It’s proven that private label products have a positive effect on a retailer’s margin. You can make a lot more money by selling private label products than you can make with wholesaling.
Furthermore, you’ve your own product and your own brand.
Also, compared to wholesaling, you can scale up easily and sell your private label products through Amazon or your online store.
And it’s not as hard as some “‘gurus” say.
If you want to learn how to make money on Amazon with private label products, you’ve come to the right place.
Here’s what you will learn in this post:
- What are private label products?
- What’s the difference to white labeling and wholesaling
- How to build a successful private label business
- How to price private label products
- Lots more
What Are Private Label Products?
Private label products = products that are produced by one company and sold under another’s company brand name. They’re available in a wide range of industries and often positioned as low-cost alternatives. (Source)
Tesco Value’s Baked Beans is an example of a Private label product as opposed to Heinz Baked Beans:
Tesco Value’s Baked Beans:
Heinz Beaked Beans:
In recent years, private labeling has become very popular among young entrepreneurs who want to establish their own brand.
The private-label dollar share in the US increased from 15,5% in 2013 to 19,3% in 2018.
White Label vs. Private Label vs. Wholesale
There’re lots of business models and it’s important to understand the differences, especially if you’re just starting out.
It’s about private labeling, white labeling, and wholesaling.
Here are the differences:
- White Labeling: A product is produced by one manufacturer and then sold by many retailers. Retailers can’t make product changes, but they can sell the product under their own brand name.
- Private Labeling: Private label products are specifically produced for one retailer. Retailers can make product changes and sell the product under their own brand name.
- Wholesaling: Retailers buy products from another brand in bulk and then resell them. It’s clear to everyone that a retailer is only a middle man.
What You Need To Know About Private Labeling…
If you want to start a private label business, you’ve to decide where to sell your products.
I highly recommend selling them on Amazon and creating your own online store.
Especially selling on Amazon is essential, because it’s the most important eCommerce platform.
Furthermore, Amazon grabs 47% on total online sales:
If you’re really serious about selling private label products, you have to sell them on Amazon.
Thus, here are the five steps to go through if you want to start a private label business on Amazon:
Sell These Private Label Products On Amazon…
You need to know what products you actually want to sell.
Although you can theoretically sell everything online, there are some fundamental rules to keep in mind:
Stay away from high competition
If you don’t have a high budget for massive promotion, stay away from high competition.
In fact, on Amazon there are over 2 million active sellers and many niches are over-saturated. It’s hard to sell something that’s completely new, however, try to enter niches with low competition.
Sell something that people want to buy
Obviously, if you sell something that nobody wants to buy, you’ll have no chance to build a successful private label business.
Thus, the next step is uber important.
Here’s what you need to do to determine if a product is in high demand or low demand:
2. Head over to Amazon and search for a product you actually want to sell.
3. Check demand and competition (sales, revenue, reviews, etc.) with Jungle Scouts Chrome Extension.
What’s cool is that Jungle Scout directly shows you if there’s high demand or not, plus it shows you if a niche is competitive or not.
Avoid products with high variation count
If you don’t have the budget, avoid products with a high variation count.
It’s clear that you’ll need to buy more inventory if you sell a product with a high variation count. Consequently, it will cost you a lot more money.
Stay away from patents or certificates
If you don’t want much trouble when launching your first private label product, stay away from patents or certificates.
Use this product research strategy
In general, try to find a product with high demand and low competition. I know that it’s hard to find such a product. However, doing extensive research will only make your life easier in the coming months.
Therefore, let’s take a look at the most powerful product research strategy that actually works:
Get Helium 10
Open Black Box
Open Black Box to set your desired filters:
What you need to do is to set filters that indicate high demand and low competition. There’re so many opportunities with Helium 10 because it has the most filter options compared to other research tools.
If you’re completely new to product research, you can use the filter settings that I’m going to use here. You can also change them by +/- 10%.
- Revenue: $5000
- Price: $15 to $50
- Review Count: 100
- Number of Images: 7
- Variation Count: 1
Now, you should see a bunch of products that meet all the criteria you just typed in. If you want, you can sort the list by monthly revenue:
Next, go through the list and sort out all products from big brands. I don’t think that you want to compete with these big guys.
When you’ve cleared the list, you need to find out the number of competing products for every product, because this is the most important criteria.
To do so, run all ASINs through Cerebro.
Cerebro is a tool that shows you all the keywords for which a product ranks on Amazon. And you’re also able to check the number of competing products for every single keyword.
Low amount of ranking products = Low competition
High amount of ranking products = High competition
For example, there’s a vacuum stealer on my list with decent parameters:
Check for what keywords it’s ranking for:
Let’s check if these keywords are competitive or not.
As already mentioned, use COMPETING PRODUCTS and CPR 8-DAY GIVEAWAYS to determine this.
CPR 8-DAY GIVEAWAYS shows you how many products you need to give away per day for 8 days to rank on Amazon’s first SERP.
If you go through the keywords, you can see that there are lot’s of competitive keywords:
When you go deeper, there’re also some keywords that are not so competitive:
I strongly recommend applying this strategy to product research. At least check sales and demand with Helium 10. There’s definitely no way around it.
Great Places To Get Product Ideas
For now, let’s take a look at two places where you can get awesome product ideas in no time:
Get product ideas during a shopping tour
Have you ever had a great product idea during a shopping trip with your friends?
I guess YES!
Everyone gets great ideas when looking around in a store. And the question you have to ask yourself: What can you do better?
If you always think that everything is said and done, you will never make anything better. So next time you’re on a shopping tour with your friends, keep your eyes open.
Explore Social Media
We all know that on social media, you see almost hundreds of products every day, and there are also new ones you’ve never seen before.
Especially on Instagram and Pinterest, you can gain product ideas. And you can also check out thousands of awesome designs.
Find a product with high demand and low competition. Keep your eyes open and think about what you can do better.
Especially with private label products, you need to have a unique selling proposition. It will make your life ten times easier if you have a better product than your competitors.
The biggest mistake you can make is to sell a product that everybody else sells.
Create The Best Private Label Product In Your Niche
As already mentioned, if you sell a *normal* product that everybody else sells, you’re likely to fail. It’s hard to make an existing product better, but it’s definitely worth it.
If you surprise your customers with great quality, you will receive ten times more positive reviews.
Just imagine, as soon as your product reaches the first page of Amazon, you will automatically make sales. More people will buy your product you’ll get more reviews.
If these reviews are all positive, you’ll outrank your competitors in no time and steal all their customers.
To develop the best private label product of your category, you need to take a look at the kano-model. The kano-model is a marketing model that describes 5 attributes that influence customer satisfaction:
- Must-be-Attributes: These are attributes that customers only become aware of if they aren’t fulfilled. You need to provide these attributes. Otherwise, your customers won’t be happy.
- One-dimensional-Quality-Attributes: These attributes are known by customers. They eliminate dissatisfaction or build satisfaction.
- Attractive-Quality-Attributes: These attributes surprise customers. If you can provide them, customers will feel much satisfaction. However, if you can’t provide them, they won’t feel dissatisfaction.
- Indifferent-Quality-Attributes: Customers don’t care if they’re fulfilled or not.
- Reverse-Quality-Attributes: These attributes lead to dissatisfaction if present, but to customer satisfaction if absent.
If you want to create the best product in your niche, you’ve to provide attractive quality attributes.
Fortunately, it’s relatively easy to create them. You only need to find out the problems of your competitor’s products and make these things better with your product.
Here’s what to do:
3. Head over to Amazon and choose a competitor’s product
4. Open Helium 10’s Review Downloader
4. Set up Only Verified Purchase and only choose reviews with a three-star rating or less
5. Go through all these reviews, find all problems and fix them with your product
Here’s How To Find A Supplier
Once you know what to sell on Amazon, it’s time to find a supplier. A great way to do so is to use Alibaba.
However, you can also choose between one of these great Alibaba alternatives.
These are all platforms where retailers can find potential manufactures for their products.
If you go for Alibaba, type in the product you’re looking for into the search bar:
Then, contact 3-5 five suppliers that suit you best. Make sure to choose suppliers that have Alibaba’s Gold Supplier Membership.
Also check with how many companies a supplier works together and what these companies say about the supplier.
If everything is fine, talk about product changes:
What color do you want?
Where do you want to print your logo on?
Do you need other specific changes?
You’ll also need to order one or two samples and if everything is okay, you can place your order.
Create An Optimized Listing To Maximize Sales
It will take a while until your manufacturer has produced your products. You should use this time to create your listing on Amazon.
A listing is the showcase of a product and it needs to be super awesome.
In a normal retail store, customers can usually ask employees if they have a question. On Amazon, people decide based on the listing. They look at things like images, bullets, descriptions, reviews, and so on.
So how can you create a listing and optimize it for maximum sales?
While we’re going to cover the main aspects below, you should definitely check out this post on how to increase sales on Amazon to learn more about listing optimization.
First of all, mention your target keyword within the title. You’ll only get indexed by Amazon for a specific keyword if you mention a keyword in your listing.
Definitely use Helium 10’s Index Checker to find out for which keywords you’re indexed or not.
Second, include (only) technical details that are important. For example, if people are searching for a drinking bottle that can take up to 1 liter, include 1L in the title.
Make your title descriptive and tell potential buyers what they will get. To find out what’s important for most customers, you’ve to study blogs, forums, or your competitors.
Bullet Points are the place to convince people to buy your product.
Most people won’t read your product description, but they’ll read the bullet points.
And what do potential customers want to hear?
They want to hear their benefits.
So, instead of flooding customers with technical details, show them the benefits of your product in the bullet points.
The product description is the place to talk about technical details. If people want to inform themselves more about a specific product, they’ll always take a look at the product description.
And if they don’t find the information they need, they’ll look for it somewhere else.
Thus, they will also buy somewhere else.
So make sure that you provide every detail in your product description.
It’s no secret that 75% of Online Shoppers rely on product photos when they decide on a purchase.
Awesome product images are the most important part of the game.
Furthermore, taking great and *real* product images won’t only bring you more sales, you’ll also receive fewer returns.
For this reason, if you don’t have massive photography skills, think about hiring a professional photographer.
How To Price Private Label Products?
When it comes down to set the right price, people often think they have to set a much lower price than their competitors.
But actually, that’s absolutely wrong!
Do you ever have heard of perceived value?
Studies have shown that the higher the price of a product, the higher the perceived value. An awesome example is the wine tasting experiment.
It shows different subjects tasting the same wine with different price labels.
All people loved the wine with the $90 label and only a few liked the wine with the $10 label.
The perceived value increases as the price increases.
Therefore, you should never try to stand out from your competitors by a lower price. This strategy will only backfire.
Try to stand out by creating an epic product.
Here’s everything that you should know by now:
- Selling private label products is a great way to make money
- You’ve to sell private label products on Amazon
- Search for a product category with high demand and low competition
- The most crucial thing is to create an outstanding product
- Set the right price for your private label product