Do you feel exhausted from accepting meager profits on wholesale products, which offer little control over your business? It’s time to break away from these constraints and get great success through the establishment of your own Amazon FBA private label business. However, you need to understand every aspect of this label to truly be successful with it.
In this article, LitCommerce will provide useful information about Amazon FBA private label through the following sections:
- What is Amazon private label?
- Why should you sell Amazon private label FBA?
- Some disadvantages of FBA private label
- How to start an Amazon FBA private label?
What Is Amazon Private Label?
First of all, let’s discover what is private label Amazon as well as what is Amazon FBA private label with us.
Private labeling products refer to goods that are manufactured by one company but are branded and sold by another company. These products already exist in the market, and as a private label retailer, you simply add your own branding to them. It’s likely that the manufacturer is producing the same product for other brands as well.
This means that you don’t need to come up with a completely new product or concept to sell under your own brand. With private labels, you have full control over the product. You can customize it with unique brand logos, packaging, and labels. Moreover, you have the power to determine the product’s pricing, and you can also take charge of its marketing and advertising activities.
Meanwhile, Amazon FBA, which stands for Fulfillment by Amazon, is a service where Amazon manages the entire fulfillment process for sellers. This eliminates the need for sellers to handle tasks such as storing, packing, shipping, and customer service. To start an Amazon FBA business, sellers simply send their products to Amazon’s warehouses, and Amazon handles all the remaining aspects of fulfillment.
So, the combination of Amazon FBA and private labeling, called Amazon FBA private label, creates a business model where sellers sell on Amazon under their own brand or label. Amazon seller private label have control over the product. They source existing products from third-party manufacturers and customize them with their own branding elements. The products are then sent to Amazon’s fulfillment centers, where best-selling platform takes care of the storage, packaging, shipping, and customer service aspects.
Why You Should Sell Amazon Private Label FBA?
Is Amazon FBA worth it? Definitely it is. Selling on Amazon and making use of Amazon FBA can reduce lots of effort and time. Using Amazon private label FBA brings many benefits to sellers, most notably the following benefits:
Gain higher profit
As mentioned, private label Amazon FBA lets you source products directly from manufacturers and create your brand. This way, your costs will be much lower than when you resell products from other brands. If you’re selling wholesale products, you’ll buy from a brand owner or distributor who has raised the product’s price, leaving you with a smaller profit margin.
Meanwhile, with FBA private label, you can negotiate the best prices and terms and avoid paying any intermediary fees or commissions.
Customize your items
With this Amazon FBA private label sales method, you have full rights to customize the product however you want. You can work with suppliers or design units to make your products unique and more impressive than competitors appearing on Amazon.
Not only that, as an Amazon FBA private label seller, you can review customer reviews of your products and competing products, and pay attention to the problems that other shoppers encounter. Then, you can customize your product to be even better than the best-selling brands.
Have no brand restrictions
Even the name Amazon FBA private label shows that you can own your private label brand 100%. That means you can make all brand decisions independently. If you intend to resell items from other brands, Amazon may limit you under its Brand Gating feature for counterfeit management. You must have explicit approval from these brands to sell their products.
Simply put, since you sell items under your own brand name, you don’t have to get approval from anyone. You just focus on marketing and providing excellent customer service to strengthen your brand and customer loyalty.
It gives long-term momentum to your profits and ensures business stability.
Manage creatively your listing
Additionally, if you sell with Amazon FBA private label, you establish a completely new entry in the Amazon marketplace. This allows you to conveniently modify images, pricing, listing descriptions, and keywords to your benefit whenever you desire. Also, you can take full advantage of A+ content or enhanced brand content to improve your brand awareness and grow sales. A+ content allows you to provide additional information about your product to potential buyers and persuade them to make a purchase.
In contrast, suppose you’re engaged in reselling on an already existing Amazon product detail page. In that case, it can be challenging to make changes to the images or description if necessary, as you are not the original seller who listed the product.
Compete a little for the Buy Box
The Buy Box is located on the right side of the product page, where customers can click on it to buy the product. Now, resellers usually have to compete with other sellers to win the buy due to their ability to increase sales and visibility on Amazon.
But private labels on Amazon FBA owners don’t need to worry about that. They can win the Buy Box right since they are the only seller of this product. It can boost conversion rate and revenue. To put it differently, by utilizing a private label, you will have exclusive ownership of the listing and complete control over the Buy Box.
Increase in credibility
As you build your private label brand on Amazon, you establish credibility and trust among customers. When customers recognize your brand and consistently receive quality products, they are more likely to become repeat buyers and recommend your products to others. This increased credibility boosts sales and paves the way for long-term success and brand loyalty.
By selling products under Amazon FBA private label, you can maximize in-demand products while contributing to your own brand’s credibility.
Some Disadvantages of FBA Private Label
Although it brings many advantages to sellers, Amazon FBA private label still has some limitations, including:
Require high investment
Unlike reselling products, where you can buy low and sell high, selling Amazon private label products requires investing a significant amount of capital into sourcing and manufacturing their own products. This often involves working with manufacturers overseas, which can incur product development, packaging design, and shipping costs. Sellers must also allocate funds for marketing and advertising efforts to gain visibility within the competitive Amazon marketplace.
In general, when starting an FBA business, the financial commitment required to launch an FBA private label business can be a deterrent for those with limited resources or risk-averse mindsets.
Take a lot of time and effort
Another drawback of FBA private label is the substantial amount of time and effort it demands. Creating a private label brand can be time-consuming and labor-intensive, from product research and development to sourcing suppliers and negotiating deals. You must also invest time in optimizing product listings, managing inventory, and handling customer inquiries.
Moreover, continuously monitoring market trends and adjusting product offerings is crucial for long-term success in the ever-evolving eCommerce landscape. The significant problem of time and effort required for FBA private label may pose challenges for individuals with limited availability or those seeking a more hands-off approach to business ownership.
Monitor quality loosely
Furthermore, one area that FBA private label sellers need to be cautious about is the potential for quality control issues. Since you source products from a third-party manufacturer, it’s impossible to check the quality and safety of the products. However, customers don’t know that. If they receive a bad product, it hurts your brand reputation and reduces customer loyalty. The product listing also gets affected by bad product reviews, further reducing sales.
Therefore, FBA private label sellers need to establish strong relationships with reliable suppliers and implement robust quality control measures such as establishing clear quality standards, performing pre-shipment inspections,… to mitigate these risks.
How to Start an Amazon FBA Private Label?
Although there are both advantages and disadvantages, in general, Amazon FBA private label is still a selling method worth trying for many people. However, how to start an Amazon FBA private label? Here are Amazon FBA private label step-by-step guide:
Research items
The first step to starting your private label Amazon business is conducting thorough research on potential products. You can begin by:
- Explore different product categories and niches that interest you.
- Consider factors such as demand, competition, profitability, and market trends.
- Utilize Amazon’s search tools, such as the Best Sellers Rank and Product Research Tools, to identify popular and profitable products.
- Dig deeper into their sales history, customer reviews, and pricing trends when you have shortlisted a few product ideas.
- Evaluate the potential for differentiation and improvement of your items.
- Look for opportunities to add value to existing products or identify gaps in the market that you can fill.
By conducting comprehensive research, you can make informed decisions about which products to pursue.
Looking for suppliers
After identifying your potential products, the next step in the process of how to start Amazon FBA private label is looking for reliable suppliers. You need to:
- Search for manufacturers or wholesalers that specialize in the products you have chosen. Some online platforms like Alibaba, Global Sources, and Thomasnet are excellent resources for finding suppliers.
- When evaluating suppliers, look at factors such as their production capabilities, quality control measures, pricing, and delivery times.
- Request samples to assess the quality of their products firsthand.
- Verify their credentials and reputation by checking references and customer reviews.
- Negotiate pricing and terms that align with your business goals while ensuring a win-win situation for both parties.
It is noted that you need to create a strong relationship with your suppliers. Effective communication, mutual trust, and clear expectations are essential for long-term success.
Customize your brand & items
Now that you have found a product and a supplier for your Amazon FBA private label business, your next step is to customize your brand & items. It is the best way to help your business stand out in the competitive Amazon marketplace.
You should:
- Generate a unique brand identity that reflects your target audience and values.
- Design a compelling logo, packaging, and product labeling that resonates with your customers.
- Collaborate with your suppliers to customize the product features, materials, and packaging.
- Innovate and differentiate your products to offer something unique and valuable to customers.
- Focus on providing an exceptional customer experience, whether it’s through product functionality, design, or additional features.
Create Amazon listing
Creating an effective Amazon listing is key to showcasing your products and driving sales for your Amazon private label business. Here are some tips for you:
Start by optimizing your product titles, bullet points, and descriptions with relevant keywords that customers are likely to search for.
- Use product images of superior quality that faithfully depict your merchandise.
- Utilize Amazon’s Enhanced Brand Content (EBC) or A+ Content features to provide additional information, images, and videos that enhance your product listing. These features improve the customer’s understanding of your product and help build trust and credibility.
- Motivate customers to share their experiences through reviews by offering incentives, sending follow-up emails,… Positive feedback not only enhances the visibility of your product but also builds trust in your brand among potential customers.
Launch your items
Now that you have prepared everything, it’s time to start selling your products on Amazon FBA private label. In this step, to attract customer’s attention, you can refer to some of the following tips:
- Run a focused advertising campaign. You can use Amazon’s Sponsored Products or Brand Advertising features to make your product more visible and increase sales.
- Adjust your marketing strategies and optimize your product listing based on customer feedback and market trends.
Significantly, remember that increasing sales on Amazon with a private label business on Amazon requires continuous effort, flexibility, and dedication to providing great value to your customers.
Difference between Amazon FBA Wholesale vs Private Label
Along with Amazon retrail arbitrage, many sellers are still confused between Amazon FBA wholesale and private label. In fact, these two forms are completely different. Amazon FBA wholesale involves selling established brands’ products on Amazon. You buy products in bulk from a wholesaler or manufacturer at a discounted price, and then sell them on Amazon for a profit. Amazon FBA takes care of the shipping and storage of your products for you.
Meanwhile, Amazon FBA private label involves selling your own branded products on Amazon. You find a product that you think will sell well, and then you design your own packaging and logo for it. You then work with a manufacturer to produce the product for you. Once the product is manufactured, you ship it to Amazon’s fulfillment centers, and they take care of the shipping and storage of your products for you.
Overall, here are some key differences between Amazon FBA wholesale vs private label
Feature | Amazon FBA wholesale | Amazon FBA private label |
Products | Existing brands’ products | Own branded products |
Brand | No | Yes |
Profit margins | Lower | Higher |
Startup | Lower | Higher |
Amazon FBA Private Label: FAQs
- Is Amazon FBA private label still worth it?
The viability of Amazon FBA private label depends on various factors, including product selection, competition, marketing, and operational efficiency. While it can still be profitable for some sellers, the market has become more competitive, and success requires thorough research, quality products, and effective marketing strategies.
- Is Amazon FBA private label profitable?
Yes, Amazon FBA private label can still be worth it. While it requires significant work and effort, it can be a profitable business model. According to a survey by JungleScout, most Amazon sellers make at least $1,000 a month, with some super sellers making over $100,000. However, it’s important to identify your niche and ensure the viability of your business model before becoming a seller. With FBA, Amazon takes care of fulfillment, making it easier for sellers.
- Is Amazon FBA the same as private label?
No, Amazon FBA (Fulfillment by Amazon) and private label are not the same thing. Amazon FBA is a service provided by Amazon that allows sellers to store their products in Amazon’s fulfillment centers. Amazon takes care of packaging, shipping, and customer service on behalf of the seller.
Private label, on the other hand, refers to a business model where sellers source generic or unbranded products from manufacturers and then create their own brand and label for those products. While private label sellers often use Amazon FBA for fulfillment, it is not exclusive to private label sellers.
Learning the Amazon FBA Private Label for Beginners Now!
In short, while competition is intense, the potential for global reach and substantial sales on Amazon FBA private label is undeniable. With careful planning and execution on how to start Amazon FBA private label, you can build profitable and sustainable businesses in this exciting era of eCommerce.
Besides, if you want to expand your eCommerce business by selling cross-platforms, LitCommerce is the great tool you need. To know more about this tool, contact us now!
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