Amazon FBA Private Label – A Complete Guide from ELT Assistance

93% of our clients experienced meaningful increase in sales velocity on Amazon

One of the biggest and most accepted online marketplaces worldwide is Amazon. According to a research, about 50% of all the sales happening on the platform are from third party sellers. To achieve this Amazon sellers need different set of skills and strategies to make their brand successful on Amazon, one of them is Amazon Private Label.

If you have heard about Amazon, you must have heard about Amazon Private Label and how it has helped millions of sellers around the globe in increasing their sales and growth of the business.

The old school private labeling wasn’t that much successful now a days as it used to be, the reason is more and more sellers creating tough levels of competition.

In this article we’re going to take you through some of the main takeaways of this selling practice and how you can make it work to your advantage in 2022.

What is Amazon Private Label and How Does It Work?

There are four possible ways of selling on Amazon, Amazon FBA Private Label, retail arbitrage, Wholesale and creating your own product. Dropshipping on Amazon is common now days but we do not recommend it as in the long run it has its consequences.

Amazon Private Label starts with finding a product on Amazon that has high sales, low to average competition has good BSR (Best Seller Rating) and good number of reviews etc. This process is called product hunting.

After finding a suitable product the next step is getting its sourcing, labeling it as if it is yours. Now the term labeling means that a same or slightly different design of said products is being manufactured with the logo and packaging of your brand and is launched on Amazon. What you will be trying is to upgrade the presentation of that original existing product by creating your own Brand. (Our next post will be based on details about creating and registering your own brand on Amazon).

How to Sell Private Label on Amazon?

Although there is controversy regarding this practice; in 2022, Amazon Private Label is the most profitable model of selling on Amazon, all that matters is how you manage to stand out from other competitors and be one step ahead all the time.

As mentioned above this strategy requires strong product hunting strategies, low cost sourcing and one of the top level labeling work in order the get the maximum out of private labeling.

Before making a decision of selling on Amazon Private Label, there are a couple of things to consider first. Remember you are not selling an existing brand you are going to create one of your own by using the products that already exist and has potential of getting good sales velocity on Amazon.

It means that the dividends/profits are going to take a bit of time to come. The biggest and most competitive markets relevant to Amazon are Amazon UK and USA. If you decide to jump into these markets, be ready for a healthy and positive competition and lots of bleeding in terms of ranking and getting a spot in Buy Box etc.

If you are launching in these big markets, you need to wait for at least 6-8 months to reach breakeven, this is the time you must invest in Private Label to earn a handful profit afterwards. Profit margins in Amazon Private Label are 30-40%, as an investor you will be investing your money and giving at least 6-8 month for business to grow and scale towards success.

Some important facts and figures of Amazon Private Label are mentioned below:

This selling strategy required an upfront cash investment, labor and a great mind-set to achieve the maximum output.

Starting from company formation, registering an LLC or LTD, creating bank account, getting registered in taxation system of the relevant country are the basic requirements.

Running a test drive to make sure that the product will sell well is paramount. This includes analyzing the keywords that are already being used by the competition so you can rise above them. (Experts agree that this is one of the most important parts of the process.)

Steady revenue is the secret to make your brand grow. Selling through Amazon Private Label is not only a short-term goal.

ELT Assistance – Best Practices to Sell Private Label on Amazon

If we look at the numbers, in 2020, private label businesses reached a profit of $9.5 billion by growing 4.4%. Just in the US, in 4 products sold, nearly one product is a private label or store brand product. This shows us that this is a market on the rise.

Once you’ve done your research, you might want to follow these important steps to ensure a smooth sailing:

  1. Product Hunting

The best way to start is by checking Amazon’s list of best selling products. Identifying the primary and secondary keywords, running the data through different set of tools, analyzing the trend of the product, its average sales velocity per day, getting to know the reason the success of competitors and analyzing the gaps/spaces available or left behind by competitors, which you can fill up and stand out in competition.

The best way to start is by checking Amazon’s list of best-selling products. You can get an idea of what customers are buying or looking for. That is priceless information. Avoid saturated categories, and look at your competition and what they’re doing.

Tip of the day:

Look for those products which are not yet stocked by other big brands or marketplaces. Deep dive into the departments and subcategories to find new and products. Pay  attention to the “Hot New Releases” Columns

  1. Product Sourcing

Finding the right manufacturer for your product is one of the most important steps in you Private Label launch. Avoid the mistake of choosing the cheapest manufacturer as you can never compromise on the quality of the product. A better way to go is using the lower price quotes to help negotiate prices down with the manufacturers.

Usually manufacturers who are willing to negotiate have better communication and fulfillment skills. It is always recommended to choose a supplier with excellent services in all areas.

Tip of the day

Remember any time you’re negotiating you are free to walk away from a deal

At this point you should mention to your supplier about working with private label products. It could be as simple as having labels produced for you by a print shop and them add them to your product packaging and continue to be a private label. Talk to your manufacturer to figure out the best options.

  1. Labeling and Branding:

As the adage goes, “A picture is worth a thousand words.” Investing in quality design and branding will not only allow you to have a seamless online presence in the marketplace, but it will also enhance your customers’ experience. Amazon A+ Content can help you achieve these goals.

  1. Well Optimized Listings:

When creating your listings, make sure you cover these aspects:

Main image should be attractive, secondary images should be in coherence with the main image and product, title must have all the relevant keyword stuffed in it, product descriptions must have all the information about the product, you must make sure nothing is left out.

Keep it simple. Add key details about your product in the title. Make sure to mention your brand name. Your title should have 100 to 150 characters. Be clear and use your keywords wisely!

  1. Testing the market

If a product has caught your eye, you can test the waters by creating an Instagram account, showcasing your product. This way, you’ll get to engage people quicker and this can work as a strategy to driving outside traffic.

You can also use it as an opportunity to promote customer feedback through surveys or direct messages, which will eventually help you to improve your marketing strategy.

  1. Setting a competitive price

The ideal range of prices for a private label product is a range between $15 to $50. A product that sells at less than $15 will leave you with a very small margin. Customers looking for products that go over $50 prefer established brands, so anything over $50 will move slowly for private labels.

  1. Using Fulfillment by Amazon (FBA)

Using FBA is definitely a safe bet. This fulfilling program, supported by Amazon, not only gives you the peace of mind you need when fulfilling your customers’ orders, but it also increases the customers’ trust in your brand.

Closing Thoughts

Now that you have a better idea of what is Amazon Private Label, you can understand that your success will mostly depend on your ability to carry out the right market research to make the best decision on the product you want to sell and the way to manufacture and brand it.

You can build your Amazon private label business in such a way that customers will remain loyal to your brand. Good luck!

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