Top 4 Types of Private Label Products to Sell on Amazon
Posted on: March 20, 2018 | Posted by: Helium 10 |
Top 4 Approaches to Selling Private Label Products on Amazon
Your approach to creating a best-selling product on Amazon depends on a combination of very specific seller-centric metrics and a few general guidelines.
To begin with and to paraphrase Clint Eastwood, “An Amazon seller’s gotta know their limitations.”
The initial phase of starting a business comes down to money. If you are considering opening a restaurant, will you put in a new kitchen, redesign the dining room and hire a top chef? Or, is your budget a little more along the lines of doing the cooking yourself while your partner runs the front of the house.
Both of the above business models seem to succeed pretty similarly as long as the respective restaurant owners are sufficiently aware of their financial limitations. Establishing your own best-selling private label brand on Amazon is exactly like that.
Successful Amazon seller accounts are the result of a great deal of hard work, but they begin with an honest understanding of your financial constraints.
Private label products are the foundation of your brand recognition on Amazon
Here are a few general guidelines in starting down the road to establishing your own brand on Amazon.
To begin, when it comes to selling on Amazon, the first and most all-encompassing metric is the size and weight of your goods. It will always be the main component in determining the shipping costs from your supplier, as well as your inventory and warehousing expenditures. They are the heart of your online business and affect everything else in cascade as you move down the line.
Ultimately, the best products tend to be practical, serve a need, provide undeniable value and are clearly differentiated from the bulk of their competition in a usable or visible way. If they can solve a problem, or make life easier, then it is very likely that there will be the consistent, ongoing demand on Amazon for products like this.
Finding the best private label products to sell on Amazon often centers around a niche product
Selling on Amazon is a puzzle, and a very lucrative one. In searching for products to sell on Amazon FBA (fulfillment by Amazon), the most dependably profitable goods are frequently the ones that serve a specific rather than a general purpose. Best-selling products on Amazon are purposefully chosen to meet the needs and desires of a specific potential customer base often referred to as niche market.
Niche markets are subsets of larger markets on which specific products are focused. They are characterized by their own particular needs and preferences and are often defined by price, quality, demographics, and location.
There are so many private labeling possibilities and options that the process can quickly overwhelm anyone starting out as a seller in the Amazon marketplace. Additionally, what sells well today may not be profitable tomorrow as sales trends can vary over time. The competition is continually evolving, and the marketability of branded products with it.
So while we can’t outline specific items that are guaranteed to sell, and focusing on trending products might be impractical, we can help narrow down your options to find profitable products that make private labeling on Amazon work best for you.
Many beginner e-commerce merchants start selling low priced generic products in a Shopify store or they start a dropshipping business in hopes of placing an order, creating a listing and striking it rich. Some new e-commerce business sellers even try their hand at retail arbitrage to make a quick buck. Sadly, the allure of these models also make them extremely competitive, and only the best label brands survive.
Nowadays, in order to have a profitable online brand, you must have a strong social media presence, great customer service, a competitive price point, a fully-optimized sales funnel, and you must be able to deliver the goods, literally.
For these reasons, selling private-label products on Amazon FBA is a great option. For a low monthly expenditure and a 15% referral fee (see full fee schedule here) you can quickly create a business with almost unlimited scalability with many of the logistical advantages a giant brand might enjoy in the same Amazon space.
Four approaches to selling private label products on Amazon
The Simple Essential
The Amazon rule-of-thumb for sellers is that the smaller and lighter the product, the better. Why? Because these kinds of items are generally cheaper and easier to manufacture, store and ship. Instead of spending your funds on higher fulfillment fees, you get to increase your profit margin without having to increase the sales price, and you get to save your money for branding and building your company.
Amazon FBA employs the “shoebox rule” in which standard (small) sized items should be able to fit in an average shoebox. FBA also offers a lot of perks to professional sellers that use the more specific FBA Small and Light services.
It only makes sense then for “small and light” items to be your first line of defense. Along with those shoebox proportions, to be primed for sales, products should also be:
Necessities are things that people will always need and are also tend to be less seasonal in nature so there’s always a demand for them. Clothing, toys, beauty or grooming products, and stationery are all examples of things that withstand passing trends like fidget spinners or eclipse-viewing glasses, for instance. As long as they’re marketed correctly, the aforementioned product categories are rarely short on credit card-in-hand customers ready to buy.
If an item is simple in design and function, it’ll be easier to manufacture at a lower cost than items with multiple parts or mechanisms. Uncomplicated things have a smaller chance of breaking, being difficult to assemble, or encountering any problems during the manufacturing or shipping process.
The Private label products you pick need to stand apart from similar existing products if you hope to compete. There are many ways to modify an item, but sellers have to be aware of patent, trademark, and copyright infringement rules to stay out of legal trouble. You should be safe if you do your due diligence before going this route and learn what you can and cannot copy.
The Simple Essential is probably the safest bet for new marketplace sellers who are familiarizing themselves with e-commerce, mainly when using Amazon FBA. These items can belong to any niche from clothing and accessories to stationery and toys. They can also be complementary add-ons to what’s already on the market.
The major drawback to the Simple Essential is that it’s the quintessential low-hanging fruit. Sales are easy. A vast majority of sellers will undoubtedly be selling simple essentials because the barrier to entry is so low for these types of products. With a fixed number of potential customers, these once-profitable items are likely to get commoditized which will result in a lower sale price.
The Complex Competitor
On the other end of the Amazon, the product spectrum exists the polar opposite of the Simple Essential: the Complex Competitor. This kind of product is typically larger or more sophisticated in its design or functionality.
All of the qualities mentioned above render the item more difficult to manufacture and copy. As a result, competitors tend to have a much harder time duplicating the item and copying the idea.
Since fewer sellers opt for more complex products, the barrier to entry is much higher. As such, competition tends to be quite low and remains advantageous for the few who invest.
If you want to avoid trying to compete in an oversaturated market with every day or trendy items, the Complex Competitor may be for you. Experienced Amazon sellers looking to expand their businesses may also do well in this kind of offering.
However, if you’re new to the Amazon FBA selling game, this option is quite costly upfront and it carries a high-risk factor. If you don’t have access to a sizable amount of funds to invest in your business and can’t afford a huge loss, the Complex Competitor might not be for you.
Sellers should also be aware that going this route means you’ll also need more capital upfront to create something that cannot be easily replicated. Other potential problems include ongoing costs related to mass production, shipping, and replacements of parts.
If your goods break or get damaged while in transit, replacing them can be expensive. And if your packaging is larger than the standard shoebox-size, that would mean more fees and surcharges for the extra weight.
Of course, there are exceptions to the rule. If you have the capital, a robust marketing plan, and a healthy business model, you may do well selling the Complex Competitor from the onset.
Musical instruments, exercise equipment, and large electronic items all fall under this archetype. They aren’t the standard go-to for most third-party sellers, but that doesn’t mean they can’t be optimal products for sellers with a solid business plan and plenty of initial capital.
If you choose to sell in this niche, be sure to do all of your research, weigh the profitability of investment, and ensure you have a fallback plan.
The Tweaked Bestseller
Some of the best products finds are hidden in what already exists.
Many resources can help you find top-selling products. The Amazon Best Sellers List, made up of products on Amazon with the “Best Seller” badge attached to it, shows the top-selling products in every category variant at any given time. Sellers can get ideas from this list and by reading over the reviews they can see how their offering can be improve upon what’s being sold.
Seasoned sellers suggest adding a significant improvement to set your product apart from similar items; this change can be as subtle as changing the handle of a stainless-steel mug or changing the material of a wallet from fabric to leather.
However, sometimes even a seemingly minor tweak can add new life to the product, like a color change on a tablet cover.
Take the example of phone cases and the number of ways they can vary. You could find a phone cover that’s performing well in the market (like the Otterbox) and discover a more resilient material from which to make a phone case.
If you reproduce the same thing using that material and rebrand the cover, you can target the same market as the original case and rank higher than you would with something entirely new. The same principle can be applied to any other item. Sometimes all that’s needed is more variety, which isn’t a vast improvement, but a change buyers welcome.
Some of the ways you can differentiate between your private label product and what already exists are by:
Offering variety in color, design, pattern, and texture
Changing the material itself
Simply adding or subtracting specific features of the item
Your improvement in the product can result in higher profit margins and better reviews, especially if you offer competitive prices. The primary benefit of going this route is that you already know the market value of the product exists and how it ranks on Amazon, so there’s much less work upfront.
Additionally, this type of product is not dependent on any one size and can share characteristics with either of the first two types on this list. An improved item can be small and light or large and complicated, so long as it improves on the original concept.
The risk here is that if you skip your homework, you could run into infringement issues with patents, trademarks, and copyrights. Another risk factor is that if it’s a common item, you can still be entering into an overly-saturated market and have difficulty competing.
Picking a bestselling product that you can genuinely improve, then study it thoroughly to know how you can make and sell it better, is paramount to winning over buyers.
Not What but How (Anything and Everything)
The Anything and Everything category of products literally involves anything and everything. Essentially, you can sell whatever you want: big, small, complicated, simple, preexisting, original, etc., so long as you know how to sell it.
The Anything and Everything option eschews all preconceived ideas of what sorts of products do well for new and seasoned sellers. To some extent, it’s true that what sells can’t necessarily be predicted. Sometimes the most ordinary item can become a hot seller if it’s presented, marketed and priced well.
The focus here isn’t so much on WHAT you sell—it’s on HOW you sell it. If you have a business that’s rooted in a sound model that makes responsible decisions, can measure profitability, and evolves with time and trends, you can sell anything you want. It can even be seasonal items that are offered at deep discounts during the off-season, for example.
Two examples of products that differ in type, but were unexpected best sellers in recent memory, are fidget spinners and Instant Pots.
Fidget spinners are small toys that spin on ball bearings and entertained many people in one of the biggest toy crazes in recent history, stemming from China and finding their way into the stores of many retailers and e-commerce sellers alike. There are simple and come in a vast variety of shapes and colors.
Instant Pots were one of the best-selling items on Amazon over the 2017 holiday season, providing a quick solution to the problem of long cook times for many types of meals. As a polar opposite to the fidget spinner, Instant Pots are complex kitchen appliances, and yet they sold like hotcakes as an improvement over similar products like the Crock Pot.
A disadvantage to going with the anything and everything approach is that your business model itself isn’t foolproof as the market isn’t always predictable. The Anything and Everything route is recommended for the more experienced sellers who have the capital and the know-how to experiment with products outside the safer zones.
Some Cautionary Bits on Selling Private Label Products
Regardless of the category of product you choose to sell in your Amazon business, there are advantages and disadvantages to them all.
It’s important to recognize that third-party selling isn’t a “get-rich-quick” blueprint. There are multiple components and layers of knowledge to launch and establish a private label business. It’s time-consuming, and it requires money.
Most sellers are recommended to a start with an initial investment of $2000-$5000; however, it should be noted that this number is not representative of every circumstance and it is possible to start on Amazon with much less or more.
If you have the funds to begin selling on Amazon, but you’re just starting out, you may want to consider these general DOs and DON’Ts:
DON’T be afraid to hold off competition at the onset so you can establish your business successfully
DON’T try to innovate—leave it to those who can afford it
DON’T chase trends
DO aim for products that are proven to perform well
DO improve on existing products
DO proper research and due diligence to get your products launched the right way
DO be prepared to place secondary orders immediately, so you don’t run out of inventory
As you consider the options and advice of seasoned sellers across the board, remember that there are no guarantees and one size doesn’t fit all. The only real way to know what products will garner success for you is to test them against the market using the available information and always to employ sound and ethical business practices.
What is your biggest challenge when it comes to choosing what to sell on Amazon? Let us know in the comments below!
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