Your Amazon Seller Account Management

Amazon Business Models – Private Label

Private Label is all about searching and finding a product that has high demand and potentially low competition, manufacturing it from a supplier, and selling it under your own brand name and logo.

Advantages of selling Private Label Products

People who think of selling on Amazon assume that products that belong to already established brands are the best to sell and make profits on Amazon.

Although some sellers make a good amount of money selling goods of established brands, but many times such sellers are an exception.

Competition can be brutal, and on some listings, there are so many sellers competing for the same product that profits can fall until there is no profit at all. Sourcing white-label products and then private labeling them can save you from this tough competition.

In addition to avoiding competition, there are some other advantages of private labeling:

• Increased Profits –?Private label products are usually cheaper to source. There are two advantages of this:

One –?You can make good profits out of it as they are sourced

at a lower price and can be sold at a higher price.

Two –?You can sell it at a lower price to accurately position

yourself in the market, and still, you can make a decent profit.

• Increased Credibility –?Private labeling, branding, and marketing of your product build buyers’ trust and they feel more comfortable spending with you.
• Increased Exposure –?You have your own unique brand name, packaging, logo, and color scheme. This can lead to significantly increased exposure. Having all these, the buyer feels much inclined to track you down to make a similar purchase in the future.
• Asset Building –?Your Amazon private label brand is your asset. You can sell it at any time and make a huge amount of money. There are some people who usually develop brands and then sell those and make huge cash and then develop more and sell and this continues.
• Control –?The biggest advantage of private labels is that you have all control of your business and you are free to operate your business the way you want within the limits of Amazon’s Terms of Service.

How to Sell Private Label Products/Private Label Process

• Product Research –?Product research is the base of your private label selling. If you make a mistake at this point, you are going to end up gaining nothing. Make sure you have done thorough product research.

Some people start selling products, without prior research,

that they believe can sell very well and actually they don’t.

Sometimes, some people will suggest you sell a particular

product on Amazon which in their opinion will probably sell

well, don’t be a fool by such products.

There are a lot of other factors to consider when choosing

your product, but as a rule of thumb, sell products that are:

– High in demand

– Low in competition

A number of tools can be used to carry out product research,

the most common are?Jungle Scout?and?Helium 10.

• Product Sourcing –?The next important step – after finding your potential product, now is the time to source it. Most of the time, products are sourced from china through Alibaba.com. Alibaba gives its customers much protection through Alibaba trade assurance and verified suppliers.

1. Contact 5 to 10 suppliers of the same product.
2. Discuss your product’s specifications and modifications and make these as clear as possible to the supplier.
3. Don’t make any compromises over quality.
4. Discuss Minimum Order Quantity (MOQ).
5. Negotiate the price and try to source at the lowest possible price, but don’t prefer a low price if the quality is compromised. Best quality at the lowest possible price. (preferred time for price negotiation is after receiving samples but can be negotiated earlier).
6. Order samples and choose the highest quality sample to proceed with.
7. Don’t make a deal with the supplier outside Alibaba.com even if they offer discounts for doing so.
8. Represent yourself as a pro, not a beginner.

Before choosing your supplier/manufacturer, make thorough

research to check its legitimacy. Visit his Alibaba.com site and

his website outside Alibaba.com if possible, in order to check

each and every detail.

• Products Samples –?After contacting your suppliers and
• carrying out the necessary verification of the legitimacy of
• the suppliers. Shortlist your suppliers to the top 3, and
• proceed to order samples.

Samples are usually not free and you have to pay either the

the shipping cost only or sometimes price plus shipping cost.

Most of the suppliers agree to adjust the sample cost in the

the total cost of your inventory if you agree to place your order

for inventory with them.

Suppliers try to send you the best of the best quality product

as samples. Your actual product might be 90% to 95% of the

quality of the sample. It can be 100% of the quality of the

sample if you find a very good supplier, but to be on the safe

side expect it to be 90% to 95%.

After receiving the sample, test the sample?under extreme

conditions. If the product passes?the worst of your tests,

then go for that supplier.

• Price Negotiation –?Price negotiation keeps the product cost-friendly and brings better profit margins. Remember do not go for the lowest price at the cost of quality of product, fulfillment, and communication of the supplier.

Instead, choose a supplier who ticks all of your boxes. Use the

lower quotes you received from other suppliers to negotiate

the price with the supplier you chose – it might not always

work and you must be flexible enough to compromise on the

price or even give up the deal.

This is the point where you should ask your supplier for

private labeling of your products (putting your logo and brand

name on your product). You can choose to add simple labels

to your product packaging or add them to your product at the stage

of manufacturing. Whatever option you choose, will cost you

some extra money.

• Branding – Logo and Packaging –?Once you have your product that you choose to sell as a private label, you would be able to have an idea of packaging and logo. Branding is a vast concept and not only limited to logo and packaging, branding experts will help and guide you through this.

Choose your logo, packaging, and color schemes that are

suitable to your niche and the market you are going to sell in.

• Product Photography –?Product photography is the key to generating sales. High-quality photos are converted better. While photographing your product, Amazon’s guidelines regarding product photos must be followed otherwise you may get your listing suppressed.

If you are not tight on budget, it’s better to hire a professional

photographer to photograph your product.

Your product photos must show each and every angle of your

product. This will help the customer to make his decision to

purchase the product.

• Product Listing –?While you have placed your order with your supplier and your inventory is in the process of being manufactured, you should start working on creating your product listing.

Keywords are the major element of your product listing, and

you have to put in some hard work to grab the most relevant

and high-performing keywords. Keywords with high search

volume are considered to be high-performing keywords.

• Launching and Ranking – Advertisement –?Once your inventory reaches the Amazon warehouse and your product goes live, your product would probably be ranked on the list of search pages. Product ranking gets better and better when sales are coming, advertisement can help bring sales and rank your product to the first search page.

There are two types of Amazon advertisement:

– Automatic

– Manual

It is advised to run an automatic campaign first for 3 to 4 weeks.

This will help you analyze which keywords perform well and

which are bad. After getting enough data regarding the

performance of keywords in automatic ads. You can then run

manual ads as well.

You have to spend money on advertisements for the time until

your products in ranked on the first page. After that, you can

reduce your advertisement budget, but advertisement is a life

long activity and it is recommended not to stop ads as it

brings in additional sales.

Other methods of generating sales and ranking your product

are giveaways and issuing coupons. This will also eat up some

of your money.

In the beginning, it is preferred to run aggressive

advertisement in order to rank the product as quick as

possible.

Social media platforms like Facebook, Instagram, etc. can also

be used to drive some external traffic and generate sales.

• Fulfilling Orders –?Amazon offers its sellers two fulfillment methods:

– FBA – Fulfillment by Amazon; and

– FBM – Fulfillment by Merchant

FBA –?Amazon will store, pick, pack and ship your product to

your customer when an order is received. Amazon will also

handle all the returns and other customer services.

FBM –?The seller itself has to handle storage, shipping, returns and

all other customer services.

Comparing the two methods, FBA is preferably the better one

as Amazon is definitely much more efficient than the seller itself. But

it will cost you some extra money, but it is worth it.

The only pro of FBM is it saves you some costs. If you feel you

can manage FBM very well, then go for it, otherwise, it is risky

as delayed shipments and poor customer service can lead to

negative feedbacks.

Summary – Private Label Process

1. Product Research
2. Product Sourcing
3. Products Samples
4. Price Negotiation
5. Branding – Logo and Packaging
6. Product Photography
7. Product Listing
8. Launching and Ranking – Advertisement
9. Fulfilling Orders