Amazon FBA private label is one of the highly profitable business models creating a buzz among most Amazon sellers.
But the problem comes when they aimlessly try this business model and wait for higher ROI without proper strategy. Sure, it can get you lucrative results, but you need to be super strategic throughout the way. Either way, you would pave your way toward losses and failure.
Thus, in this guide, we will share every subtle aspect of Amazon FBA private label, so you can get a clear idea of where to start, how to start, and how to generate higher sales and profits.
Here, you’ll uncover:
- What exactly is Amazon FBA private label?
- Is Amazon FBA private label profitable?
- Advantages and disadvantages of Amazon FBA private label
- A step-by-step guide for starting Amazon FBA private label business
- 5 pro tips to make your Amazon FBA private label a success
Ready? Let’s roll in!
What Exactly Is Amazon FBA Private Label?
Amazon private label is a process of selling where Amazon sellers source unbranded products from third-party manufacturers and then sell them under their own brand or label.
Now, the FBA enters when a private label Amazon seller decides to integrate the fulfillment service offered by Amazon so they can solely focus on product marketing and selling, eliminating the extra headache of order fulfillment.
Is Amazon FBA Private Label Profitable?
Before we dive into more details, the first thing we must evaluate is whether or not going for Amazon FBA private label is a profitable business.
But first, consider these statistics:
- Over 87% of customers prefer buying private-label products to save money.
- Private label products are growing three times (20.2%) than other products.
- According to the study by Jungle Scout, over 54% of Amazon sellers sell private-label products.
As you saw, these statistics prominently portray the significant growth of private label businesses as of now and project its steady scalability in the upcoming years. So, we can undoubtedly say Amazon FBA private label business is profitable if done correctly.
Yes, the difference between a successful private label brand and an unsuccessful private label brand is killer brand positioning. If you succeed in this part, you are more likely to generate higher revenue than other business models. (More about it later in this article.)
Advantages Of Amazon FBA Private Label 👍
Besides being an extremely profitable business model, there are lots of other advantages that come with Amazon FBA private label. Below are a few of them:
1. Increases Profit Margin
In the private label business model, you directly deal with manufacturers and unbranded products. It means you only have to pay someone for manufacturing only.
Also, unlike reselling, there are no price tags attached to the items. So, you have the opportunity to negotiate the product sourcing cost with your supplier and customize the selling cost with a higher profit margin.
And once you master these pricing strategies and negotiation skills, you will generate higher profits from private-label products on Amazon.
2. Fewer Competitors
Since you’re selling private label products, you completely own your brand. Meaning there will be no other competitors selling the same branded products. And you can utilize this golden chance to shine more through mass branding.
3. Win Amazon Buy Box Easily
Amazon Buy Box is the silver bullet for winning sales. The more you win this box, the more chances you’ll have to make the sale. Either way, you’ll end up having zero sales for a longer period.
Now, if you are a reseller, you’ll need to fight for the Amazon Buy Box constantly. But, as you are the only seller selling that particular product in the private label business, you’re more likely to win the box every single time.
4. Full Control Over Your Brand
In the private label business, you get full flexibility over brand customization. And it’s one of the best advantages that can set your brand apart from other companies existing on Amazon.
For example, after launching your product, if you see some negative reviews on product packaging and design, you can immediately take action and change it the way you want. Apart from that, if you see your competitors doing something extra with their branding, you can take two steps further and beat them with the best branding strategy. But these are not possible with reselling.
5. Create A Unique Product Listing
Like the brand, in a private label business on Amazon, you also own the whole product listing. You will get the flexibility to edit product images, descriptions, pricing, and keywords the way you want.
On the other hand, in reselling, you won’t get this creative freedom easily as many other sellers are tagged in that list.
Disadvantages Of Amazon FBA Private Label 👎
Now, let’s look at the other side of the coin. Sure, Amazon FBA private label is one of the most lucrative choices for sellers. But it’s not as easy as it’s projected.
So, here are a few challenges you might face as an Amazon FBA private label seller:
1. Starting A Private Label Business Seems Overwhelming
Private label business includes lots of work at a time—finding profitable product niches and trustworthy suppliers, conducting competitor analysis, creating brand elements like logos, packaging, designing, and more.
Now, If you are a newbie seller or a solopreneur, all these can make you feel overwhelmed, leaving lots of unsurmountable tasks on your shoulders.
2. Needs A Huge Upfront Investment
Though you can save money on product sourcing, other business tasks will consume your budget.
Why? Unlike reselling, in the private label business, you need to invest a huge amount of money in product design, packaging, and branding. Hence, you need to have enough upfront financial support to succeed in this game.
3. Needs Mass Branding
When you resell a brand’s item, you are free from the burden of branding that product in a new way as it has already made its impression and visibility by other sellers or the brand itself.
But, when you think of launching a brand new product, chances are high that your potential customers don’t know about it. You have to start branding and marketing from scratch.
And the most demotivating part is it’ll take lots of time. That’s why if you are looking for “overnight success,” Amazon FBA private label isn’t your cup of tea.
Step-By-Step Process To Start With Amazon FBA Private Label
Follow the step-by-step guide to save yourself from unnecessary friction during the launch of the private label business on Amazon.
1. Decide On The Products You Want To Sell
Be it for Amazon’s private label business or any other business model, finding the right products needs lots of research. And exactly here, your passion, creativity, and practicality combine together.
First thing first, you can start with Amazon’s best-selling products to check what’s going on and trending in the market.
Once you get some ideas, tap into the keyword research tools like Afrefs and Semrush to find the hot-selling, high-volume products.
Now, it’s time to go deeper from the surface level. You have to check the market size, whether or not the shoppers are searching for that particular product on Amazon, the potential growth in the future, and more.
Don’t worry; you don’t need to waste your time to pull off these tasks manually. You can take help from some fabulous Amazon seller tools like Jungle Scout and Helium 10 for the best possible results.
Another best way to get in-demand, low-competition private-label product ideas is to dig into the negative reviews. Find them, and bridge the gap with better solutions at the same price.
Once you narrow down the list of products, make sure they have competitive pricing (not too high or not too low), medium weight and length (to save extra cost in the FBA), and 6-7 listing quality scores (to help you find room for opportunities).
However, here are some profitable private-label product categories you can try in your Amazon FBA business:
- Apparels
- Eyewear
- Cruelty-free cosmetics
- Home Decor
- Gardening tools
- Backpacks
- Accessories
- Shoes
2. Find Trustworthy Suppliers
Once you decide what exactly you want to sell, it’s time to find reliable suppliers to source those products.
For quick results, you can visit Alibaba or try different private-label manufacturing services and apps like Oberlo, SaleHoo, and Printify to find manufacturers.
You can also find private-label suppliers on Reddit, as it has a dedicated community for private labeling, and people keep posting supplier recommendations.
Last but certainly not least, don’t forget the old-school way of Google search to find local product suppliers. Just type “Your niche”+ “Private label suppliers” and get lots of options.
After getting some results, do check their background in terms of ratings, company, and client reviews, and then contact them.
While contacting, maintain transparent communication with the manufacturer to avoid future friction. For example, ask — if they can negotiate the price, their payment methods if they allow giving sample products or not, what’s their return methods and more.
💡 Note: Always keep two-three suppliers in hand to check where you are getting the best offer at a decent price.
3. Order Sample Product
Product quality and branding are the keys to the success of Private Label businesses.
Thus, if you find a suitable supplier, order sample products first to test the product quality, formulation (for skincare and cosmetics), materials (for apparel), and other nitty-gritty things to play safe and eliminate future return possibilities from the customers.
4. Focus On Creating Brand Elements
As you are selling private-label products, it’ll take longer to establish brand credibility among your potential customers. But creating excellent brand elements makes it faster.
After getting the private label products in hand, ensure to create a unique product logo, brand name, and color aligned with your target audience’s needs.
You can also portray your USP through unique storytelling and implement it into your brand identity. Take Nike’s tagline as an instance — “Just Do It.”
But whatever brand color, product design, and packaging you are choosing, ensure you maintain consistency with every product under your brand. It’ll help buyers remember your brand and spread credibility.
5. Send Products To Amazon Warehouses
For Amazon sellers ( no matter whether they are private label sellers or resellers), FBA is the best process that makes their life much easier. It eliminates the extra headache of product inventory, order shipping, and return policies.
All you have to do is to contact the Amazon team. They would provide you with packaging guidelines and other requirements as per your product quantity. Then, you have to label those products with the unique barcodes provided by Amazon and send them to Amazon warehouses with proper sturdy packaging.
That’s it! The rest will be taken care of by Amazon itself.
6. Create A Top-Notch Product Listing
Product listing is almost like the storefront of a brick-and-mortar shop. If organized and optimized properly, it has the potential to turn lurkers into customers. Otherwise, they won’t take seconds to leave your product page.
However, here are some best practices for Amazon product listing that boost your product visibility and increase selling potential:
- Find relevant keywords and add them to product titles and descriptions.
- Add product IDs and SKUs to ensure an accurate listing.
- Write compelling product descriptions and use bulleted points.
- Add high-quality images with different angles ( 500×500 pixels or 1000 x 1000 pixels). You can also add product videos to give “in-store” essence.
7. Launch Your Brand And Start Selling
Finally, it’s time to launch your product on Amazon officially. But before that, cross-check every subtle thing regarding product listing, contact information, customer support, etc. If everything seems fine, you are ready to sell the first product.
Wait! It’s not the end. From here, the real game starts — branding, marketing, and promotion. If you don’t pay attention to these, you will end up generating zero revenue.
We have discussed it in the next step.
5 Tips To Make Your Amazon FBA Private Label Business A Success
The success of Amazon FBA private label is directly related to how you position your brand in front of your buyers. Thus, here we’ve given you five tips to help you succeed in this game.
1. Create A Bullet-Proof Marketing Plan
Though there are lots of marketing strategies to adopt, here are some best marketing techniques for Amazon FBA private label sellers:
- Run PPC ads on Amazon to boost visibility.
- Run ads on different social channels like Facebook and Instagram to gain external buyers.
- Embrace influencer marketing. One way, it’ll get you instant ROI, and the other way, it’ll boost brand credibility and visibility.
- Start social media marketing and link to your products with a clear CTA.
2. Set Competitive Product Pricing
There is a myth – if you lower your pricing, you are more likely to generate higher revenue.
Sure, lower price attracts customers. But remember, they are as smart as you. If they see a similar product at a higher price, they might doubt your quality. That’s why keep an eye on similar products with different ASINs and keep it 15-20% of their selling price.
For example, if your competitors price a sunglass $50. You must keep the range of your own product between $40-$50. If you keep it to $10, it might cause quality doubts. On the other hand, if you keep it to $100, it’d take longer to convert as it won’t be an impulse buy from the customers.
3. Provide Out-Of-The-Box Customer Service
Providing excellent customer support isn’t just an option — it’s a necessity.
Why? Because people are unaware of your brand. If you want to build trust and brand authority, you must listen to them carefully and provide them with the best results. For example –
- Keep your buyers in the loop throughout the order fulfillment process.
- Ensure to mention a seamless return policy to eliminate future conflicts.
- Optimize the checkout process and offer multiple payment methods.
- Ask for feedback. If any negative review pops up, deal with it politely and rectify it for the next time.
- Offer a faster refund process.
- Always stay active to better communicate with your buyers.
4. Don’t Try To Be A Jack Of All Trades
Lots of newbie Amazon private label sellers make this mistake. They try to sell different niche items and fail to establish their brand identity.
Let’s take an example — if you are selling headphones, try to sell items that are of the same line, like watches, Bluetooth, etc. Likewise, if you are selling makeup products, you can sell skincare products, makeup brushes for scalability.
But if you sell electronic items with cosmetics, you won’t profit much as it would hamper your brand identity.
Thus, master one category and try to scale it to the same line. It’d be much more profitable and build credibility faster.
5. Offer Discounts And Giveaways Occasionally
If you want to create buzz and popularity within a short period, offer discounts and giveaways occasionally. Note it again “occasionally.”
If you offer deals and discounts on a regular basis, it might lower your brand authority.
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Conclusion: Amazon FBA Private Label Is Profitable!
Amazon FBA private label is one of the trickiest yet most profitable ways to generate higher revenue.
Sure, you won’t get results overnight. You have to focus on providing value and building brand identity constantly.
But at the same, don’t forget to analyze your business performance over time. A deep focus on what’s working for you and what’s not, along with a bit of experimentation, can increase your visibility and brand authority and, most importantly, generate higher revenue.
