Amazon private label- Private label model is a great way to start your Amazon business. Amazon has made private label products very popular for consumers, and many sellers have been successful with Amazon private labels.
This article will discuss how Amazon FBA can help make your private label product successful on the Amazon Marketplace.
What is Amazon's private-label business model?
Amazon’s private label program offers you the opportunity to sell products with your brand name on Amazon. Amazon has made product creation and selling it very simple. This business model works best where you first need to find a good developer/manufacturer that can use your brand. You can create Amazon private labels by either finding existing items to sell with your brand or working directly with manufacturers who can create new products under your own brand name. In most cases, the supplier or manufacturer can be found abroad or in China through Alibaba.
Once your product is created, you can submit it for the Amazon FBA model and use the Amazon Marketplace to sell your product. Amazon FBA is a fulfilment service that will manage your products for you and ensure they are successful on Amazon's marketplace. As you produce and buy your product in bulk, the initial cost is very high. So be prepared to invest $1500-$5,000 only for your initial stock and of course launching budget is also very high.
However, there are usually minor barriers to entry:
- Don’t need a website to sell
- Don’t have to generate traffic because you are using Amazon Marketplace
- No minimum stock required
In general, this business model is more demanding yet challenging than other models, as it often requires interaction with foreign suppliers. But the best thing about Amazon Private Brand is that you own your brand. You own your product and sometimes so the profit margin is very high (over 50%). Also, because the Amazon market is huge, you can make money faster.
The main disadvantage is that you are connected to Amazon and exposed to face all the hurdles of selling on this market. To rank your product on the first page or make it visible to the buyers you have to spend a handsome amount initially to run the Amazon sponsored ads. Ranking keywords are the most expensive because sometimes you have to offer free products to rank on a certain number of keywords. Another disadvantage is that any reasonable offer will attract sellers and individuals alike/ hijackers.
You should also keep checking your products for negative feedback and product quality issues as Amazon can suspend your products or account at any time. In addition, since you are investing a lot of money in inventory, the Amazon ban can keep you stuck with lots of unsold products if you don't choose what to sell wisely. Especially when you later discover that the product you are trying to sell is a patent.
In general, selling private label products is very attractive because you own the brand, you own the product, and you can sell it on your website too. Selling a privately labeled product is the most consistent way to make money on Amazon than any other model.
Highlights of Private Label
- Ease of Launch - You need to find a manufacturer and invest a decent chunk of change in inventory.
- Profit Velocity - You can sell immediately.
- Sustainability and Risk - You can be suspended by Amazon, but as you own the brand, so it is not that easy you can open a case if something bad happens to your listing or account.
- Level of Competition - Besides sourcing products and choosing specific products, there aren't many of them.
How Does it Work
Amazon FBA allows sellers to send their products into the Amazon warehouse where they are stored until sold through Amazon Marketplace channels. When one of these items sells, Amazon packages it up and ships it off for you! This way there is no need to worry about buying shipping materials or filling out any forms at the post office; this entire work is automatically done on your behalf through Amazon's Amazon FBA service.
Why use Amazon Private Label
Amazon offers two distinct advantages over other marketplaces when it comes to using the Amazon Marketplace as part of an online retail plan:
- Consumer trust in their system
- Ease of access compared to all other platforms available today. Since customers have been shopping on Amazon for years now, most of them feel comfortable purchasing things through Amazon that they might not buy on another online marketplace.
When it comes to being able to ship an item quickly, the Amazon platform outshines all others. This ease of access allows sellers looking at using Amazon as part of their overall plan an edge when compared against other marketplaces such as eBay or Etsy where listing items for sale takes much longer than if done through Amazon's system.
How much Does It Cost
The flat fee Amazon charges per item sold through the Amazon Marketplace is very minimal which includes all fees such as referral, closing fee, etc. It also comes at no additional cost when customers buy multiple items from one order, not only this but Amazon paid out sellers every two weeks, unlike other marketplaces where funds might not be released for days or even weeks.
If we talk about Amazon business account fees it costs $ 39.99 yearly to sign up as an Amazon seller which is relatively low when compared against other marketplaces such as Etsy where sellers pay between $15 – $20 monthly just to list their item! Even eBay charges more than this for listing fees alone; however, each platform offers its unique advantages over the others depending upon what type of business model you choose.
What Kind of Products Can I Sell?
You can sell almost anything as long as it complies with Amazon policy! If you want to start looking at what is already being sold through their platform simply check the list of best-selling items on Amazon. There are over 50 million different types of goods listed so there is room for everyone! In most cases, many sellers choose to source existing products from China through Alibaba, though the possibilities of creating something original are endless!
Sell Your Private Label on your Website
You can also sell your private labeled product on your website to get traffic from outside the Amazon Marketplace. Amazon helps those listings to rank which gets organic traffic through Google. This latest business model with the maximum potential of getting profit is selling products from your brand on your website. This includes branding your product and increasing traffic to your online store. In addition to selling your brand on Amazon, getting traffic through the website to sell your private label product not only requires start-up capital and investment to develop a website, but also provides long-term stability. The branding website allows you to establish your brand outside Amazon. Further, you can set the price and place your product as you wish, and no one will be able to stop it.
So, if you want to sell your private label products on your website, this is the safest way to start an e-business in the long run:
- Ease of Launch - You need to buy a product and create a website
- Profit Velocity - You must pay for advertising on Google to generate your traffic
- Sustainability and Risk - You are responsible for your experience of selling on your website your brand. No one is interested in you
- Level of Competition - Finding a special offer is easy when you have complete control
Now you have an overview of the Private Label business model in e-commerce platforms, it is important to note that nothing can stop you from integrating different models. Just because I sell on Amazon, does not mean that I cannot run my website for my private label.
Private label products do not mean to sell your product always on the Amazon marketplace; you can launch multiple products under your private label and adopt different business models. We recommend you try the entire model to see what is appropriate for you but yes, we recommend selling private labels as a brand on Amazon when you want a long-term stable income it is the best time to build your online store on Amazon.