Brands have become a huge part of our everyday lives. In some way or another, we interact with multiple brands on a daily basis, sometimes without even realizing it. Whether they are local, international or makeshift business owners operating out of their homes, we use and engage with brand-owned products all the time, everywhere.
They’re prevalent in every industry and every media, from TV to radio and everything in between. Every day we hear instantly recognizable names with established business chains across the world. But does that mean that only huge companies are capable of establishing their own brand? Absolutely not.
What makes the private label model unique?
With the way our markets have evolved over the digital space, everyone has access to creating their own unique identity and selling their private label products on eCommerce platforms. In fact, selling privately branded products that are in high demand is a great strategy to capitalize on reputation and popularity.
However, the process does take a great deal of time and effort. In this article, we’ll be exploring every aspect of creating your own private label on Amazon and growing it online. Before we do that, let’s start with the basic terms.
What is a private label product?
Basically, a private label product is any generic item that you brand with your own company’s identity. In other words, you modify and impart your own established business identity to the product so that it becomes easily recognizable in the market. This also helps your brand grow in the online marketplace.
In a nutshell, private-label products are simply items produced by a company, which you buy, improve, market and sell under your own personal branding. Amazon FBA has become a super popular way to do this. The marketplace comprises just about every conceivable consumer industry, from electronics to food, cosmetics to clothing.
There are no hard and fast rules to a private label product (also known as a white-label product). It could be a modified version or a commonly sold item that you simply imprinted your brand logo on. You could also completely reinvent the product to suit your brand identity, add features and enhance its quality.
It’s really all about finding the right product in an unbranded form, labeling it, and giving it your own unique identity to market and sell it on one of the world’s most popular eCommerce marketplaces – Amazon.
The private label strategy
It is quite difficult to actually find an audience for a product you’re introducing to the market for the very first time. This is why most ecommerce business owners prefer to buy popular products that are already in high-demand, brand them under their own private label, market them as such, and sell them online.
For instance, let’s say vacuum cleaners are a trending product in a certain locality. Most of these sales take place on Amazon. Let’s suppose a common complaint you hear regarding the product is that it is too loud when activated. So now you know that there is a great demand for less noisy vacuum cleaners. In this case, a savvy business owner could try to find ways to improve upon the existing product (research how to make less noisy vacuum cleaners), brand them under a private label and sell them online.
Of course, this is just a random example. But it is what essentially happens in the case of everyday ecommerce sellers, at a slightly smaller scale.
Not only do you improve upon an existing product, solve a problem, and make great sales online. You also associate your brand with the product, thereby building your own reputation and growing your market share.
What are the Benefits of Selling Private Label Products?
The benefits of selling private label products on Amazon FBA are numerous. Here, we’ll list just a few of them to give you a general idea of what you can expect from this lucrative way of doing business online.
The private label business model is a great way to cash in on the credibility you’ve created through consistently good performance. A brand name exudes trust and reliability. It sets you apart from ecommerce sellers who trade the same products, albeit in their generic form. As you make good on what you promise, it adds to your brand’s reputation. This accumulated feedback can be very persuasive for potential customers.
Better profit margins
When you brand your product, you’re instantly positioning yourself in the market by doing so. In addition to what the product costs, you’re also charging for the brand value. This gives you flexibility in terms of pricing. Associating your brand with a product has a circular effect of increasing the product’s value, just by virtue of the label.
Room for customization
Private labelling is an opportunity to build the products you want to build. So naturally, it offers great scope for customisation and enables you to improve upon existing products, test new features and creatively add your own imprint to what you’re selling. If you have a better idea, or a better strategy of selling, you get to use that insight to inform the product’s design.
Simply put, you get to experiment with ideas and have the freedom to try different things with the product. You won’t be stuck with what you’ve got.
Creating a brand identity
The goal for any new business owner on Amazon is to eventually grow big enough to scale up and expand. To do this, you need to craft your own brand identity. That way, consumers begin to associate your product’s quality with your brand’s values. When you start to branch out and add more items to your inventory, loyal customers are more likely to buy from you. Strong brand presence can also bring in new customers, which is why you shouldn’t underestimate it.
Potential for high revenue
Once you’re able to give your customers a unique offering, coupled with a strong brand identity and smart marketing, you eventually start making more sales. This boosts your revenue which gives you massive investment potential.
The best way to outdo your competitors is by offering your customers something unique. Personalising the product to reflect your brand isn’t enough. You also need to make sure that you’re making it better. Private label isn’t just about introducing a superior product in the market. It is also about getting your customers to recognise the source of the product – you.
Compared to a random and obscure Amazon profile, brands have a way of attracting attention. Part of this is due to the fact that private labels are simply more recognizable and easy to remember. Even when happy customers recommend you to others, they need a name that they can use and a proper logo to which they can point.
How to sell private label products on Amazon in 2021
Begin with research
If you want to succeed in sales, you need to adopt a result-driven approach. When you research products to sell under a private label, its best to play it safe if you’re starting out. Find bankable products that are in high-demand and have a proven track record of being reliable.
You might notice plenty of attractive deals and products that appeal to you, but when it comes to business matters, you need to look at the data through an objective lens. Don’t just pick any random product on a whim. Look for strong indicators that show the product performs well.
Here are some good guidelines to help you choose a product:
- Easy to ship, easy to sell:
Start with products that are small and lightweight. This helps you ship more goods in bulk while you save on shipping costs.
Go with products that are easy to exchange and get replacements for. Eg: custom T-shirts are a lot easier to swap around if the size you delivered doesn’t fit the buyer. On the other hand, certain electronics are a lot more complicated and not easily replaceable.
Unless you already have a niche product that has a growing demand in the market, an already established product line is the way to go. Sure, you might encounter a great deal of competition, but you can also expect to make sales because of the high demand.
Look for top-rated, trending products that are in demand all year round. Some items might experience a surge during special occasions or festive seasons, followed by an instant decline once the season ends. You need to avoid that by looking at what sells historically, not just at a particular moment in time. Also try to avoid products that come with multiple legal and safety requirements. For eg: batteries, toys etc.
While you can benefit from a high-demand product, you need to stand out from the competition with a unique offering. This doesn’t necessarily have to be in the form of a different product or new features. It could just as well be a better deal or discount you’re allowing for prompt customers. The key is to distinguish yourself, not to alienate the customers.
Sourcing, the smart way
Once you decide on a product, the next step is finding a manufacturer you can deal with. Many newcomers may feel hesitant about approaching unknown third-parties, but it’s actually very simple once you get the hang of it.
There are plenty of ecommerce websites where you can find generic, manufactured products in bulk at ideal prices. The best part is you don’t have to directly interact with the manufacturer. Just place your order and wait till its delivered.
On the other hand , you could go the traditional route and look for the closest production centres that offer wholesale deals.
Samples for testing
A common strategy is to get product samples from multiple manufacturers and test them out before you decide on any one of them and place a big order.
Handling the product personally and giving it a close inspection helps you spot defects early on. This way, you can avoid purchasing faulty items that damage your business’s reputation. It also helps you compare prices, get a feel for variety and gives you leverage to negotiate with suppliers.
Negotiating with suppliers is all about finding middle ground and meeting them halfway. Manufacturers will expect you to negotiate so there’s no need to feel apprehensive, it’s the natural thing to do.
If the product is up to standard, then the only thing you need to worry about is the price. The initial quote is always going to be a lot higher than what the product is worth, including profits. However, you’ll still have to compromise at some point if you want to go forward with the deal. Be willing to discuss counter-offers and discounts.
Logo and package design
Branding your product with your very own label involves a memorable logo and safe packaging. Make sure that your logo design complements your brand and what you’re selling. For instance: soap bar packaging commonly uses light and upbeat color schemes to cultivate a positive brand perception in the consumer’s mind.
You also need to think about the markets you want to sell in. Consider factors such as local language, culture, attitude, and brand image when you design the logo and tagline.
Start listing, start selling
Once you’ve got your deal underway, designs ready and branding in progress, then it is the ideal time to start listing your private label products on Amazon FBA. You might be wondering why it’s better to wait so long. We do this so that you can create your listing when you have great product images to market your brand on the platform. The design, product features, and marketing copy are all things that take time to become fully realised. Only when you have products lined up and ready for sale can you clearly define what your brand is all about.
Optimize your brand
Make sure you do your research and use the right keywords to optimise search. Also, consider the tips we mentioned in a previous lesson to capture winning product images that give your branded products a competitive edge.
Be willing to take as much time as you need to craft a catchy title and crisp bullet points that outline what makes your product unique and attractive to potential buyers.
FBA (Fulfilled by Amazon) or FBM (Fulfilled by Merchant)
Once your business starts to take off and the orders come in, you’ll have to manage fulfillment. This is what makes Amazon FBA unique. If it is convenient, you can opt to handle delivery and customer service on your own. If not, you can arrange for Amazon to handle it all on your behalf, for certain fixed charges.
When you go with the FBA option, you need only forward the inventory over to the designated Amazon warehouse close by. The company manages storage, pick-up, package and delivery for your private label product, on your behalf.
You also don’t have to worry about addressing customer grievances, returns and refunds because Amazon handles that too. However, you need to consider whether the ensuing cost is going to take away significant portions of your revenue. This varies depending on how successful your business is.
Setting up your own private product label and selling under your personal brand is no longer as complicated as it once used to be. The rapid growth of e-commerce sites has empowered all types of business owners from every sphere of life to sell better and bigger. Building a brand on Amazon merely takes some good research skills, an open mind, a good negotiation strategy, and the right mindset.