How to Grow Your Amazon Private Label Business
Thinking about launching your private label business on the Amazon marketplace? With over 1 million active Amazon sellers in the United States alone, building and growing your private label business can prove challenging. Even big brand players are now joining the private label marketplace, making the already tough competition even much harder to cut through.
By building a strong brand for your Amazon private label products, you can effectively set yourself apart from the competition, win more sales and reduce customer churn.
In this blog post, we will define what is Amazon private label selling is, its advantages and the key steps to help you create a powerful brand.
What is a Private Label Product?
Private label products are products sold under a retailer’s brand but created by another company. The process involves in private labeling is fairly straightforward – you just need to source items, find suppliers, stock inventory and market products. The difference is that the products use your brand and not the company that created them.
Although it sounds easy, creating a trustworthy private label brand on Amazon requires a great deal of time, research and commitment. You need to ensure that all of your touchpoints are perfectly in place – from your logo to your brand name and product packaging. In so doing, you can differentiate you product from similar competitors and resellers.
Advantages of Selling Private Label Products?
- Earn higher profit margins
- Have lower operating costs
- Create your own brand and have your own marketing identity
- Gain full control over your pricing, size, package design and more
- Build customer loyalty from people who love your products
- Promote a stronger customer recognition
5 Effective Strategies to Grow Your Amazon Private Label Business
Strategy 1: Find the Right Product to Sell
Before you sell private label products, it’s important to conduct a thorough product research to determine which item would most appeal to your target customers. Here are some tips when choosing a private label product:
Follow Your Passion
Choose a product that you can confidently market and sell, something that you know in and out and will not hesitate to talk about. Once you know what you like, it’s easy to explain what the product can do and how it can benefit your target customers.
Use Your Experience
Let’s say you have more than a decade of experience in the beauty industry before you decided to become an Amazon seller. Then use that experience to create your own private label. You can improve an existing beauty product based on your industry knowledge. That way, you can easily introduce your brand and answer any questions your customers might have.
Perform In-depth Research
Not everyone has industry experience or a passion that they can turn into a business. If you’re one of these people, consider doing research. Use Amazon as your starting point – after all, it’s where you want to sell your products.
Find out what items are in demand or are listed as best sellers. You can also ask your friends and family the type of products they usually buy on Amazon. Subscribe to newsletters from companies that sell items you are interested. The more you research, the more new ideas will come to mind. Put in more effort and you will find the right niche over time.
Use High Quality Tools
Tap into advanced tools that can help you find the best niche while reducing your research time. For instance, Google Trends lets you see what words or search terms your target audience are using and how often they search for them. This will help you get an idea of your product. Other than that, it can let you view the statistics of the countries that searched the words the most. This allows you to foresee the projection of search volume of a certain product for the future as well.
Check for a Patent
The process does not end after you have found the product that suits you best. You still have to perform a patent search to ensure that you are not selling a product that has a patent owned by another brand. Violating someone’s patent can lead to lawsuit and cost you a large amount of money in case you need legal assistance. Worst-case scenario is turning over all of your revenue for the product and seizure of your remaining stock.
Choosing a good product for private label takes time and effort but it can be a rewarding experience once you see the sales coming in.
Strategy 2: Take the Competition into Account
Once you’ve decided the right product to sell, research your competitors. Do some exploring to see how they are marketing their products on Amazon.
A smart move is to do a deep dive into a few of the top brands that appear in the search results for your desired product. Go to each listing and evaluate their copy, best-sellers rank, reviews and feedback ratings to get a feel for the level of competition.
Identify their strengths and weaknesses and figure out any opportunities for your brand. For example, if your competitors have a formal tone, you could use a casual and friendly tone with your brand.
Do not be afraid to experiment and produce something weird yet eye-catching. For example, if you’re trying to sell a soda, you can expect other brands to use bright colors and wide fonts on their packaging.
To catch the attention of your potential customers, make your Amazon private label product intriguing. A good strategy would be to use dark aesthetics for your packaging design. In a brightly-colored dominated page, a dark product packaging will certainly stick out.
Strategy 3: Get More Out of Your Suppliers
Suppliers will literally make or break your business, so make sure you work with the reliable ones! To ensure you develop a lasting positive business relationship with your suppliers, follow these tips:
Ensure Constant Communication
This means that you should regularly, openly and directly communicate with your suppliers. It’s also essential that you know your suppliers’ preferred mode of communication. Maybe they are more comfortable talking over the phone than chatting over Skype. Find out what messaging platforms are popular in their country and use it to reach out to them.
Set the Right Expectations
Set the foundations for the relationship from the get-go. Make sure to clearly communicate your expectations and decide together what your roles and responsibilities are. Whether it’s a deadline or a product specification, ensure that everyone understands their duties and is on the same page. If there have been any problems, come up with a solution together. Transparency and honesty are the keys to building and growing a long-term partnership.
Pay on Time
Timely payments are crucial. Suppliers’ cashflow relies on steady and dependable payments from customers. Paying your suppliers promptly proves that you are a reliable vendor and easy to work with. If for any reason you might have problems making the payment on a date agreed, inform your supplier as soon as possible. Offer an alternative date on which they can expect the payment. Of course, stick to it. Just like you expect timely actions on their side, suppliers expect timely payments from you as well.
Learn more how you can build a positive relationship with your suppliers.
Strategy 4: Leverage Product Reviews
Product reviews and seller feedback provide social proof. When there are too many sellers marketing the same products, customers will pick out products based on reviews and feedback.
Looking at the following statistics below can give you an idea of how important reviews are.
- Nearly 95% of buyers read online reviews before making a purchase (Spiegel Research Center, 2017)
- 68% of Americans report positive reviews making them more likely to use a business (BrightLocal, 2017)
- Given two products with similar ratings, consumers are more likely to buy the product with more reviews (Psychological Science, 2017)
In addition, product reviews and seller feedback ratings have a huge impact on your sales and profitability. These key metrics can also affect your Buy Box placements and ranking. You can also tap into your feedback to gain a better understanding on where your product fall short of your customers’ expectations so you can improve it.
Find out the key difference between Seller Feedback and Product Reviews and the reasons why they matter.
Sending an Automated Email
One of the best ways to improve your product reviews and seller feedback rating is by automating your feedback email requests.
Customers with positive shopping experiences are less incline to provide product reviews, so it’s important to give them an extra nudge with a request to give you a feedback. By using a Feedback Automation tool you can send a personal email for every order placed.
Here are some suggestions when crafting a message:
- Keep your message short and simple
- Add your brand logo
- Include a link to the feedback message
- Don’t offer incentives
Strategy 5: Develop an Attractive Packaging Design
Packaging is another way to stand out and prevent other retailers from copying your product. Create a long-lasting first impression by developing a high quality packing. Even if you’re just starting out, don’t cheap out on package labeling. Potential buyers will never know how good your product is if the packaging doesn’t compel them to purchase it.
Here are some things to keep in mind when developing your packaging:
Align the package design with the product
Take note of the main qualities of your product such as weight, shipping conditions and storage temperature so your product is protected from damage.
Add the necessary information
Put your logo, brand name, and the image of a product. Ensure that the requirements of the country/marketplace you’re selling to is also displayed on the packaging, such as the barcode and expiry date. Never display misleading information or images.
Check what your competition is doing
Look into their reviews and see what people are saying about their packaging. Use any negative feedback to your advantage.
Choose the right type of packaging
For example, if you’re selling supplements, find the most appealing bottle. If your product is made of glass, make sure to provide a more durable package so the item reaches the customer intact.
Make the packaging easy to open
Otherwise, the customer might damage the product inside when the packaging is difficult to open. Put a “tear here” tab or directions on how/where to open the package.
Use recyclable and sustainable packaging
A good example for this is a custom-made box that can be used as a storage container or pencil cases. This way your customers will always be reminded of your brand whenever they see the recycled packaging.
A professional graphic designer might come in handy when it comes to designing your private label packaging.
The Bottom Line
Building a private label business on Amazon is a great way to set your brand apart from the competition and build a loyal customer base. Although this requires a great deal of time and effort, it is financially rewarding when managed properly.
If you need help in managing your Amazon business, take advantage of SellerMobile full-suite of tools and analytics.