So you want to start a private label and you think it is as easy as selecting a product, slapping a label on it and then shipping it to Amazon? Or you decided you wanted to make a ton of money on FBA so you purchased large quantities of products doing retail arbitrage, sent in crates and have not made a dime.
What you need to know…
One of the biggest issues is that many people are thinking that creating a private label or selling product in general on Amazon is a great way to get rich quick, they listen to some YouTube videos by people who clearly haven’t succeeded because they still have to make money by selling their “secret process” on how to succeed.
Some of the biggest mistakes I see people making that are new to Amazon:
- Doing selling research on YouTube guru videos
- Thinking that private labeling is just random Chinese products that are the path to riches
- Not researching that random product to make sure it's not a knockoff
- Not checking to see how many other sellers on Amazon, who viewed the same video, have the same product with the stock manufacturer such as Alibaba stock pic on their "brand”
- Ordering massive quantities of said brand and sending hundreds to FBA and again sitting back to watch the money roll in.
Part of the problem of just listening to people on YouTube is you don’t really know what their business experience is. Maybe they did make a ton by flipping products, maybe they had someone help them sell a product but do they really know what they are doing? If they depend on selling products on Amazon why do they want the competition?
I am a certified industry expert in consumer business, and have put in thousands of project work and training to understand the consumer business, supply chain, manufacturing, labeling, generic and private labeling. And I would still say that there is NO one size fits all solution for all businesses.
That is not to say that we cannot learn from people who have had long term success in a particular area but I think that is the key. Not listening to “overnight” success guru’s and start listening to those who have put in years of real work.
Why you need to know this…
The biggest problem right now with Amazon FBA is that even those that have succeeded in the past are now realizing they have to move off of Amazon because it is high risk and the same opportunity they had in the past just isn’t there.
Personally being someone who is older than Gary Vaynerchuk (by just a little) and have already had my own clients which have included companies like Costco, Amazon and NIKE... in my mind I ask you this…if Fortune 500 need help succeeding with their own private labeling, manufacturing and business in general, why would it be THAT simple for someone who has no experience in business to succeed?
The reality is that it takes a village to start a business and 90% of businesses fail. I spend most of my time coaching entrepreneurs and I can tell you from experience that those that just want to get rich quick, refuse to do the work and think they can just throw stuff into Amazon FBA and expect to see money roll in are the ones who fail. It is those same types of people who tend to believe if you build a website or upload a video people will just find it by magic. Or the types that like watching you do a sales presentation but never want to do it themselves, they just want to collect the money you make as you do the work.
I think that too many think that you can just buy some cheap thing from China, send it into Amazon and you are all set for riches. Or they will buy these big crates of junk from some supplier that half the time doesn’t even tell you what is in them, they do no inspection of the product and they expect to get rich off of that. Then they get bad reviews and people don’t want to buy their stuff.
The worst thing you can do is act like you are just holding a garbage dump sale in your backyard and thinking that people will buy junk and be happy with it. This goes for private labels or retail arbitrage. I mean would you want to buy a cheap plastic knock off you know was made in China?
The cost to you if you fail to act…
One big drawback with sourcing from China is not changing the product
Once you list a product you need to expect to have to defend your listing as it is likely many fake sellers will attach themselves to the item detail page claiming to be selling the same item for much less. So unless you take a product, change it, change the materials it is made of, improve it, create packaging and really create something completely different you will be headed for some frustrations.
What happens instead is high monthly storage fees and even higher seasonal and twice yearly storage penalties for using FBA as your own private warehouse instead of as a fulfillment/shipping center for your fast moving products.
So to understand how to build a business the right way, so that you actually DO make money, you DO succeed at it long term, and that you DO get great reviews on your product. Is to take it far more seriously than many are and build a real business. Take time to build a customer base on your own website which is done through marketing.
Protecting your product
The nice thing that Amazon has in place is called their brand registry. To be approved you need several things, included a branded product with branded packaging, and a brand website where information on the brand and its products can be viewed. It may take you some time to learn about the brand registry and to gather all of the things you would need but it is a great way to protect your product especially if you choose not to trademark.
The perks are other people can list there but can't change your copy, you can elect to list by model number rather than brand, and you can apply for some listing enhancements. And you also have to show those products for sale on your own website to show it's a real brand. The other option is to get a trademark which would make your life a lot easier.
Private label is sort of becoming a free-for-all right now. Companies are stopping sellers from selling online because of the dive in prices on the listing, counterfeiters, and just plain ignorance of some of the sellers. So many are jumping to private label to keep people off their listings. Then you end up with more troubles because you have to get them off and having a registered brand with Amazon makes it a little easier. Trademarking the brand makes it very easy.
You still have to build a business and it will cost you money…
You are still responsible for spending money on a product rollout, which would include big bucks for marketing/advertising and getting some brand recognition. Paying inspectors to make sure all you have asked the supplier to do has been done. Patenting your research and more…
Consumer business, like any other job, requires knowledge and experience, and most of all, a thorough knowledge or the particular type of products you offer. Ordering a random product sight unseen from another country is about the worst thing you can do. Building a strategy around packaging, marketing, inserts, change in materials, design and other important things to consider if you want to beat the competition are imperative. And learning how to build a REAL business is also necessary, because Amazon FBA isn’t exactly a magic pill of success.
As I get ready to open my own coaching program for Amazon FBA I struggle with the issue of providing the “how to” before I provide business coaching just because so many people seem to think “if I just have a process of importing a product and I have a good product I am going to get rich”. Yet if you do enough research you will discover it takes a lot more than that to succeed. It is much more realistic to say that if you find a great product you have a 10% chance of becoming massively successful and it will take a lot of time and work.
Nothing that comes quickly has worth and even if you make a ton of sales on Amazon, you still need to fight to stay there. There is no one size fits all solution.