As an Amazon seller, what are your biggest headaches on a day-to-day basis?
If you’re a reseller, like most Amazon sellers, your list probably looks something like the following:
After a while, many sellers begin treating these issues as necessary evils that come with doing business on Amazon. At seller meetups, rookies will complain about how awful dealing with the buy box is and how low profits are. Grizzled veterans usually respond with a gruff “Welcome to the club, kid.”
In reality, these headaches aren’t some kind of burden that sellers are duty bound to shoulder. They’re necessities of reselling in general, but not of selling on the Amazon platform.
Does that seem paradoxical? Only if reselling is the only kind of Amazon sales you know.
Imagine this: What if your products could go head to head with the same big name brands that sell on store shelves?
Exciting as it may be, this idea is no fantasy. Many Amazon sellers already accomplish this every day by selling goods under their own independent brand name. If they can do it, so can you.
Still not convinced? Here are five key reasons why private label selling beats reselling on Amazon.
As you settle down at your desk with your morning coffee and check your Amazon Products, your eye starts to twitch. It’s not the caffeine. It’s seeing that one of your competitors has nabbed the buy box for one of your best-selling products.
This isn’t a rare occurrence for Amazon resellers. It’s an everyday reality. Reselling on Amazon is a constant battle to keep your razor-thin margins safe from the dozens of other resellers nibbling like piranhas at your coveted buy-box spot.
Keeping the buy box is so crucial that many resellers spend thousands of dollars a month on repricing software that lets them duck and weave under competitor prices. As more and more sellers start to use this service though, a race to the bottom starts. Prices and profits hit rock bottom, and the herd of resellers migrates to greener pastures.
What if you could have the buy box every time, for every product? No more morning eye-twitches, no more nibbling piranhas. For the veterans of Amazon reselling, this prospect seems like a fantasy.
And they’re right. So long as you’re reselling on Amazon, struggling to keep the buybox is a daily reality. It can seem like a never-ending uphill battle.
And that’s where private label, or branded selling, comes in. The world where always having the buybox is not only a possibility but a reality. When you’re selling your own product, you’re the king of your own hill. No more daily buy box stress.
Of course, it’s not all sunshine and rainbows. As Spiderman’s Uncle Ben famously says, “With great power comes great responsibility”. Notably, having your own product page means managing product reviews and getting your product seen.
Still, having your own brand beats reselling on this count. With buy box struggles a thing of the past, you can focus on growing your business in more meaningful ways. Bonus side effect: a source of stress is completely removed from your life.
Ask a typical reseller what kind of products he sells and he’ll likely laugh in your face. The reality is that resellers sell whatever they can get their hands on. The nature of the business is to sell whatever turns a profit, even if you know absolutely nothing about it. You’re blindly reaching into the merchandise grab bag and pulling out a messy assortment of whatever sells.
Unfortunately, this broad approach comes with a cost. Sellers don’t have the know-how to address customer questions, let alone complaints caused by defects. Buyers get frustrated because they expect competent service, and sellers get frustrated because they burn time trying to fix something they don’t know or care about. It’s a losing proposition on both sides.
What if you could sell only what you cared about the most? The grab bag is gone, replaced by a set of carefully chosen items that you’ve become intimately familiar with. You know what can go wrong. You know the solutions. The shoulder shrug is no longer your go-to response when the buyer encounters a problem. You can take action, help your customer out, and take direct action to ensure better quality control in the future.
The seller also gets to deal in something he’s passionate about. A hobby can turn into a full-fledged business. There’s a feeling of security when the buyer knows that a seller is really dedicated and knowledgeable about their product.
With Amazon private label selling, this passion and expertise benefits both buyers and sellers. Buyers can expect quality products and knowledgeable sellers. Sellers leverage their experience to anticipate buyer needs, massively boosting profits compared to the blind-shooting of reselling.
Selling products you don’t know about must be reactive by necessity, following the herd from fad to fad. Selling from your niche of expertise means the trends start with you.
Once again, a word of warning. Even when selling what you know best, you have to sell what customers actually want. It can be easy to get emotionally invested in pet projects that don’t help your business. Learn to be adaptable while still staying true to your knowledge base.
The number of unique ASINs that Amazon resellers must sell to make any kind of reasonable revenue is in the thousands. With buy box woes, unpredictable demand, frequent out of stock situations, diversification is a necessity. The result? Constant headaches.
A large number of products means:
Need I say more?
With private label sales, a seller can reach the same amount of revenue with a fraction of the products. The reasons are simple. Namely, private label sellers can buy lower, sell higher, and build a reputation to encourage return customers.
Fewer products to manage means:
Simply put, branded selling means your time will be spent managing strategies for a few products, instead of hedging your sales by selling as many products as possible. Becoming a successful branded selling involves no less work than successful reselling, but the time devoted to branded selling is more meaningful and provides better results.
We’ve already mentioned that retailing on Amazon is a race to the bottom but, even worse, the products must be bought from wholesalers rather than directly from the manufacturer, meaning another middleman and higher costs. You’re buying high and selling low. You do the math.
Low profits means that selling becomes a means to pad income, rather than an entrepreneurial opportunity.
On the revenue side, private label sellers are able to charge more, and deservedly so. With the backing of a trusted brand, the quality of a product and more critically the level of customer support is assured. Besides, no buy box competition means that you set the price you believe your product deserves.
On the cost side, private label sellers pay less. Resellers buy from wholesalers, who buy from manufacturers, who in turn are under contract of a big name brand. Private label sellers buy directly from the manufacturer, often with custom specifications. The result? Products over which you have direct quality control, at a lower price.
Private Label selling leads to higher revenue and lower costs. Once again, we’ll let you do the math. These profits can be used to reinvest, allowing you to infuse your new brand with capital, turning it from a hobby to business.
Perhaps the most important yet most underestimated asset of any business is its reputation. Reputation is so important that big corporations spend hundreds of millions of dollars on PR firms that gloss and polish their every action and product for public consumption.
Unfortunately, we don’t have that luxury as Amazon sellers. Despite this, positive consumer perception is more critical for small businesses than it is for established corporations. A bad reputation means certain rapid failure. On the other hand, building a good reputation in the eyes of consumers paves the way for incredible business success.
The only reputation Amazon resellers can establish is through their seller feedback rating. Amazon factors this rating into their search results and buy box algorithms. More visibly, if consumers bother to look beyond the buybox, the “Other Offers” page allows a direct comparison between sellers by their feedback rating. Finally, consumers often click through to the company page to view feedback directly.
Private label sellers must also pay attention to seller feedback, mostly in relation to Amazon’s search ranking algorithm (blog post coming soon!). Thus, maintaining high feedback ratings is critical to success both as a reseller and as a branded seller. (another blog post coming soon!)
Besides this one statistic, however, resellers never have the opportunity to really build a lasting brand. Nobody remembers that they bought a Nike shoe or a used book from Lots O’ Stuff Inc. At best, your relationship with the customer ends once their package arrives. Any repeat sales are pure chance in the massive ocean of the Amazon Marketplace.
The sad reality is that if your resale company disappeared tomorrow, not one customer would notice. A fallen tree in an abandoned forest of resellers reaching to steal the precious sunshine of customer sales from each other.
Branded sales are a whole different ballgame. If you’ve done things right, the sudden disappearance of your company should prompt “sky-is-falling” despair among your niche of loyal customers. Even the cool-headed folk at Amazon HQ will note your disappearance with some dismay.
Amazon product reviews play a large role in developing such a strong reputation. You’ll find our in-depth post on them valuable if you’re a branded seller or are planning on becoming one.
Broadly speaking, private label selling on Amazon means building a long lasting reputation and brand. Every product you sell has your name and logo on it. Every customer interaction you have, good and bad, is associated with your name. Every product review speaks not only to your product, but to your company at large.
Consumers remember you and speak to their friends and family about your products. Your logo might sit somewhere on their desk or kitchen counter every day.
With dedication, a private label brand can be cultivated into the rock solid foundation of a thriving e-commerce business. Instead of stagnating year to year with resales, you’ll see your business grow year after year.
Before you know it, competitors will be glaring at you with envy as you sit atop Amazon search results across your line of products.
So what are you waiting for? Go Private label!
Of course, it’s not that simple. You can’t just call up a manufacturer and start selling private label - there are quite a few steps to getting started. We’re working on a detailed guide to help you get started. For now, check out this article to learn about the first step of private label selling: product procurement.
Thoughts, criticisms, or topic requests? We love to hear from our readers and Amazon sellers. Leave your comments below!