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selling?
To set the scene, let’s first go over the basics of private label selling.
Private label products are existing products made by a manufacturer with your brand
name on them. In the case of Amazon FBA, these are often generic products that
are already selling well on Amazon, which are then sourced, re-branded, re-
marketed, and draped in new packaging and logos.
One of the essential qualities of a great private label product is that is unique. This
comes in the form of new features, colors, sizes, options, higher quality, better
pricing, etc. Once you have modified and branded your private label product, it is
your invention and can be both patented and trademarked. Private labeling is a
growing and popular business. Most major retailers engage in private labeling,
selling their store brands on the shelves alongside national brands.
As an example of how this works in Amazon FBA, you find a generic product selling
on Amazon (a Bluetooth speaker). You contact the manufacturer of the speaker,
have it made in a new color (blue) with your brand name on it, then list and sell it
under your Amazon private label. The product is ordered from China, shipped to
Amazon, and they handle the rest.
The key thing to remember when creating a private label product is how to
make your brand stand out from the crowd, and offer real value to your target
market. This will create the relationship you need between your brand and its
customers to drive sales.
Build trust – Your private label will be the basis of building a trusting relationship
with your customers, giving them what they need and more – so that they come back
again and again.
Increased control – By selling your own brand, you have full control over
packaging, labeling, manufacturing, and ultimately the quality of your products. You’ll
be the one setting all the rules for your brand and business. You can build your
brand as you see fit.
Less worry – If you’ve done your research right, you’ll be working with a product
where you already know what to expect in terms of quality, the manufacturer, and
the target customers. It won’t be such a crapshoot when you launch – in fact, it will
be the opposite.
More profits – Instead of selling a “name” brand product, you sell your brand,
allowing you to bypass middlemen and vendors. This leads to greatly increased
margins. You also get full control over pricing.
Saves time and money – Selling pre-tested products that already are being
manufactured saves massive time and money in development of a product. Your
startup costs will also be significantly lower.
As you can see, there’s quite a lot of freedom and opportunity in a private label
product. Now let’s learn how to pick a winning product.
It’s best to start with choosing only one product, and see if you have sufficient
demand for that product while also leaving yourself room to expand the brand line at
a later time.
Automated tools will save you many hours and give you accurate metrics
about products in seconds. You’ll gain valuable insights and be able to quickly
access data such as daily sales, keywords and phrases, total reviews, profitable
product categories, price, rank, and more.
It’s best to use more than one in order to get a more accurate picture of the product
and the competition. While Amazon does provide a free tool in your portal, it only
gives very basic information.
To conduct a thorough analysis of your product and the market (more on that later),
it’s a good idea to invest in a couple of our favorite online product research tools.
1. Brainstorming
• Create a list or spreadsheet and write down things you are interested in. Think
about things you are familiar with – hobbies, your business, your
responsibilities and passions. Mine your everyday life for inspiration
• Create a list of products that are used with the interests you listed above. Try
to get at least 10 or so for each category. Use catalogs, newsletters, websites,
Google, trade publications, etc. to help come up with ideas if you are stuck.
• Other sources of inspiration for your initial product ideas could be: traveling,
items seen at retail stores or supermarkets, blogs, trade shows or
conventions, Alibaba.com or Jet.com.
• This process gives you an initial list of ideas to work with.
2. Search on Amazon
You’re going to be selling on Amazon, so it’s essential to search the Amazon
marketplace to figure out what’s selling well. While searching Amazon, you’re
looking for products that fit into your categories of interest, or that jump out at you
during your Amazon search. Add these products to your list.
When going through products by category, keep in mind that beyond the top
20 sellers, no one else is getting a significant piece of the pie. Focus on the
top sellers and ignore the rest.
Before you dive into the deep research on your product, let’s refine your product
list by eliminating items that either meet or don’t meet specific criteria.
If any of the products on your list fall under these choices, go ahead and cross
it off – you’ll be saving yourself a lot of time, money, and headaches later.
What follows is a basic list of ideal criteria for an Amazon private label product. Keep
the products on your list that fit the bill, and cross off the rest. Automated tools will be
helpful for parts of this step.
• Price – Between $20-60 is the sweet spot. You’re going for the perfect price
where your product is affordable to the buyer, but your margin enables you to
make a profit; while simultaneously, buying new inventory won’t be
prohibitively expensive. A minimum 30% profit margin is advisable.
• Weight and size – Ideally, your product will be under 2 lbs. and under 20” x
18” x 14” in size. This will save money on shipping costs and Amazon FBA
fees.
• Simple and durable – Easier to make and source, and fewer returns.
• Private label potential – The space for your product is not dominated by
large name brands, allowing the potential for your private label to take control
of the niche. Also, your product can be customized easily – if the product has
room for improvement, even better. Consider if there is room to create a
whole line of products for your brand around this one.
• BSR (bestsellers rank) – Aim for 500-5000. The BSR shows where products
are ranked within their categories based on their sales volume. This will let
you know, in general terms, that the product can generate enough demand to
be sustainable.
• Reviews – 500 or fewer. This indicates low to moderate competition in the
category.
• Initial order purchase – You want to be able to purchase less than 500 units.
What is needed initially is enough inventory to cover your sales and
promotions. Too much inventory can kill your profit, and you don’t want to
drop a lot of money into a new product. It’s better to be able to minimize risk
all the way around.
• Reorder potential – If your product is the kind that lends itself to reorders,
such as supplements, you’ll get recurring sales.
• Gift purchase – If the product can be purchased as a gift, this will also help
sales long-term. Clever packaging can help drive gift purchases on selected
items.
Now that we’ve narrowed down your initial list into one with serious potential, let’s
take a look at how people will find your product.
Also identify the top secondary keywords for your products, and make note of the
search volume for all keywords.
If your ideal customer would search for your item under multiple keywords,
this is a good indicator of product success and higher sales.
Now that we have a robust and small list of products, let’s analyze the marketplace
to see how they measure up to the competition.
You’re going to need your software tools to dig into the data. You’ll also notice that
some of the criteria we’re going to look at is the same as we used to select your
product in 3B above. This makes sense, because we want to be playing in the same
field as the competition.
Here’s the market research criteria that will put your product in a position to
succeed:
7. Sales rank
This should be under 10,000 for each of the top three items in the category. This
ensures demand of approximately 4-6 items per day.
8. Reviews
There should be less than 400 reviews for each of the first three items.
Do other products on the first page have less than 100 reviews? Reviews are critical
for organic sales. Good marketing will give you a chance to overtake 400 for the top
spot on the page, and if 12 of the next 17 products have less than 100 reviews, you
have a very good chance at getting on the first page of search.
9. Keywords
Does the market have multiple keywords? The more keywords, the better. This
equates to more sales. It’s also a great sign if the top three keywords for the product
have a combined search volume of over 100k per month.
There’s an opportunity to make money in this market if other people are doing so.
Is there something you can add, modify, or customize in order to take advantage of
the competition’s shortfalls and create a product more satisfying to customers? Is
there an opportunity to add extra value to the product?
These kind of customizations are the heart of private label FBA, and are what
will set your product apart from all the others. If you can make a product better
than anything else on the market, you can dominate your niche.
Is there a product video there? If not, you could get your product ranked in Google
searches by creating a YouTube channel and posting product demo videos. Your
Amazon product page would receive increased traffic from links in the video.
Now that we’ve seen how your product fits within the marketplace, you should be
down to only a very few potential products.
Let’s look at the final piece of the puzzle – and the most important piece. Will your
product make money?
Part III. Ensuring Profitable
Margins
This is the the most vital step in deciding which product to move forward with for your
Amazon private label business – determining which one will make you the most
money.
The deciding factor will be examining the margins on your remaining products. Yes,
there will be math. You’re going to do this by analyzing the two most variable product
costs: production and shipping.
• Find the right supplier. You want to find the best possible cost to quality ratio
in your private label manufacturer. The goal is not to sacrifice quality, while
maintaining a healthy margin. If they are easy to work with, reliable, have a
good attitude, and good English skills – even better!
• Reach out to your network of Amazon sellers to get recommendations on
good suppliers.
• Doubling your margins is possible with the right supplier. Choose carefully,
use your network, and keep high standards.
Your goal is cost certainty, as shipping cost can quickly eat up your margins.
Traditional logistics companies are well known for quoting one price and charging
another upon delivery. Use your network for recommendations on quality shippers.
It’s not a bad idea to build in some leeway when estimating your shipping costs for
purposes of product selection.
You know which of your potential products is most viable, which has the best
opportunity in the marketplace, and which has the most profitable margins.
Congratulations! You’ve chosen a winning FBA product with a lot of promise, one
with real potential to dominate the niche and generate impressive sales.
The goal is to land your product on page one for its keyword. This will create
increased visibility and bolster organic sales traffic.
In short, a properly executed launch with the right product is key to long-term sales
success.
‘’Your premium brand had better be delivering something special, or it’s not going to
get the business.’’