The term ‘Private Label’ has become quite popular among Amazon FBA (Check the step by step guide for Amazon FBA here) sellers. It sounds beneficial for online business yet, there are many aspects to consider. For example, while selling on Amazon as a private label seller, the first and foremost thing you should worry about is inventory management. Private labeling requires highly efficient and optimized inventory automation for sellers to make the most out of their business.
Private label products carry the name of the seller but are manufactured by a third person. Usually, after establishing an online business and growing at a fine pace, the seller takes one step further by choosing private labeling. In order to create his own brand and create an identity, he starts selling private labeled products.
In the previous blog post, we talked about 5 simple steps to create a private label product for Amazon. It gives a unique identity to your products.
After finding a suitable product to sell on Amazon with the highest profit, the seller needs to create an appropriate logo and design. Along with designing and logo, the packaging and listing on Amazon fall under his responsibility.
Private labeling on Amazon
While purchasing your products from a manufacturer, when you put your own logo to sell on Amazon, that product goes under private label.
Personal care, beverages, cosmetics, dairy items, frozen food are quite popular products for private labeling.
Before selling your products on Amazon, it is necessary to register for a trademark and authorize your private label. If the same logo or name is already registered under somebody else’ name you can check on the Trademark Electronic Search System Database (TESS).
After making sure the availability, you can register for a trademark on the U.S. Patent and Trademark Official Website.
When we talk about Private label it seems that there are more advantages than disadvantages. It is important to identify if the same can be good for you and acknowledge if they can benefit your business.
Following are Pros and Cons of Private Label which is necessary to understand before coming to a decision.
Pros of Private Labeling
- They are cheaper than the nationally branded products which can eventually lead to a higher profit margin. In the following image, you can see the price difference.
- Competition among manufacturers can prove to be the best opportunity for the sellers to get the best quality products.
- You can control the pricing and production of the products and grow at your own pace.
- You can modify your products whenever you want to depend on the needs and requirements of buyers.
- You can create your own brand name. All the positive reviews associated with the product can make you a good profit.
Cons of Private Labeling
- You are highly depended on your manufacturer in terms of the quality as well as production.
- Private labelled products are sold at a lower price which leaves lower profit margin in the initial stage considering all the amount you are spending on private labeling.
- Private Labelled products are more like replicas of the branded products which leaves very small room for the unique identity.
- Designing your own logo and packaging can be difficult, risky and expensive.
- It will take time, probably months or years to create the brand name and brand awareness. A lot of time passes before you can see the results. It is not a secret that a private label seller initially starts selling products with lower sales rank on Amazon.
- Comparing to national popular brands, private labeled products are less trusted by consumers.
Selling private labelled products on amazon require experience of selling online. The process is quite complicated. There are a lot of factors to keep in mind starting from deciding which products to choose to list the product online.
Not only that, but it also depends on your budget and experience at selling products online. The better you are at selling online, the more chances to succeed. The key point is to have patience when you are selling private labeled products.