Selling private label items on Amazon has become an increasingly popular method for ecommerce sellers looking to make more money. It can help you avoid price wars, earn higher profit margins, and establish longevity in the market.
Whether selling private label products is your primary focus or just an additional revenue stream on top of your other business ventures, ecommerce or otherwise, it’s a great way to set yourself up for long-term success in the ever-changing ecommerce world.
Selling private label items on Amazon has become an appealing option for several reasons. For starters, there’s a lot of appeal for online sellers that are sick of the penny wars that competitors often engage in to win the Amazon Buy Box. By selling your own uniquely branded items on Amazon, you avoid the Buy Box completely.
In addition to avoiding the Buy Box, selling private label products can often yield higher profit margins. Since you’re establishing your own branded product, you have complete control over how much you’re willing to spend on a supplier and other costs, as well as complete control over how much you sell your product for.
This is a huge difference from traditional reselling and retail arbitrage where you have very little control over how much you’re paying to source a product. Additionally, you’re forced to price your item based on other competitior’s prices and what the brand owner has established as a reasonable selling price. While reselling is still a viable option for many sellers, the profit margins are likely going to be smaller due to the nature of the business model. With private label items, it’s much easier to sell items at higher margins.
The first step to selling private label products on Amazon is, of course, deciding what to sell. You can make virtually anything a private label product - from phone cases, to kitchenware, to beauty products, to reusable water bottles. So how do you decide what type of product is right for you?
From sourcing to branding to creating a listing, you’re going to spend a lot of time and energy on the product(s) you choose to sell. The process will likely be much more enjoyable if you have at least some genuine interest in what you’re selling. Plus, you’ll likely already be somewhat knowledgeable on the product or product category if it’s something you care about, which will make creating your brand identity and listing a much easier process.
While you don’t want to rely solely on short-term trends that will stop selling by the time your product is ready, following trends is a great way to get ideas for a product to sell that will have mass appeal right off the bat. For example, fidget toys became massively popular in 2021 and were relatively cheap to produce, making them a very popular private label product. If you can identify a trend early using tools like Google Trends, you can set yourself up to develop a lucrative private label product.
While selling seasonal products isn’t a bad idea per se, you are immediately limiting your sales potential by selling something that is only popular at a particular time of year. Since selling a private label product requires capital upfront to pay the suppliers and to pay for branding initiatives, we recommend investing your time and money into a product that can have strong sales year-round.
Once you decide on the general product you want to sell, it’s time to do product research so you know exactly what you’re getting into.
You can use tools like JungleScout to check sales history, reviews, price points, and ratings of other products similar to what you want to sell.
While there’s not specific rules for what numbers deem a “successful” product, here’s a few tips to keep in mind when doing your product research:
Selecting the right supplier for your product is essential. When researching suppliers, your goal should be to find the perfect balance between cost and quality. You don’t want the supplier to be so expensive that you can’t turn a decent profit, but you also don’t want to necessarily pick the cheapest supplier that may not offer the quality you need to produce a viable product.
One of the best tools for finding a supplier is Alibaba, one of the largest and most comprehensive manufacturer directories. You can easily sort manufacturers in several different ways to find exactly what you’re looking for.
You can start by viewing suppliers within a specific product category to identify suppliers that have the resources to produce the type of product you want to sell. From there, you can optimize your search by sorting your suppliers by things like percentage of on-time deliveries and response times to find high-quality, legitimate suppliers.
Once you identify a few suppliers that seem like what you’re looking for, we recommend contacting all of them so you can compare what they’re offering. Be clear with the suppliers about what you’re looking for and ask plenty of questions about their current offerings and what they’re capable of producing.
Most legitimate suppliers will offer free samples, so you should request free samples from any suppliers you’re seriously considering. Pay close attention to the quality of the samples, how quickly they are delivered, the quality of the communication from the supplier, etc. - all of these can be indicators of the quality of a manufacturer.
Branding your private label product is one of the most important steps in this process. Your brand is what’s truly going to set you apart from other products in your category.
According to Forbes, good branding tactics have become more important now than ever in the time of social media due to the sheer amount of brands that consumers are exposed to. By strategically branding your product, you can ensure that you immediately stand out from your competitors.
There’s two main aspects of a brand: the physical look and your unique story. Both are important aspects of creating a brand that will stand out and effectively communicate to your customers why they should buy your product as opposed to someone else’s.
For the physical aspects of your brand, such as a logo and the packaging, you can use websites like Upwork and Fiverr to find designers with branding experience. You can work with these designers to create branding assets that fit your vision, as well as your budget.
For the more abstract aspects of your brand, you need to consider what your unique selling points are. What’s the difference between your product and all of the other ones in your category? What feelings do you want your product to invoke in consumers? How can you appeal to an audience in a way that is compelling, yet still authentic?
Establishing a positioning statement is a great way to answer these questions. Shopify offers a simple template to get you started:
While it may be tempting to slap on some random packaging and hope for the best, we recommend committing some real time to your branding, as it can make or break your product’s chances of success.
Now that you’ve picked a product, found a supplier, and created your branding, it’s finally time to list your product on Amazon! The main aspects of your Amazon listing to focus on are your product title/description and images.
Optimizing your product titles and descriptions are key to success on Amazon. The keywords that you use in your titles and descriptions are the primary way for consumers to find your product when they are searching on Amazon.
According to eDesk, your product title should contain things like:
There’s also several specific guidelines that Amazon expects you to comply with when creating your product titles:
Your product description is another great opportunity to include as many relevant keywords as possible. For example, if you’re selling a stainless steel electric tea kettle, you want to make sure you emphasize the words “stainless steel” and “electric” in both your title and description, as these are aspects that can set you apart from other tea kettles on Amazon.
You should also format your product description in an enticing, readable manner. Consider using bullet-point lists and keeping your copy straight to the point.
The two main things to keep in mind when choosing your product images is that they should be high-quality and should highlight every aspect of your product.
Using images of poor quality could signal to consumers that your product itself is low-quality, so it’s essential to make sure your images are not blurry, do not contain any typos, and clearly highlight your product.
Your first product image should clearly show your entire product, as shown in the example below:
In the additional images, you can then highlight specific things about your product, such as the dimensions or its unique features.
Essentially, you want your product images to tell the complete story of your product. You want consumers to learn everything they need to know about your product from its images so they feel compelled to buy your product even if they don’t take the time to read your product description.
Optimizing your prices is the final step in the process of selling private label products on Amazon. Sometimes private label sellers just choose a price with a favorable profit margin and stick to it, but these sellers end up losing out on sales and profits by not intelligently adjusting their prices.
Even though you’re not competing for a Buy Box when you sell private label items, consumers are still comparing your prices to the prices of all the other products they’re seeing in their Amazon searches. Plus, you won’t know how much consumers are willing to pay for your product if you don’t test out different prices.
If you price your product too low, you could be losing out on significant profit margins. If you price your product too high, you could be losing out on sales and marketshare.
We strongly recommend testing out different price points for your private label products. The easiest way to do this is by using a private label repricing tool, which automatically finds the best price for your private label product that will maximize your profits while still maintaining sales.
Tools like Informed Repricer’s private label repricer take the guess work out of optimizing your pricing by utilizing sales data and the power of machine learning to determine the optimal price.
By using a tool to automatically optimize the prices of your private label products, you can save time, improve your profit margins, and improve your sales rank.
Selling private label items on Amazon is a great option for online sellers who want to earn higher profit margins and avoid competing for the Buy Box. Although it requires more upfront capital and planning, it’s worth it for sellers who are serious about expanding their ecommerce business.
If you’re interested in checking out Informed Repricer’s private label repricer and learning more about how it can help you increase your private label profits, you can try it free for 14 days!
Informed Repricer is a competitive repricing platform that helps online businesses drive profits using smart algorithms and actionable insights.
