What is Amazon Private Label and why is it the most profitable sales model?

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There are 4 basic sales models on the Amazon platform:

1. Retail arbitrage is what can be described as: “buy cheaper – sell more expensive.” Often, searching for promotional items in local markets or purchasing at discounts in retail stores with subsequent resale on Amazon at full price.

2. Wholesale - purchasing goods from the manufacturer at wholesale prices. Earnings due to high marginality.

3. Own production product — a classic model: you produce something and sell it through an e-commerce platform, saving on marketing and other sales-related expenses.
4. Private Label — selling other people's goods under your own brand.

At first glance, it seems that it is the wholesale trade model that will bring you the maximum benefit. But in fact, this is not quite true.

Firstly, because many manufacturers sell the product on Amazon themselves, creating competition for you.

Secondly, since large wholesale is of maximum interest to the manufacturer, it is ready to cooperate with an unlimited number of dealers, which creates, again, competitive conditions and is associated with reputational risks.

Here we can recall dropshipping, however, this method of implementation is officially prohibited on Amazon.


Amazon Private Label in Simple Terms

Private Label is a long-term strategy that allows you to avoid production difficulties and risks. The essence is this: you label a finished product that your supplier produces. This is very similar to what supermarkets do, placing their own brand products on the shelves without producing them.

Moreover, thanks to the FBA (Fulfillment by Amazon) service, you on page seo service remove all the headaches associated with warehousing, logistics and customer service.

In general, the Private Label strategy looks like this:





The main difficulty is finding a product of the right quality that is in demand. This is not necessarily something original, something that is not yet on the Amazon platform. Many sellers take TOP products and make the packaging unique, add gift stickers, change the basic colors - that is, add a "zest" and thus lure buyers.

Another equally effective way to stand out is proper dumping, which allows you to reduce the price as much as possible, but win due to high turnover.

According to statistics, 90% of Americans will not buy from a competitor's site without comparing the price on Amazon.



Benefits of Amazon Private Label over Other Strategies


As mentioned above, such a strategy is focused on the long term. That is, you create a brand for someone else's product, which is more like investing in securities than buying a ready-made business.
This provides you with certain advantages: 1. Complete control over reputation : you do not care about negative reviews earned by the brand manufacturer, scandals and disputes that are possible if the product is sold by unscrupulous sellers. You build your reputation from scratch.


2. Unlimited potential and scalability . Your brand is NOT limited by theme or niche. It would be strange if a natural candle manufacturer suddenly launched a robot vacuum cleaner, but it is absolutely normal to combine these items in the catalog if you position yourself as a “home goods brand.”

3. Low competition - since the products belong only to you, accordingly, you do not need to share sales of similar items with other sellers.

4. Recognizability . Thanks to a single concept (logo + brand colors + packaging, etc.), the buyer is highly likely to return to you. The level of trust and loyalty increases.

5. Flexibility. If the quality of the manufacturer's goods has dropped and you are no longer satisfied, you can easily replace it with another one, since you are tied to the brand concept, and not to a specific supplier.
This allows you to test new products and offers for seasonal demand. This is quite difficult to implement if you work on a wholesale system (that is, tied to a specific company and limited by its range).

Approximately 80% of the US population buys Private Label products more often than products from large and well-known manufacturers.

( this is from the site vc.ru )


The main disadvantage of the Private Label model


It is fair to call this not even a "disadvantage", but an "investment", which will be much higher than the initial investment for the implementation of other models. First of all, this is an investment in trademark registration. It is also worth considering the initial purchase of goods for tests and branding costs (design + implementation).