Selling on Amazon is a one-of-a-kind opportunity to start your own business on the e-commerce giant, Amazon. Becoming an Amazon Seller is a multi-channeled path, providing users with several approaches to selling feasibly on the Amazon website. Whether your focus is budget-oriented or you’re in it for the long-term profit, there is a selling strategy tailored to fit your specific goals. Two of the most popular Amazon FBA selling options are Private Label and Wholesale. Today we are going to break down these two selling strategies and discuss which method would be best based on what each one entails.
Wholesaling describes a selling method where you buy products in bulk and then sell the individual units on Amazon at a higher price per unit than what you bought them at. Wholesale products are usually existing products from established brands that, in most cases, already have listings on Amazon. In essence, Wholesale Amazon FBA Sellers add their own products to existing listings and act as resellers for them. This means that wholesale sellers are competing directly with other wholesalers to get into the “Amazon Buy Box”. The “Buy Box” is the clickable square on an Amazon product detail page that initiates the purchase process by adding the product into the shopping basket. Winning the Buy Box is a direct competition with other wholesale sellers based (mostly) on price, and the larger your share of the Buy Box, the higher your sales rate will be. As a wholesaler, you are constantly adjusting your product pricing and enhancing your listing in order to attain more shares of the Buy Box.
Wholesale sellers have less responsibility for the product itself, since the liability lies with the manufacturer. Wholesaling does not require a hefty investment on the sellers end, and bulk purchasing usually means that the price is less because you are buying more. Compared to other selling strategies on Amazon FBA, wholesaling is not as time consuming and does not require the seller to create new ASIN’s, ads, or a new brand. Wholesaling is a great option for anyone who is not experienced in branding and marketing, and wants to get a better understanding of the Amazon marketplace by reselling before establishing a brand. Wholesale selling is also less of an investment, making it more financially feasible and less time demanding. On the other hand, wholesale selling is competitive, it can be difficult to find an established brand to partner with, it requires a wholesale license and it is not as profitable as Private Label in the long run.
Amazon Private Label
Private labelling is a business strategy where you purchase products that are made by a third-party manufacturer and then sell it under your own brand on Amazon. The buying of goods for your own private label is relatively inexpensive because you purchase no-name products and can get these at a lower price overseas. In this case, the manufacturer you partner with may produce your product, but they don’t have any rights over your brand/label. Private Label Sellers are business owners and brand builders. Selling through a private label means that you are responsible for building up brand reputation, product image, creating product listings and descriptions, as well as attaining a GTIN, UPC, SKU, FNSKU and ASIN for your products. You are fully liable for your brand and products, which allows you to have complete control over the creative process, including marketing and ads!
Unlike wholesaling, private labelling has no Buy Box competition. The investment associated with private label selling is high initially, as is the risk. With that being said, the reward can also be very high as a Private Label Seller. An experienced seller can launch and manage over 50 products under one brand through private labeling, as well as expand to other Amazon marketplaces. If you are able to establish your brand successfully, the profit margins are very lucrative and eventually you can sell your brand at a substantial price. Private labeling is a unique opportunity for people who are already well acquainted with selling on Amazon and have expertise in branding and marketing. If you are someone who has the right background and experience, as well as the funds to establish your brand, Private Labeling is an attractive selling method.