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Owning a Brand: How to Private Label on Amazon
07/22/20 — 0 min read

Owning a Brand: How to Start a Private Label on Amazon

You want to sell on Amazon by starting a private label. But you don't want to get caught up in guesswork, and you don’t want to make the classic mistake of choosing a product that never sells. So how do you pick a product you know will succeed? How can you private label something where you feel confident your investment will pay off?

This article is about branding your own product to sell on Amazon, otherwise known as private labeling. If you don’t know what private labelling is, or still haven’t figured out which business model you want to use to sell online, check out this article to learn the main e-commerce business models.

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Why Start a Private Label

Recap and examples of private label brands:

A quick recap: when you get a product manufactured by a third party (or contract), but sell it under your own brand name, that’s a private label. It’s more than just slapping a sticker on something and calling it yours: you get to call the shots. You pick what goes into it, often how it looks, as well as how you package it and the design of the label and other branding. It’s not the same as retail arbitrage, which we talk about in the article linked above.

Perhaps the most obvious example of private labels in e-commerce is Amazon Basics. A good niche can often avoid competing with them, but if you’re concerned, read our article about competing with Amazon’s private labels.

So what are the pros and cons of launching a private label product?

Advantages

We may be a little biased here because we’ve had so much success launching private label goods with our software, but there are some serious advantages to going the private label route:

  • Profitability: since you’re managing everything from manufacturing costs to the final cost of the product, you have a lot more freedom to decide your margins
  • Quality control: since you’re working directly with the manufacturer to produce something with your specifications, you can refine your product until it’s exactly what you want to sell
  • Quick iteration: as a smaller company on a different brand from your competitors, you can quickly make changes to the product and meet new demands in your niche
  • Branding: create a unique and recognizable brand, which not only distinguishes your product from competitors, but the brand recognition can then be used to boost sales if you decide to launch more products under the same private label

Disadvantages

Of course, if there were no disadvantages then everyone would be starting their own private label rather than wholesaling, so here’s what you can expect for potential downsides of launching your own branded product this way (summary: it’s really not much).

  • Initial marketing costs: marketing and customer relations are essential in building your own brand. Any established brand is going to have recognition in stores, so you will likely experience some heavier costs early on to get noticed and chosen over the competition. If you found a niche where you’ll be competing against some less-than-ideal offerings though, you might not even have to deal with this at all! Still, as with any Amazon business model, you’ll need to generate some initial reviews for your product to rank better, and this can create some heavier upfront costs.
  • Higher overall investment: simply put, this option costs. Even when you find a great niche with minimal competition, you’ll still need to go through the process of getting your product just right (sending specifications for the manufacturer, getting samples, often more than once), shipping stock to Amazon FBA, running promos, getting product photography, and even getting your own trademark (and other legal registration). It’s not as bad as it might sound, but it still takes dedication.
  • Supply-chain dependency: while it may be cheaper to partner with some obscure manufacturer, more established companies are often safer. Remember, you’re dependent on this manufacturer for your supply chain continuing uninterrupted, so if they encounter issues then you risk losing profits. To learn how to choose a manufacturer from China, or even if you don’t want to source from China, scroll down to Step 3 for more info!

Okay so you’re set on starting a private label, on building your own brand and rising to the top of an unconquered niche. Let’s get started.

Step 1: Finding your niche

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This piece of advice gets thrown around a lot, but consider finding a niche you’re passionate about. The most profitable products won’t usually be the sexiest or most interesting to you, so it’s not wise to chase just any product you have a passion for, but if you can find a good niche that gets you excited, go for it.

To get a better idea of what this might look like, check out our video on finding a product to sell for private label (and consider subscribing if you want more useful ecommerce advice)!

First, this makes selling a lot easier. Plus, if you can get excited about it, odds are you can find plenty of enthusiasts in the category. If the word “enthusiasts” didn’t make your ears perk up, remember that the enthusiasts of any category tend to spend a lot more on a given product than casual buyers do.

On top of this, you can avoid mistakes with manufacturers: by understanding the product, you’ll have a better idea of how you want it produced, and how to improve the quality of available goods. And you’ll have a much better idea of what a good manufacturer can produce. You’ll understand the needs of the market better, and know what features the product needs.

To get started brainstorming a niche, consider what you care about. What’s an area you’re familiar with? This might be anything from food items and beverages to personal care products and cosmetics. Think past the first things that come to mind: the best products are rarely the most obvious.

If you want more ideas based on the categories you’re interested in, try using Deep Words to explore what’s out there. Using sophisticated search data algorithms, Deep Words shows you all the best associated keywords associated with anything you type in. And on the Free Plan, you get 5 free searches a month! For a little primer on how you can use this web app to find your product, check out our Deep Words introduction video.

Step 2: Selecting a product: what makes a brandable product?

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You’ll want to identify a category where there’s a high demand, but the supply just isn’t addressing the demand in some way. You can use Peek for this (available for limited use on our Free Plan).

Run a search for keywords in the category you want to take a Peek into (sorry). Go through some search result pages in each potential niche, look for interesting products. The software can tell you which keywords have a high search volume, so you’ll know what’s in demand.

From there, try using Massview’s free Chrome extension to look at sales estimates for these products, and see which ones have high monthly revenues.

Hunt down your competitors’ keywords

With Competitor Insight (also available for limited use on the Free Plan), check out which keywords are driving sales for these products. This tool will let you see the top ranking keywords for each product, so you can quickly figure out which keywords you need to optimize for. Doing this well can save you a ton on marketing down the road, so don’t rush it!

A few quick tips:

  • Look for non-branded keywords. This means avoid using keywords like Nike or Burton or Hydroflask. Instead, look for keywords that aren’t specific to a certain company.
  • The competition for those keywords should not have a ton of reviews, and if they do have a ton of reviews, simply find products where the competition has poor star ratings. This way you’ll know the product you choose can outperform the market.

Once you’ve joined us as part of Massview’s Free Plan, we provide you with explainer videos for all of these services, so you’ll know exactly how to get the most of our software.

Watch your margins

Margins matter! If you know a product well, you can often find products where current competitors are selling at a huge markup. If those products are selling then you know you can create your own version and make a substantial profit. The better you differentiate your product, the more control you have over the profit margins.

Once you’ve found a potential product, you’ll want to figure out what kind of profits you can expect. Use the free FBA calculator available on our Chrome extension, Monocle by Massview. to determine your profit margins. When you find a product that still leads to a big profit (even after manufacturing, shipping, and FBA storage fees), you’ll know you’re onto something. Check out our Amazon FBA fee calculator explainer video to see how it works.

Don’t forget to leave some budget for marketing costs. With a bigger profit margin, you also have more flexibility to offer great deals to customers in order to build your initial sales (such as through our massive retail platform Snagshout – you can learn more about Snagshout for Merchants here). This way you can capture greater market share without breaking the bank.

If you’ve found your product, or if you’re still not sure what to expect for manufacturing costs, it’s time to talk sourcing.

Step 3: Sourcing

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We’ve covered these topics more in past articles, so here’s some quick recap.

First, choose a manufacturer to produce your product. This will vary quite a bit depending on your category. While China is the obvious choice for most people, many sellers are starting to source from outside China.

If you’d prefer a Chinese manufacturer though, try searching Alibaba for your niche, then contacting some of the highly rated manufacturers of comparable products to see who is willing and able to produce a product with your specifications and branding. You’ll want to consider their delivery times, and whether they’re legally compliant with any requirements for your product and category.

Once you’ve found a supplier who can give you a good price for your requests, have them send you some sample products to test the quality and see if you want to iterate further. There are some major advantages of going to China for this (at least when there isn’t an active pandemic), but if you want to learn more about sourcing, you’ll want to consider watching our show New Mogul.

New Mogul is a YouTube docuseries we started to help new sellers see the nitty gritty of what it takes to start an ecommerce business. We’re all about building careers that let people live life on their own terms, and we want to share that with you.

To dive directly into product sourcing, try New Mogul S1E3: Traveling To China: The Hunt For The Perfect Manufacturer. But if you want to see what it takes to start a physical product business from scratch, join us on our journey and start from New Mogul Episode 1!

And finally: start!

When your product is ready for market, you’ll need to choose a freight forwarder to ship your product to FBA. There are other methods, but FBA is ideal for most sellers, especially if you need package prep service (some freight forwarders will provide this). You’ll need to have your inventory ready before you start selling.

From there, you’ll want to keep it well stocked and do whatever you can to optimize for the keywords you’ve chosen. Learn more about Amazon listing optimization here to make sure your product hits page one of search results.

Private labels are a big undertaking at first, but can be massively profitable and can provide a much greater feeling of stability and ownership over your brand. So if you’re done reading, it’s time to get started!

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