How do I start an Amazon private label company? Should I open an Amazon account in my country or America? Do I need an EIN or registered business address? Can I use Amazon FBA with private label goods?
My subscribers send me questions like these all the time. There’s a lot of interest in how to start a private label Amazon FBA, but also a lot of confusion.
That’s why I wanted to answer everyone’s questions with an official post. 🙂
I’ve written before about how to start an ecommerce company from scratch, but not about an private label Amazon FBA specifically.
This article guides you through the early stages of the Amazon FBA private label business, along with what you need to know about FBA and my personal recommendation: Amazon MCF (Multi-Channel Fulfillment).
If you have any questions about Amazon private labels, this article should clear everything up.
What Is Private Label?
Let’s begin with the bare basics, in case you really are starting from scratch. Private labeling, to me, is taking a generic product, making it own by some type of modification, and then selling it under your own brand. (Compare this against “white labeling,” which is selling another manufacturer’s product as is.)
Because different brands can offer the same private label products, the key to success is what you add to the product, which could be a physical feature or superior marketing and customer relations. Your product quality is nearly identical to your competitors, so you have to rely on other sales techniques like branding, pricing, advertising, shopping experience, etc.
Private label selling does have its advantages over traditional models, at least in some areas. Smaller companies can cut production costs while they build up their brand name, while larger companies can use it to experiment safely in new markets. Think of how many clothing companies branch off into cosmetics or perfumes—chances are, their initial breakouts were private label goods.
Likewise, private label products could be an upgrade in quality, or resolve some compliance issues. If you’re expanding internationally, it may be more effective to sell a local private label product that already complies with the country’s standards, rather than to alter your existing production process.
Research Better Products to Increase Sales
A private label company is only as good as their products. That’s why your first step should be sharpening your product research skills. I’ve written a lot about product research before and I don’t want to retread any ground, so take a look at the links below to learn more.
First things first, you need to choose a profitable ecommerce business idea. What’s your niche? Where can you add value to the market? Once you have a niche, you need to know what to sell online to your followers, both trending products to capitalize on sales and evergreen sellers to stabilize your business.
Private label products have an additional set of criteria for what makes them worthwhile, particularly whether the demand is high enough and whether there’s room for improvement in marketing or on generic features. You can see my list of 29 private label product ideas to help inspire some avenues you can pursue.
If you’re here specifically for Amazon private label advice, you need to know what to sell on Amazon. If you have some budget to spare, you can also use Jungle Scout services to reveal new ideas for products and categories in your niche.
What Makes a Brandable Product?
By and large, you want to sell products that you can make your own, at least in a branding sense. Making a successful private label business relies on choosing products that you can market according to your brand persona.
Some products are easier to market than others. Here’s what I recommend to my subscribers:
- Small products. They’re cheaper to store and ship for your manufacturer, so you can either pass the savings to your shoppers or profit from the markup.
- Lightweight products. Anything under 3 pounds.
- Priced between $15 and $50. That’s the sweet spot before consumers think twice about spending so much money.
- Products that trend on Google. For me, they need a minimum of 1,000 searches per month, but without too many competitors — if two or three small sites still rank on the first page, the “big fish” haven’t caught on yet, so add it to your store.
- Niche influencers are present. This is a sure sign that you can have a product niche you can build a brand around.
For Amazon FBA private label, you want to make sure there’s over 5,000 searches on Amazon every month, but with only low or medium competition. You also want to make sure it’s a niche you understand: can you make a short list of popular influencers and bloggers off the top of your head?
For paid course members, I present a printable checklist with clearcut data like this, along with more criteria, to look for when choosing products. Some entrepreneurs will tell you choosing a product is more about instinct, but I prefer empirical, black-and-white guidelines.
How to Find the Best Manufacturers for Sourcing Your Product
Just like you need to research the best products to sell, you also need to partner with manufacturers who you work well with. It’s more that just what products they offer. Are they prompt with delivers? Do they offer the best prices? Are they legally compliant — you don’t want to get in trouble because you didn’t check their paperwork.
This post on finding a manufacturer for Amazon private label includes a free list of suppliers.
Step-by-Step Guide to Selling Private Label Amazon FBA
Despite its shortcomings, Amazon is a good equalizer for international vendors looking to expand their business worldwide. You can sell on Amazon from pretty much any country, with your only real obstacles just learning the ropes. Here’s how you can set up Amazon FBA in just 4 steps.
Step 1. Register
The first step is also the easiest: you just set up your account. Go to the Amazon FBA main page and click Get Started. If you don’t already have an Amazon seller account, you can create one now by clicking Register Now.
Just note that you will need multiple forms of identity verification including a photo of your driver’s license and photos (not screenshots) of your bank account info.
If you’re already an Amazon retailer, click Add FBA to your account.
It also helps to create listings for all your products now, since you’ll need to do that before you send your first shipment to an FBA center anyway. How to make product listings for Amazon is a topic worth its own article, which we’ll get to another time.
Step 2. Preparing Inventory
The FBA program essentially stores and ships your products for a fee. Dealing with an assortment of different vendors from different countries, they rely on organization and automation to make sure the right packages get delivered to the right address. That means, before you even start selling, you need to make sure your inventory is ready.
First, you need to make sure your products are eligible for Amazon FBA at all. The program does not accept the following products:
- Loose sleeves or pouches.
- Footwear without a box.
- Products that come in multiple pieces that require assembly before shipment.
- Loose products or products with areas exposed outside of packaging.
- Products that collapse on any side from medium pressure.
Furthermore, some products include mandatory packaging requirements. Refer to the How to Prep Products guidelines to see the specific protocol if you’re selling one of the following types of products:
- clothes, fabric, plush, or textile
- glass or fragile
- toys or baby products
- powders, pellets, or granular materials
- sharp, pointed, or with other safety concerns
- smaller than 2⅛“ on the longest side
- adult products or products with obscenity on the packaging
Furthermore, products batches as sets must be marked. Bags, too, must be at least 1.5 mil and contain a visible suffocation warning if the opening is larger than 5”.
Next, you need to make sure your products meet the labelling requirements. Amazon FBA uses a barcode-system along with their our company ASIN (Amazon Standard Identification Number).
You may not have to do anything if your product packaging already has an unobstructed barcode, as long as the barcode is one of the following:
If your products have one of these on the packaging, double-check to make sure your number corresponds with the official ASIN listing. If it doesn’t correspond, contact Seller Support for assistance.
If your products DO NOT have one of the four acceptable barcode numbers, you’ll need new labels to comply with Amazon FBA policies. You can either print and apply Amazon labels to each of your products on your own (be sure to cover any other non-acceptable barcode on the packaging), or you can have the FBA Label Service do it for you, at a per-unit fee.
Getting your inventory prepared and making sure it’s compliant can be hassle. If you have some money to spare, again you can take advantage of Amazon FBA Prep Service.
Step 3. Assign and Ship Your Inventory to an FBA Center
Sending your shipment to Amazon FBA centers starts with assigning your inventory online. From your Seller Central account, go to Inventory, then Manage Inventory. Click the box to the left of each product you want shipped to the FBA center. From the Actions pull-down, click Change to Fulfilled by Amazon. On the next page, click Convert and Send Inventory.
Once your products have been converted to FBA, you can send or replenish them whenever you want by going to Manage Inventory, selecting the relevant products, and then from the Actions pull-down choosing Send/Replenish Inventory.
By default, your shipments are broken up and sent to multiple distribution centers, based on what Amazon thinks is best. You can opt instead to use the FBA Inventory Placement Service have them place all your boxes together in center, however they charge a per-unit fee.
You can change your settings any time at Seller Central. Go to Settings > Fulfillment by Amazon > Inbound Settings > Edit > Inventory Placement Option > Inventory Placement Service.
From there, you select either Create a New Shipping Plan or Add to an Existing Shipping Plan. Simply fill in the relevant information and follow the instructions.
Once your shipment has left, mark it as “Shipped” on the Shipment Summary page. Once they arrive, they’ll be marked as “Delivered” for up to 24 hours upon arrival. After that, the status “Checked In” and then “Receiving” means a portion of your shipment has already arrived and begun processing.
All in all, it takes about 3-6 days from when your shipment is delivered before you can actually start selling products.
Shipping products to Amazon FBA can get technical, considering all the rules and extra fees. You can follow along Amazon’s Shipping Plan Workflow so that you don’t miss any of the details.
Step 4. Manage Orders
The last step is essentially be a good Amazon vendor: continue to promote and sell your products while keeping an eye on the logistics. Amazon handles most of the ground work like pulling products and applying the right addresses — after all, that’s what you’re paying for — so you’re freed up to focus more on your managerial duties.
You can review active orders at any time from the Manage Orders page of your Seller Central account. In addition to standard data on the order, such as where it’s going, you can also find any warnings or issues that need immediate attention.
While “Payment Complete” is self-explanatory, if a shipment is marked “Pending” it can mean a few different things:
- The order is on hold while other items are consolidated for free shipping.
- The customer’s credit card payment has not yet been authorized.
- An item in the order is out of stock.
- Split orders can be marked as “pending” until the final item is shipped, even after the payment is completed.
You can also access your sales data at any time to influence your future strategies. Just go to Reports and select the area you’re curious about.
When to Use Amazon FBA Prep Services
Not only is it tedious work to prepare all of your inventory for Amazon FBA, it’s also costly. Any time you spend printing labels or measuring boxes is time you could be spending on devising new marketing campaigns, researching better products, or simply enjoying the company of your family after a long day.
If you have the resources, you can hire an Amazon FBA Prep Service to take care of the heavy lifting, literally and figuratively. Each one is different, but you can expect these regular services:
- Inspecting products to ensure compliance
- Packing the shipments
- Labeling individual products
- Sorting products
- Packing certain products into poly bags
- Photographing new products
- Forwarding readymade shipments
Sometimes, prep services can even offer cost incentives — if they operate in a tax-free state, for example, or maybe they’re just closer to the Port of Entry that you save of traveling fees. In a lot of cases, they make up their cost.
7 Best FBA Prep Services
Unless you’re pinching pennies, an FBA Prep Service is worth at least looking into. Here are seven of the best to consider:
- EZ Prep — With a warehouse near the Port of Los Angeles and a flat rate of $1.25 for every standard-sized item, EZ Prep is a good choice for retailers operating heavily in Southern California.
- etailz — In addition to a whole host of ecommerce services like retail strategy and channel management, etailz also offers standard FBA prep from either of its two U.S. warehouses.
- FBA FlexPrep — If your top priority is speed, FBA FlexPrep provides 24-processing in the Texas area.
- McKenzie Services — Offering an enormous warehouse in the Pacific Northwest and a low rate of $1.10 per item, McKenzie Services works well for bulk orders.
- Direct 2 EU — Located in England’s Staffordshire, Direct 2 EU is one of the best prep services for European Amazon markets.
- Shapiro — In the shipment prep business for over 100 years, Shapiro is recognized as one of the best by its clients, including Amazon themselves.
- FBA Transport — FBA Transport specializes in shipments arriving straight from China. Their per-unit prices undercut many of their competitors, but since each task is priced separately, their full-treatment services add up to the average.
Alternatives to Amazon FBA for Private Label Brands
My concern is that, if you’re starting a private label company, you want to stay away from Amazon.
If you’re starting a private label brand, you should know there’s other options than Amazon FBA. Private label companies need successful marketing and customer relations, both of which are stunted on Amazon. It’s better to branch out with your own website and use Amazon only for research and testing ideas.
That’s not to say a private label Amazon FBA company isn’t viable — you can still turn a profit off it — I just think there are easier ways to do it.
The thing about Amazon FBA is it’s convenient. If you’re selling on Amazon already, it removes a lot of the micromanagement and technical planning, so it makes your life easier even if it ends up costing a little extra.
However, with an industry as sensitive as private label selling, you want to oversee the details, especially when just starting out. Repeating what I said at the start, private label companies need to excel at two things: marketing and customer relations.
- Marketing because you have to market your product better than competitors selling nearly-identical products.
- Customer relations because you need to build brand loyalty and repeat customers to sustain a business. With private labels, your selling your brand more than the product, and your brand is only as good as customers think you are.
Amazon hurts you in both of these areas. Even participating in their advertising campaigns, you still have very little control over how you market yourself on the Amazon site — you’re limited to only what they offer. As for customer relations, it’s always a bit farther removed with a middle man. And considering that have to abide to Amazon’s policies just like every other merchant, your personal relationship with customers is a degree less personal.
In my opinion, if you’re doing private label, it’s better to see on your own site. There, you have absolute control over the shopping experience, policies, what products get featured — over everything. Enlisting the help of the details can be give you that tiny edge you need to build a brand people actually love, as opposed to a brand that just has the cheapest price for now.
If you’re worried about fulfillment, I recommend Amazon MCF over FBA.
Amazon MCF makes far more sense and solves a lot of the issues with private labels. Think about it: you still get all the fulfillment service benefits of FBA, but you’re able to sell other sites like Shopify that are more conducive to marketing and customer relationships. It’s a win-win for retailers, and offers more opportunities to satisfy shoppers.
Running a private label company outside of Amazon is not as convenient and requires a lot more effort, but that extra effort pays off in profits. No one said running an ecommerce business was supposed to be easy.
If you have your heart set on an Amazon FBA private label company, I don’t want to dissuade you. It’s still financially viable, and there’s something to be said about following through on an idea you’re passionate about. After all, part of the beauty of running your own ecommerce company is doing things your way.
No matter which route you take, with or without Amazon FBA, you still need to understand the fundamentals of ecommerce — especially marketing because we’re talking about private labels. Ecommerce brand marketing is a topic I talk about frequently in my courses — members even have access to a free video that deals with it in depth.