Choosing the right product to sell on Amazon shouldn’t be taken lightly.
You invest considerable time and cash into sourcing and setting up products for sale, so you want to be sure you’re going to have a fair shot at success before you go to the trouble.
You’ve got competition to consider. How many sellers have similar products and how are they doing with them? How can you stand out from the rest?
Private labeling gives you a good way to create a notable brand, though be warned, it is not a “get rich quick” path to take. In saying that, there are large numbers of sellers who are making plenty of monthly revenue by doing a good job of private labeling.
How can you get in on this? Here’s what you need to consider;
How does Private Labeling Work?
Private labeling means that you create your own branding under which to sell. You source generic products from manufacturers which you feel will sell well and you label them with your own branding.
On Amazon, regular customers don’t generally spot products and say “oh, that’s a private label on a generic product”, they look for well-reviewed products. You need to work to promote your own brand and get more verified reviews so that you stand out. As long as you have a quality product that is selling well and has good reviews, customers won’t usually care about whether or not you are labeling a generic product.
Pros and Cons of Private Labeling
The plus side of private labeling is obvious to anyone who has had products manufactured from scratch before; you get to market pre-tested products which have already been manufactured as your own and you avoid the development costs that creating a completely new product entails.
Besides that, you can quickly and easily add to the product range of your brand, your startup costs are relatively low and you already know what to expect from the product in terms of quality and popularity (if you’ve done your research well!).
As for the cons, firstly, there’s the hunt to find a reputable, high-quality manufacturer, and the amount of time that can possibly take for you. You might also consider it a con that you need to work on developing and marketing your own brand, including all marketing materials as most manufacturers won’t have those. Sellers who simply sell established brands don’t have those same issues, however their margins are usually lower in return.
What to Look For in a Product
Researching which product or products to private label and sell on Amazon is arguably one of the most time-consuming parts of the whole process. The last thing you want is to sink money into product which either languishes in an Amazon warehouse or that you simply can’t make a decent margin on with sales.
Oftentimes, sellers are limited by their budgets for purchasing stock in the first place. Manufacturers are likely to give a better unit price where a larger number of units are ordered, so if you’re wondering how a competitor is making anything on the lower price they are charging, it’s a distinct possibility they are ordering larger amounts and getting better bulk discounts.
Here are some tips for discovering your private label products:
Look to Amazon
Amazon actually provides you with some good clues as to what will sell already. Best seller lists are updated hourly, and will vary according to how well products are doing over that time. For this reason you may want to check back over a few days to see whether anything you thought was a top seller was an anomaly at the time.
Amazon has some other lists you should check out too, including “Most Gifted”, “Hot New Releases”, “Most Wished For” and “Movers and Shakers.”
Start your research by looking for products which are generic (or could be) and are already selling well. The best seller rank of the product (found in the product information box as pictured below) is another good clue Amazon provides. Daily sales figures in association with the ranking will vary for product categories, but obviously you want something with good sales volumes which you will be able to compete with.
Jungle Scout created a useful estimator which is free to use and will help you to estimate sales per month of a product based upon its category and best seller rank in the category.
Here’s an example using the same product as pictured in the information box above, a mist humidifier:
This is one question which seems to get varying answers everywhere you look — how much should the product be priced at for sale? You’re going to have to do some math based upon what you need to achieve in terms of profits and decide from there.
Generally speaking, products in the $10 – $50 range fall within shopper’s capacity for impulse buying. This is a good place to be in because that’s exactly what helps you to sell at volume. You’ll sell far fewer $200 products (unless you’re the leader in an in-demand category or very niche product), because people spend more time researching and reassuring themselves that yours is the product they want.
On the other hand, if your sale price is too low, you have to sell much greater volumes to reach your revenue goals. There are enough Walmarts and Dollar Stores already — low margin, high volume is a tough business to win in.
Products with a lower number of reviews are always going to make life easier for you to get in on the market. If they are popular but have lower reviews, you have the opportunity to get ahead in the rankings with some astute marketing and encouraging more reviews.
Many sellers often focus on the top three product results on the first page, but don’t forget to cast their eyes further down at other page one results. If a product is in spot nine but has 50 or fewer reviews, the seller could still be making a good $1000 or more per month in sales and you could overtake, again through marketing.
No Big Names
If you try to compete with the Nikes, Canons or Epsons of this world, you will usually find yourself facing an uphill battle on Amazon. If there is a big name selling a similar product in your category and dominating it, who is the customer more likely to trust and go with?
Think of categories where there doesn’t tend to be a dominant brand springing to mind. That’s where you can probably compete.
This is a big one that is entirely on you to check out before selecting and purchasing a product. Make sure there are no existing patents on the product or that yours is significantly different so as to meet patenting laws. Many sellers have received cease and desist letters due to patent infringements, which of course can put them out by their entire investment into the product. If in doubt, check with an attorney.
No large products
Ideally, you want products which fit nicely into one of the more standard sizes of postage boxes or bags. You also want weight to be no more than around 2-3 pounds so that you aren’t hit with huge postage costs.
Product Is Simple and Durable
You don’t want to field constant questions or have to provide an instruction manual for buyers to use your product. Those kinds of products tend to have higher customer care requirements and possibly higher dissatisfaction, especially if people don’t get it and use the product incorrectly.
The product should also be something durable which will not break easily during shipping. There are a few negative impacts of products which break easily; customers will blame you, they will probably write poor reviews and you will lose money on high rates of return.
File this under “nice to have” because choosing a product which has an element of reordering built-in is obviously good for your business if you provide an excellent experience the first time!
An immediate example comes to mind; I needed to order shipping tape off Amazon recently, a product needed in bulk supply but which will run out and need reordering in the future. Any kind of products which require refills of some kind, such as fresh water filters for filter jugs are also a good option.
You Can Restock Quickly
We know how costly stock-outs can be for FBA businesses, so it’s always preferable to have a product which can be re-stocked in the shortest time possible. This is a question when you are shopping around for manufacturers. Bear in mind how quickly they can prepare a new order and the time it takes to ship from their facility to an Amazon warehouse.
Product Can Sell All Year
The Santa business is really only lucrative around a certain time of year, right? The same can be said for certain other types of products where there is seasonal ebb and flow.
The best products for you to be private labeling are those which can sell steadily at any time of year so that you’re not faced with adverse seasonal income.
Bonus: If your product can be given as a gift, this is huge. Buyers always look for gifts on Amazon and you could experience a lift in sales as a result. Be prepared for quarter four!
It might seem like a lengthy list of items to check when deciding on a private label product, but spending a bit of time early on to do your due diligence is what will help your business to pay off in the end.
Take the time to check your product ideas out thoroughly before going ahead. Make sure you’re going to be able to compete and that you stand to make margins in line with your financial goals.
Here’s to your success!