Selling private label products is the most profitable ecommerce business model.
The top ecommerce brands (that rake in 8-figures) aren’t dropshipping generic junk. They’re using private label products as the cornerstone of a brand marketing machine.
With a little bit of thought and resources, you can develop and sell your own brand, giving you total control and maximum profits.
The reason that I created this guide is that too many people think there is an insurmountable learning curve to building a private label business.
Disclaimer: If you’re looking to get rich quick, sorry this isn’t for you. But, if you’re willing to put the work in, you can make real money selling private label products online.
This guide will help you understand what it takes to launch a private label brand and give you ideas on products commonly private or white labeled.
- How to Start a Private Label Business
- White Label vs. Private Label vs. Wholesale
- Apparel and Accessories
- Private Label Cosmetics & Skin Care
- Packaged Food You Can Easily Private Label
- Private Label Hair Care Products
- Private Label Supplements
You Don’t Have To be a Big Brand to Succeed
The holy grail of ecommerce is when people start searching for your brand. Don’t make the mistake of pushing cheap, generic products on Amazon or your website. Instead of building a quality brand of your own, you’ll be chasing your tail forever.
“Jordan Shoes” is searched for 83,000 times per month. That’s more search traffic than the entire category of “basketball shoes” and “And1 Shoes”, combined! But in reality – there isn’t much difference in the materials or manufacturing process between Jordan and And1.
You don’t have to create a Jordan brand to be successful – look at Peak Design. They’ve carved out a nice niche for themselves.
Every month tens of thousands of people are looking to buy their branded products. And their products are NOT cheap.
I’m sure you can imagine how much markup is in that $260 backpack.
But guess what.
People are buying it like crazy.
If your ecommerce site is just selling other people’s stuff, you’re only going to go so far. But, if you’re willing to put in the time and energy required to build a brand, you can crank out some serious cash.
But you’re probably asking yourself – How do I build a brand? It all starts with learning how to identify product/market fit and find in-demand products. You need to find products to sell online that are important to your ecommerce site’s niche audience. If you are an Ecommerce CEO member, check out branding 101.
How to Start a Private Label Business (In Ten Steps)
It’s not as complex to sell online as you might think. The proof of this is in the huge number of people that have had success.
There is always a risk when starting a business. But, if you can master the basics, you can make private selling work for you.
Let me show you how simple this is:
- Research a niche market.
- Identify the products that you think can sell.
- Scour the internet for potential competitors.
- Assess your ability to cover up-front manufacturing costs.
- Find a reliable private label manufacturer.
- Create your brand elements.
- Order your first batch of product.
- Launch your site and/or sell on Amazon.
- Put the time into marketing your products.
- Engage with your customers and find ways to improve the next batch of product.
These ten steps can take you from where you are, to where you want to go. There’s a learning curve. You’re going to have to pick-up some new skills. But there is no question that you can learn the skills you need to succeed. All it takes is a little research and persistence.
Private Label Business Roadblocks
I don’t want to make it sound like selling online is easy. It’s just not as hard as some of the “gurus” like to make it seem.
There are many important decisions that you’ll need to make along the way. This guide will go a long way to highlighting the challenges your company will experience.
Before you start selling products, you need to be aware of some of the hurdles. The strategies I outline will help you get over them.
You need capital to launch a private label business. You have to pay for initial product runs, branding, design, marketing, shipping and customer service. The more units you purchase up front, the better the per-unit cost will be.
Resourceful entrepreneurs can source private branded product for as low $500. It all depends on your approach.
Don’t forget to register for a business tax ID with the IRS. Keep careful records of your financial accounts. Consider hiring a tax preparer.
Here are some additional tips for starting your own brand.
- You might end up chasing the wrong niche market. That’s an expensive mistake.
- Your supplier might not be up to the job. Quality control is really important. If you’re not getting what you paid them for, you’ve got an expensive problem on your hands.
- The wrong packaging can harm the customer experience. Protection during shipping is just as important as branding.
- Setting profitable product price points can be tough. There are many variables that can hurt profitability.
- The market could shift on you. By the time you’re up and running, they hype train has left the station – and your products are left sitting on the platform.
White Label vs. Private Label vs. Wholesale
For starters, it’s important to understand the terms used by ecommerce companies to define their relationship with the company providing their goods and services. In order to create profit, you’ll need to find the right suppliers and the right ecommerce business model.
- White Label is when you take someone else’s product and put your name on it. You are directly selling a product that is developed, controlled and serviced by someone else.
- Private Label is when you contract with a manufacturer to produce a product to your specifications.. This results in the highest possible profit margin, because you are only paying someone else for manufacturing.
- Wholesale is when you contract with a supplier to purchase goods from another brand. You are simply reselling the products that you’ve purchased in bulk. It is clear to everyone involved that you are simply a middle-man in the transaction.
There is a lot of confusion about the differences between white label and private label products. When you talk to suppliers, always confirm that their definition matches up with your understanding. This will prevent a lot of confusion in your career as an ecommerce merchant. It’s always best to invest time and energy into partners that have a clear understanding of your needs.
How do I come up with private label product ideas?
This is where your creativity and ability to do market research really shines. Virtually anything can be private labeled. Private label manufacturers offer you the best price when you order in bulk. So, it’s important to choose the right products to develop and produce.
Warning: Unless you’re an engineer, it’s best to stick to products that are simple and easy to design / develop. You don’t want to get stuck dealing with unforeseen product issues down the road. The more complex, the more there is an opportunity for products to be faulty and returned.
There are a variety of tools available to help you find market opportunities. Keyword research can help you identify hot trends on Google. If more and more people are looking for answers to a specific problem on Google, your product could meet a growing market.
Researching Amazon is another no-brainer. Look for products that have a ton of negative reviews. If you can develop a better solution at a similar price point, you might be able to win over their customers.
Industry research is also important. If you dig beneath the surface, what trends are the professionals seeing? What is the true size of the market? Is it growing or retracting?
Jungle Scout is a powerful tool that gives you insights into what shoppers are looking for and purchasing on Amazon. If you have an idea, searching through this tool can help you confirm the size of the market. It’ll also help you identify competitors. Their dashboard can help you filter opportunities by how competitive the market is, so you won’t waste your time in a crowded market.
What products are often sold under a private label?
If you’re still trying to figure out what to sell online, let me help you out. I’ll outline the most popular niches where private label products are excelling.
Private label products are more popular than ever. Some of the most popular private label products can be found in these segments:
Private Label Apparel and Accessories
Clothing is a great market for private label brands. Customers love discovering new brands that help them stand out. The average closet has more than 100 items of clothing and fashion. Plus, there are purpose-driven outfits for working out or enjoying a day at the beach.
Manufactures are standing by to private or white label any of these:
- Yoga pants for women (63K Amazon Searches Per Month)
- Hiking boots women (26K)
- Tactical backpack (36K)
- Maternity dresses (12K)
- Jean shorts for women (36K)
- Rain ponchos (30K)
Private Labeled Cosmetics & Skin Care Is Big Business
The skincare industry is estimated to reach $180 billion dollars by 2020.
Margins on cosmetic products are insane. People are becoming more aware of what they put in and on their body. Think vegan, natural, etc.
With the push for healthier skin care products, the cosmetic industry is shifting. This is an excellent opportunity for entrepreneurs to establish their private label as the perfect next step for shoppers looking to make a change.
Here are some examples of cosmetic products that you could private label:
- Cruelty-free makeup (638 Amazon searches per month)
- Elf makeup, a cruelty-free makeup brand (25K)
- Organic sunscreen (11K)
- Natural deodorant (28K)
- Charcoal toothpaste (35K)
- Coffee scrub (5K)
- Tea tree oil (130K)
- Anti-aging face cream (11K)
It will be much easier to just white label these – but if you wanted to – you could try to get the manufacturer to leave out the parabens and sulfates.
Packaged Food Is One Of The Easiest Things You Can Private Label
Private label food brands are going online to find health-conscious consumers at home. Think vegan, organic, gluten-free, non-GMO. Beyond health food, custom sweets and other gifts are extremely popular with online shoppers. With the loosening Marijuana laws in North America, there’s been a surge of demand for this type of edibles.
If you don’t have the cojones to sell weed online (I sure don’t) – a safer bet would be to start a gluten-free snack brand.
These are all super easy to private label, you just design the packaging.
- CBD gummies (32K Amazon Searches Per Month)
- Organic baby food (9K)
- Matcha green tea powder (32K)
- Gluten-free snacks (20K)
- keto snacks (89K)
Hair Care Private Label Ideas
Everyone has different hair needs. This is a huge market with a virtually unlimited customer base. From bald men to natural curls – there’s endless segments here.
Here are some private label ideas in hair care:
- Hair growth shampoo (12K Amazon Searches Per Month)
- Beard Oil (61K)
- Hair mask (26K)
- human hair bundles (21K)
- Hair growth vitamins (11K)
Private Label Supplements Are Always In Demand
People take supplements to combat all sorts of personal issues. JungleScout, once again, is their friend. And high retail prices have driven large segments of the market online. Dr. Axe is the perfect example of a site killing it with private label supplements.
Here are some of the hottest supplements right now:
- Vegan protein powder (58K Amazon Searches Per Month)
- Detox tea (27K)
- Creatine (83K)
- Testosterone booster for men (20K)
- Turmeric curcumin (65)
These are just a few category examples. But there’s something that binds them together. Every one of the niches listed above can be marketed through influencer marketing and Facebook ads. And, the relative cost to produce these items in large quantities is lower. Plus, the profit margins can be phenomenal.
Have you ever considered how little it actually costs to manufacture common cosmetic products? Think of those tiny bottles of eyeliner, or a container of foundation. The margins at the convenience store are insane!
And if you can find the right clothing manufacturers, you can make a killing there too.
The markets where private labels succeed have low barriers to entry. There is a short product life-cycle. (Think about how often you buy these products.) And brand trust is important for the buyer. This means that once you establish your brand, customers are likely to return for more.
How Do I Find a Reliable Private Label Manufacturer?
The most important partner you’ll have in your private label adventure is your private label manufacturer. You might be able to make products on your own – but that’s a tough route to go. You’ll hit capacity issues and struggle with quality control as you chase the most efficient process to make products that customers love.
It’s hard trusting a new manufacturer with your hard-earned cash – especially if things are financially tight in the beginning. That’s why thoroughly vetting a private label manufacturer is so important.
All of this can be intimidating. I promise, it’s pretty straight-forward. I can show you the ropes. I offer in-depth training where I share my process for finding and securing the help of trusted private label manufacturers. Some of the areas I cover include:
- Product Research and Validation
- Overseas vs. Domestic Manufacturers
- Common Scams and How to Avoid Them
- My Process for Vetting a Manufacturer
- Best Communication Strategies for Engaging a Manufacturer
With the information from my courses, you’ll be able to find great manufacturers and get them to take you seriously.
Where Should I Sell Private Label Products?
Depending on the type of market you’re looking to sell to, it may make more sense to list your private label products on a third-party platform. Amazon is the most popular ecommerce platform in the United States. But there are pros and cons to selling private label products on Amazon.
In the photo above, I’ve highlighted some Amazon products that are sold under Amazon’s private label. These are brands that Amazon has acquired or developed in-house. Amazon recognizes that they can make more money by selling their own products, instead of just taking a slice of the revenue from sellers on their platform.
A word of caution: Amazon has been aggressive in competing with sellers on their own platform. If you strike gold, Amazon’s probably not too far behind. This is why it’s so important to have multiple sales channels for your private label products.
Don’t worry, though. There are plenty of niche markets. No one company can cover all the bases. The market is just too diverse.
I usually recommend doing the heavy-lifting of building and marketing your own ecommerce site. That way you can maximize your long-term profits when selling private label products – avoiding the commissions and listing fees that sites like Amazon charge.
You may be able to connect more quickly with your target audience by listing products on a third-party platform. But, it will come at a cost. You’ll have to decide whether you want to
- Build your own ecommerce site and aggressively market your site to your target market.
- Market your products to Amazon’s established customer base.
- Or do both. You could start out selling on Amazon to generate some cash-flow while you wait for your own ecommerce site to become more established. An Amazon affiliate store is a great way to do this.
Make Sure You Include Shipping and Warehousing Into Your Product Pricing Strategy
Fulfillment by Amazon (Amazon FBA) is a program where you can have your merchandise shipped directly to an Amazon warehouse. Once it’s there, Amazon will show your item as in-stock on their website.
Better yet, your products qualify for Prime Shipping, along with other Amazon benefits that are important to Amazon shoppers. Amazon will even provide customer service for your product orders. This can be a huge benefit, especially if you don’t like dealing with customers over the phone.
If you’re worried about fees, it is super easy to estimate Amazon FBA/MCF fees:
- Visit the Amazon profitability calculator.
- Choose a product similar to yours
- Enter in your estimated product cost
You have to decide whether the benefits outweigh the costs.
So What’s Your Next Step?
After you’ve done your product/market research and established solid relationships with reliable suppliers, you’ll need to set up a business and get a tax ID.
Most suppliers only want to deal with serious businesses – not tire kickers.
Before you get to all the fun stuff like brand development, content marketing, Facebook ads, Instagram marketing – you’ll want to get a solid plan in place to make sure you can thrive financially.
It all starts with selecting the right product niche and validating your idea. If you’d like some additional help, I’d love to be of service – either through my 1:1 coaching or online courses. I look forward to helping your private label business thrive!
Got questions? Leave a comment and I’ll reply right away!