is the best way to build an Amazon business that stays strong in the face of competition, internal and external threats, and stricter demands from both Amazon and its customers.
At LandingCube, we’re experts in helping you build your Amazon store into a strong, resilient brand. Check out how our promotional tools help you grow your private-label business, and for more resources on expanding your reach, check out the LandingCube Academy.
Originally published on the LandingCube blog. View the original post on landingcube.com.
