Follow My Journey Private Labeling a Product to Sell on Amazon
Learn from My Research on How to Sell on Amazon
What Product Will This Bag Contain?
Answer: It Will Contain My First Private Label Product – Exciting!!
This bag is so exciting to me! It will contain my first own – private label – product.
If you have not heard about private labeling before, it is basically about creating your own product for e-commerce, and especially to sell on Amazon.
It is not as complicated as it may seem. There are a few hurdles to overcome when starting out and then it will flow better and better.
You will know the process and have hopefully created some good connections to continue working with.
Where Do I Start When Private
Labeling a Product?
You look for a manufacturer that can produce your product for a good price and that allows you to add your logo, and possible also make some customization to the product.
Like I mentioned in a previous article/blog post: How to Make Money by Blogging for Beginners, you can make money online in a number of ways. The internet has opened up so many doors on how to earn a substantial income through its many venues.
I have not spoken (blogged) about private labeling and selling on Amazon before, since it is new to me as well, but I am so excited to share what I have learn so far.
How Did I Hear About Private Labeling?
I got introduced to a webinar on Facebook held by two very successful guys that are private labeling their own products and then list them for sale on Amazon. They now have 7 figure businesses both of them.
I only remember one of the guys name; Justin. He started out like so many others – super bored with his job and not sure if his employer would outsource his position in the near future. He started to look around and came across private labeling.
His story; being an every-day Joe longing for something else and his now enormous success, hit me like a bolt of lightening. I instantly felt I had to try this myself.
“If He Could Do It, So Can I!”
This was my first thought and motivation, which I still carry with me and believe in, of course. You have to have a mindset of a true entrepreneur to follow through with something like this, because the hurdles are many until you cross the line and things start snow-balling by itself.
Back to the webinar where I got this business model presented to me…
Justin and his colleague introduced the basics steps to take when private labeling a product, and also how to chose the right and most rewarding product to sell.
I am going to give you the information I picked up from the webinar and also information I gathered from doing further research online.
How Far Have I come In My Private Label
As you probably know if you have visit my blog earlier, my prior and existing way of making money with Amazon is as an affiliate. Soon I am also about to make a direct, consistent income as an Amazon FBA seller, which is super exciting!
As of today, I have passed the first steps of taking lots of online courses on how to private label and sell on Amazon’s FBA – Fulfillment by Amazon Program. I will probably write a future article/blog post explaining the FBA program a bit closer, but for now, you can read about it here.
I have also done extensive research to come up with a product that I think will sell good and has a good net profit.
You Shall Only Pay Attention to Products That Will Result In a
Net Profit of 30% and Up
The Amazon FBA charges will come to about 30% (for inventory/storage and referral fee) and then you have the product cost, plus shipping. The rest is your profit.
Note that with Amazon’s FBA program you can ship directly to the warehouses and they take care of the distribution, storage, and delivery out to the customer. They even take care of possible returns and customer service, which is amazing!
The only thing you have to do is acting as the middle hand finding a product and negotiate with suppliers for the production cost and shipping. You create the listing and then you can sit back when Amazon is handling the selling process for you.
You Are Also Leveraging Amazon’s
Existing Buyer Traffic
I found an interesting product to start out with (or WE since I introduced this to one of my friends that was game on right away). The product fits in on the directives you should follow to become a successful Amazon FBA seller.
The picture will be me when our products reach Amazon’s warehouses and go live on Amazon for customers to buy.^^
We ordered a sample of the product to do our own quality check, which turn out good.
Always Order a Sample So You Can See and Feel
the Product Yourself
You do not want to risk selling something of poor quality and get bad customer reviews. That can be difficult to bounce back after.
We are now more or less finished negotiating with our Chinese supplier and we have also got a reasonable quote on air shipping. I have created a logo and provided the FNSKU codes.
The process understanding UPC and FNSKUs’ was a bit tricky and took a while, but I highly recommend watching tutorials on YouTube. They helped me tremendously.
If you cannot create the logo yourself, there are low price designers on Fiverr.com or 99Designs.com that can do it for you. I am a graphic designer, so we had some advantages there. The logo on the poly bag in the beginning of the article is our logo created by me. As you probably understand by the brand name, we will start in the home and kitchen supplies category.
We have created our first listing of the product on Amazon and prepared the shipping into the FBA program, so they know what products to expect before they arrive. It is a bit tricky to understand this process at first. It feels a bit backwards to me… so take your time studying tutorials.
You can also get support from Amazon, but often they send you links to read more and you get even more confused instead. Their descriptions are rather contradictory and very difficult to understand.
We called the support and more or less demanded them to personally guide us through our questions, and we had to do so several times because the expertise of the customers sales reps varies a lot.
Right now, we are waiting on the final step before placing the order – to see how the product will look like with packaging and logo.
How We Hopefully Will Look Watching the Sales Numbers on Amazon
After approval we can go ahead with the purchase of our 500 sets and wait for it to reach the Amazon warehouse and then go live on Amazon. Or in fact, 3 different warehouses. This is something to take into consideration in regards to the shipping costs.
When preparing a shipment in Amazon’s seller central, Amazon often splits up the shipment to different locations. They started this to shorten the delivery time to customers, but it makes it worse for sellers, since it gets more expensive shipping to more locations than one.
Although, there are so many more benefits than disadvantages with selling on Amazon, so do not get discouraged by this.
In fact, they have a program called: The Inventory Placement Program, where you can ship your inventory to one warehouse in exchange for a $0.30 fee for each unit (small standard size). If you have an over-sized product the cost is $1.39 per item.
Things to Consider When Choosing a Product to Sell on Amazon
There are some things to consider if you want to guarantee that your product will sell on Amazon. In the bullet point list below I am including the main information from the first webinar I attended, and from further research online, plus from video tutorials:
- Identify a Product That Is Already Selling Well on Amazon
To identify a product already selling well on Amazon is easy. You can do this by Googling: “Top 100 Best Sellers on Amazon + Your Category You Have Interest In”. Choose a product that is already a best seller with a low sales rank. More about this further down.
- Choose a Product Not Sensitive to a Brand
To give you an example of a product not to choose, I would say a digital camera. It will be very difficult to compete with an already established brand. There are even MANY established brands selling cameras on Amazon already.What the guys from the webinar recommended (plus other sources online) is to choose something in the pet supplies category, for example pet odor removal. They also show an example private labeling a yoga mat.
These are examples of products not tied up to already established brands.
- Choose a Product In the Price Range of $15 – $50
The reason to this is that Amazon customers make purchases in this price range easily with not much thinking. It does not feel too expensive and people tend to do impulse buying decisions for products in this price range.Most people will not need to do any further research to make the buying decision, because it is a low enough price to risk losing the small amount of money if the product is not what they expected.
- Try and Find a Simple Item That Is Not Easily Broken
This is very important, since you want to sell a product that first of all is simple and that you do not have to worry about arriving to the customer broken in pieces.The best way to ensure finding a product that not breaks easily is to stay away from more than one part products, porcelain, glass, and electronic devices.
- Search for a Supplier/Manufacturer That Can Produce the Product For
a Low Cost
To find low cost suppliers, many choose to look overseas, in for example China. There is a good website that I used myself to look for Chinese manufacturers, called alibaba.com.
I recommend to check the box “Gold supplier” to not risk getting low quality products, or possible being scammed out of the payment.
- Chose a Product Preferably Not Heavier Than 1 Pound
The weight is important because it plays a big role in the shipping cost from your supplier to the Amazon warehouses. The lighter the product is – the cheaper the shipping cost will be, which in turn means higher profit margins.If you keep to products not heavier than 1 pound you can choose to ship by air, which is much faster and will save you the agony of running out of stock with 30 days to the next shipping. You will also be able to sell your products faster on Amazon and in that way save (or make) more money.
The weight also plays a factor in the Amazon’s FBA storage/inventory fees. Amazon charges around $2 for up to 2 pounds then every pound after that it is an extra $0.39.
- Choose a Product That Have Competitors with Less Than 50 Reviews
The amount of reviews is one of the best ways sellers have to gauge the level of competition for a product. Reviews are one of the main aspects on how Amazon ranks products.If your competitors that are selling the same product have less than 50 reviews, you can beat their review count easily. Some Amazon sellers say that even a review count of 200 is beatable.
I think it is best to stop there. It will be very difficult to beat the big players with thousands of reviews and get customers to buy your product instead.
- List Your Product on Amazon
When listing your product on Amazon you have to make sure you are better than your competitors. In order to be so you have to have high quality images and preferable user pictures. Also, put some extra effort in making the description very explanatory. It should focus on trying to solve a problem for the potential customer. Why should customers buy this product from you?
Yes There Is Tons of Competition on Amazon,
but 99 Percent Are Doing It Wrong!
With this I mean having none, or maybe only one picture of the product. Also poor descriptions and no optimization. Customers want to see and read about what they are purchasing. Make sure to do it the right way. Make your listing stand out.
- Optimize Your Listing With Keywords
To be able to rank in the organic ranking on Amazon, you have to optimize your listing. Make sure to use your keywords in the main title and the description. You also have a special page on your Amazon seller account where you can add keywords.
- Take Advantage of Amazon’s Pay per Click Advertising
If you want to start selling fast, be prepared to invest some money into Amazon advertising. With their PPC – Pay per Click option, you can pay to be visible on the 1st page to the right on their product listing page.You only pay when someone clicks on your listing, and most often this leads to a sale, which will be a quick ROI.
- Similar Products Have a 5,000 Best Seller Rank or Smaller in Main Category
The lower sales ranking (BSR) on Amazon the better! The best seller rank also gives a good measure of whether there is demand for a product or not.Your product should have a BSR of 5,000, or lower to ensure that there will be enough buyers in the market for you to make a good profit.
Below are numbers that can explain the sales ranking a bit better and how many sales you can expect from a particular sales rank. This example is for books only:
- Amazon Best Seller Rank 50,000 to 100,000 – selling close to 1 book a day.
- Amazon Best Seller Rank 10,000 to 50,000 – selling 5 to 15 books a day.
- Amazon Best Seller Rank 5,500 to 10,000 – selling 15 to 25 books a day.
- Amazon Best Seller Rank 3,000 to 5,500 – selling 25 to 70 books a day.
- Amazon Best Seller Rank 1,500 to 3,000 – selling 70 to 100 books a day.
- Amazon Best Seller Rank 750 to 1,500 – selling 100 to 120 books a day.
- Amazon Best Seller Rank 500 to 750 – selling 120 to 175 books a day.
- Amazon Best Seller Rank 350 to 500 – selling 175 to 250 books a day.
- Amazon Best Seller Rank 200 to 350 – selling 250 to 500 books a day.
- Amazon Best Seller Rank 35 to 200 –selling 500 to 2,000 books a day.
- Amazon Best Seller Rank 20 to 35 – selling 2,000 to 3,000 books a day.
- Amazon Best Seller Rank of 5 to 20 – selling 3,000 to 4,000 books a day.
- Amazon Best Seller Rank of 1 to 5 – selling 4,000+ books a day.
These numbers are taken from another blogger; Make Use Of.
Click here to check them out.
Very exciting numbers indeed!
Imagine If You Can Find a Product With for Example 200 – 350 in Sales Rank and You Can Sell Up to 500 Books a Day. Not bad!
Of course, there are other aspects deciding how good your items will sell as well.
You first of all have to follow the Amazon’s terms and regulations, and like I mentioned earlier, you also need a good amount of reviews.
I am super excited to see where my journey takes me!! I have a really good feeling about this.
My baby Max is on my side voting for mommy too^^
Everything That Can Be Done Online Has No Limits and Is Completely In Line With “Today” and the Future
Other Good Advice When Private Labeling Products to Sell on Amazon
Try to find a product that is not seasonal and that people will buy all year around. Also if the product encourages recurring purchases, you have set yourself up with a gold mine.
Products in this category are for example vitamins and other nutritional supplements.
However, Watch Out For Weight Loss Supplements!
These come with too many regulations and safety risks. You can risk ending up in some legal hot-waters, so it would be wise to avoid this product category.
Furthermore, start with one product only and focus on building that brand. When your first product is selling well you can start looking for more products to private label. It is not recommended to sell more than 5 products to be able to maintain the account and not get overwhelmed.
It is also good to consider the ability to expand your brand with future related products. You are then thinking ahead and are building the foundation of a bigger business.
Take Your Amazon Business 1 Step Further
If you can show Amazon that you have a branded website, you can register your products in Amazon’s brand registry and not have to bother about UPC codes etc.
It has other benefits as well being registered on Amazon, but I have not studied this enough yet to share the information. Since we still have not built our brand website we could not apply to the program now anyhow.
We will absolutely build a website in the near future, but we first want to find other relative products to expand our brand with.
It feels a bit “overkill” to build a website just for one product.
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Conclusion How to Private Label and Sell on Amazon for Beginners
Like everything else I present on my website, this is not a get-rich-quick solution. Like any business start up, it takes time to get going. There is a lot to think about and to process before ordering your first product.
Our biggest hurdle so far has been trying to reduce the shipping cost and to figure out whether we need to apply for a customs bond, hire a shipping and customs agent, how much the duty will cost us and so forth.
We ended up choosing air shipping, since our products are light weight. Luckily, there is no customs when air shipping and we got a reasonable price after all.
I hope this article helps answering some questions you may have, or maybe spiked your interest in private labeling to sell on Amazon. Either or, I will keep you updated on my Amazon journey.
If you have any questions that I still have not touched upon, please feel free to ask them in the comment section and I will research the subject for you.
I am here to help out as good as I can.
Cheers and all my best wishes to you all and may we have a successful 2017!
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Update #1. – Follow My Journey Private Labeling a Product to Sell on Amazon
I promised to keep you posted on my private labeling journey, so here comes a summary of what has been going on during the last 2 weeks.
It is now April 5 already and we have been going through some frustration.
First of all, the 12 hour time difference makes it really hard to get enough accomplished each day.
Right now, my partner James, who is a morning person has taken the night shift (Chinese time), and I have the morning shift trying to process things with our supplier, since I love to work at night. I am not a morning person, so I am much more focused at night.
However, even me cannot be up ALL night, so often I get to communicate with our contact, Lincoln, from 10pm to about 1am U.S. time. Not enough time when trying to schedule everything.
Our first frustration occurred while I was going to pay the deposit in order for them to manufacture our product with full packaging, logo and label, so we could approve or make final adjustments. They needed a deposit of about 30% of the total order to do this.
I had no idea it was as complicated to wire money to China as it turn out to be. It took us two days of text and email communication back and forth figuring out that the Chinese Swift codes look different from other countries. I honestly thought that my supplier did not have “all horses in the stable” as they say when he continued to send me too short Swift codes with only letters and XXX’s even that I told him it had to be 2 letters and then 8-12 digits.
After Googling common Swift codes in China, I saw that they are looking different and like the ones he kept sending me, and it made me feel a bit remorseful. I had to apologize for not understanding they were different.
The Language Barrier Also Makes Things Like This a Bit Extra Complicated
Sometimes, our contact does not understand what we mean either, which prolongs the end result having to repeat the same thing over and over. He is limited speaking and understanding English, and is also the ONLY person of the company speaking English at all, and this is a reality with many suppliers in China.
However, with a little bit of patience you will find a way to make your point come across.
Since China has different Swift codes, I was not able to do the wire transfer through my Swedish bank. At first, I was not happy about this but now I am grateful, since you do not have the same protection if you would get scammed.
We came to use PayPal instead, which protects you during the whole paying-process and ensures that you will get the money back if you are not receiving your products.
The only minor con with PayPal is that they are adding a fee using their service.
Note! According to the Legal Regulations of PayPal, the Seller Shall
Always Pay the Service Fee
This was where our second frustration started. Our supplier added the 5% PayPal fee to our invoice instead of taking the cost as they should. It may seem like 5% is nothing, but when having tight margins, every extra penny is decreasing your net profit.
This leads me in on another thing I have not been able to figure out yet. PayPal lists that their seller fee is 3.9%, but our supplier-contact showed us the receipt displaying how much PayPal actually took, and I calculated that to be about 4.2%. So both percentages are wrong – it is neither 3.9% nor 5% that our supplier charged us?? Comments on this anyone?
Anyhow, we tried with all means to get them to do the right thing and take the seller cost, but they were arguing that they would lose and go minus on our order instead of gaining. You know how this talk goes..
I even sent them the legal regulations from PayPal, but got back that all suppliers are charging the customer this fee, the only difference is that they include it in the product price from the beginning, so the customer is unaware he/she is paying the PayPal fee.
After too many emails back and forth not going anywhere, James and I decided to just go with it this time and at least be on the safe side knowing that PayPal protects us if anything would go wrong. It sucks a little that we had to give in on something not right, but we have come too far in the process to start over with a new supplier.
UPC & FNSKU Codes – What to
Use for What?
After we paid the deposit, we did a double check of the product label and description that I already had sent to the supplier. On the actual packaging of the product you only need the FNSKU code.
The different codes and labels were a bit confusing in the beginning, but here is what we have learn on the way:
- The UPC code is needed when creating the product listing on Amazon. If your product does not have an UPC code already, you can purchase a code for a low cost. I purchased 250 UPC codes on eBay for only $5, so that is not a big expense at all.
- The FNSKU code has to be placed on the packaging of the product when selling on Amazon. This code is related to you as seller, so they know who to pay the profit to. You will get access to the FNSKU codes after creating you listing in Amazon’s seller central.
- Inside the seller central, you will also get access to your shipping labels that you need to provide your supplier with. These will display the correct Amazon warehouse addresses.I do not know if you remember this, but Amazon can decide to split up your order in several delivery addresses when you are creating the FBA shipping, which can cost you a great deal more when it comes to shipping. You can avoid this by joining the Amazon Placement Program and pay $0.30 per standard sized item and $1.35 per over sized item. In some cases this may be worth it.
We decided to not use the Amazon Placement Program, but maybe we will change our minds in the future, who knows.
We had to go a couple of rounds with the product description before this process was settled. First, our contact told us the description and user guide were too long for adding to the back of the poly bag and asked us to create a description we could add on a hard copy inside of the packaging.
I created a nice description in Indesign with the FDA, BPA and Eco logos, elegant framing etc., but of course he then changed his mind again and asked me to re-make it into a shortened version, with no logos, only plain text to fit the back of the poly bag.
This is an example of a process that easily makes you frustrated and slightly impatient. With clearer directives from start, we would have saved lots of time and effort, but I guess there is a first trial period with a new supplier and product that will go much faster when re-ordering.
Always Create More Sales Funnels
Than Just Amazon
What do I mean with this? When branding your product and working on getting more sales, it is always good to find more sales funnels than just Amazon.
I guess my experience as a marketing consultant for over 10 years makes this way of thinking natural to me. While waiting for our product to get ready, I have already created a web shop and a Facebook store where people will be able to buy our product as well. I will update with the links when our product is finished.
I have also taken beautiful user pictures with our product sample and models that we have added to the Amazon listing, web shop and Facebook store.
From my research I have learn that having high quality pictures is one of the most important aspects for selling better than your competitors on Amazon. Let us see if that is a fact.
Where Are We Now In the Process of Getting Our First Private Label Product?
Waiting and waiting! We have been waiting for a week now and it is so nerve-racking because I am nervous about the final result – how the packaging will look like with our logo, label, description and suffocation warning. Yes, we have to have suffocation warning on because the poly bag is on the size limit of possible suffocation if placed over the head. Most, in case of children I would guess.
Like you probably understand by now, it is a lot around the actual product to think about.
I surely hope that the packaging will look good from scratch and that we will not have to do further adjustments that will delay the process even longer.
I Cannot Wait to Start Selling on Amazon FBA!
I am telling you, patience is not my virtue! I want to get going NOW.
Luckily, my partner is there to calm me down and talk me into the fact that it is better to make sure everything is in its right order and not make unnecessary mistakes that need to be corrected later. I know he is absolutely right.
So…this is where we are today and make sure to come back for my next update. If you have any questions, or if you want me to research something for you, let me know in the comment section.
Thank you for reading!
Remember This – the True Mind Of an Entrepreneur Is To Never Give Up and Always Find Ways to Recoup and Get Back Into It Stronger and Wiser!
About the Author
My name is Stina Pettersson. I am the founder of Make a Living from Home in 2017 and the author of the articles on this site. I am originally from Sweden and am currently a business owner to 3 online businesses.
I help people to start their own online business and make a living from home. I am especially fond of helping the stay at home parent, or single parents to increase their income.
I hope I will get the honor to help YOU achieving your online success.
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