Most stores on Amazon are the same; they buy and sell other business’ products and that’s how they make their money.
However, the best Amazon stores are manufacturing their own products. They contract out a small manufacturer to create their products and then sell them on their stores.
This process is called private labelling. Or selling your own private label products on Amazon.
Private labelling allows you as the seller to decide everything about the product, such as what it looks like and what it’s made of.
Example. Take the popular Matcha tea. You will find a lot of offerings on Amazon of that type of tea. However, the majority of Matcha's offers comes from small companies, like you, which pack the same type of tea under its own brand. This is their private label brand.
There are so many advantages to selling your own private label products on Amazon which I want to tell you about today, so the goal of this post is to provide you with enough motivation so that you start thinking about your own private labels.
Even Amazon started their own multiple private labels.
Private label selling strategy is a great way to position your Amazon store above the competition so here are some of the reasons why.
Advantages to private labels
Exclusive to your store
Private label products are produced solely for that particular business, meaning they are unique to them. The benefit to the exclusivity is that as the product is only being sold by your store, there is no competition from other businesses.
This is especially valuable to customers that have given you repeated business as they have the trust in your products and already approve of their quality so they will purchase your own brand with these qualities already in mind. This is also a great way to build new customer loyalty since they know they cannot find that product anywhere else.
You control levels of pricing and sales direction
When selling a variety of branded products, there is little choice in how the pricing is determined and how it should be marketed. Again, these decisions are made by the third party brands themselves. However, with a private label, you take back control. All key strategic decisions are made by yourselves.
This means that you can specify what sector you want to target. Most importantly, the pricing is also chosen by you and altered as you see fit.
As no other store will be selling your private label product, your business decides how it should be priced and any promotions to entice the customer to buy your product. Private label markets and production levels are usually smaller than that of larger brands meaning less stock is left unsold.
By being the only store that will have your product, an exclusive opportunity arises in that if it proves successful with customers, they will come back and buy more.
You have then got their loyalty and will frequently come back to your store for that product. You will know why they are coming and can guarantee them that they will not be able to find the product anywhere else on the market. Frequent customers are comfortable purchasing from your store and so are more likely to buy other items.
Starting a private label business can create opportunities where other retailers may want to start offering your product in their stores and contact you to make this happen. They will be willing to pay significant premiums to get your product as part of their store which means an increase in your income. Of course, you lose the exclusivity of the product but the flip side is that there is potential to expose your brand to a new market.
As has already been mentioned, the time it takes for a supplier to ship stock to your business can be time consuming. All this time costs money. Since private label products are dispatched directly from the manufacturer, profit margins are retained by you. By being able to control pricing and the ability to alter it as you wish, you directly decide the margins. If the product proves popular, you can raise prices but maintain similar costs with the producers, thus greater profits.
Faster update to products
Customers can change their minds quickly and decide that a product no longer meets their needs. When this happens, it’s important that you adapt to the change quickly. By having a private label, changes in their preferences can be analysed and identified quickly and timely solutions can be created. These results can translate into fresh products specially designed to be up to date with current trends and keep your business ahead of the curve.
This is unlike larger brands where the development and the getting-to-market of a new product can take a lot of time, meaning the potential loss of sales and in worse case scenarios, customers may not come back if action is not taken quickly enough.
Product and packaging tailored to meet your standards
When ordering a shipment of other branded products, they will be advertising and shipping their inventory based on their company decisions and values. By taking advantage of a private label, you are in control.
For example, if you are a business that prides itself in using recycled materials to make your packaging, you can make sure that your own branded products are sold in such a package. You get to control what materials are used in the recycling process and there will be a guarantee that the packaging is suited to your requirements.
Using your business’ image to your advantage
By establishing a good reputation as a retailer, your business is more likely to sell more products as the quality in product and service has already been established.
By tapping into this image, private labelling can be a great weapon in your arsenal. Naturally, having your business associated with its own product increases its chances of being popular with customers. And by successfully promoting this product to be on a similar level of quality as products they will have already purchased from you before, the strength of the brand increases, meaning more sales, leading to a stronger brand, generating more sales and so on and so forth.
Another benefit to using the business’ image is that when customers discover the private label, they will not have difficulty in deciding to buy what you have to offer. The level of trust has already been established. I can’t stress enough how important of a factor customer perception of quality is and your image plays a big role in that so use it!
You can deal directly with your supplier
It can take a long time to get different brands’ products into your store, especially if they have a long list of suppliers! With your own brand, you get to deal with you own supplier directly. This will increase the time you can produce the product and get it on the shelf. Another advantage of this is that it will take less time for you to communicate any improvements or changes that need to be made with your supplier. Customer feedback can be dealt with quicker and any trends that start to develop will take less time to catch up on so you can stay ahead of the competition.
So as you can see, there are many advantages to creating your own private label. They are an attractive option for any business looking to gain an edge.
Things to bear in mind
While there are many pros to private labels, there are very few disadvantages and more like just things to think about.
Such an example is when selecting the manufacturer. You will want to be in business with an established organisation as they will be responsible for the production of the inventory. If problems arise for one reason or another, you will want these dealt with as quickly as possible.
Yet another one. You'll probably need to open a second Amazon account.
One more thing to be wary of is that your brand is just riding the wave of an established brands’ success. Don’t fall into the trap of just recreating what they have done and focus on how it can be improved.
As mentioned, these aren’t disadvantages, they are more like potholes to avoid when thinking about selling private labelled products.
The bottom line
Have you been persuaded to think about starting your private label product on Amazon?
Overall, private labels can be greatly beneficial to growing your business’ brand and boosting sales. They allow you greater control over pricing, give you flexibility in margins, exclusive share of the market so customers can only get that specific product from you and, at the end of the day, greater levels profits.
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