Private labeling – it’s not just a money-maker, but a fun way to generate additional income. You get to create your own brand, indulge your creative side, and sell a product under your own brand name. And you can do all this without having to develop and manufacture a product yourself! You just need to do some research, make a few smart decisions, and invest a little to get started.
What is private labeling?
If you haven’t heard of private labeling before, here’s what you need to know: with private labeling, you purchase someone else’s product and then sell it under your own name and label. It’s that simple. You’re creating a product with relatively little risk by purchasing something that’s already been manufactured, then packaging it with your own product logo. You list your product for sale – probably on Amazon – and then you make money. Although it’s a bit labor intensive up front, once you’re all set up, you have the opportunity to draw a significant passive income.
But where do you get the product name and label? You make it up, of course! You can find inspiration by scoping out the competition: research the bestsellers in the product type you want to sell, note popular colors for products and logo shapes and other details. If you’re an artist yourself or good with graphics design, you can make your own logo. If not, you can hire a freelancer from Upwork or similar places to do it for you.
I can hear you thinking – this sounds like it costs money, and I need to make money! It’s true that getting into private labeling requires an upfront investment. It doesn’t have to break the bank, however.
Figure out your budget.
The first step in making money with private labeling is to establish your budget. What is the maximum you can spend on this venture? Whether you can only pull together a couple hundred dollars or you have thousands to invest, there’s a product out there that will make you money. Setting up a budget at the beginning will keep you on task, and help you zero in on those items you can afford to market under your own private label.
For example, let’s say you can put together $700. There are vendors out there right now that will supply you with fidget spinner toys for 20 to 50 cents a pop. You can start with a stock of 1000 units – more than enough – and commission a logo from a freelance artist to customize the toys (or at least the packaging) with. That’s just one random example. For a smaller budget, you could market and sell yarn to knitters; with a larger budget, you could break into travel mugs, which all those people who don’t work from home surely need on their daily commute.
Decide what to sell and where to sell it.
Once you’ve got your budget, it’s time to find your product. The ideal choice is something that’s inexpensive to manufacture, friendly to generics, and a popular item – i.e., something that many people need or buy. Let’s unpack that a bit. You want an item that’s inexpensive to manufacture so you can buy low and sell it for a healthy profit margin. An item that’s friendly to generics is one that doesn’t depend on an established big brand name to sell it – would you buy off-brand headphones or a no-name shoe? Probably not. As for popularity, you want an item that’s in the sweet spot of being either something many people need (kitchen implements, blankets) or want (fidget spinners, hot sauce). Research best-selling products online to zero in on these items.
While you’re narrowing down the best product to sell, decide how you want to get your private label product to your customers. You can be completely hands-on by stocking the product in your own storage space, picking and packing and shipping orders, and handling customer service. That involves even more time and money investment up front, especially if you’re selling through your own website. A much easier method is to handle selling through a service like Fulfillment by Amazon – your product can be shipped to Amazon directly from your manufacturer, and Amazon handles all the day-to-day business of customer service and shipment and returns. You pay Amazon a fee for this, but it’s almost certainly worth it having your product available – with Prime shipping! – at one of the world’s largest online retailers.
Select a manufacturer.
With the Internet at your fingertips, you have a world full of manufacturers to choose from when ordering your product. Where you purchase from is entirely up to you, but be aware that certain methods of conducting business are more costly. For example, if you want to buy American, you’ll pay more and need to charge more for your products. If you want the largest profit margin, you’ll probably want to shop overseas. Alibaba is a good place to start looking. To find other manufacturers, try Googling the product name (e.g. “moisturizer,” “yarn”) with the phrase “private label.”
Learn from your competition – then outsmart them.
With all this market research you’ve done to pick a product that will sell, you should have made notes on how the best-selling items are marketed. Study the difference between the top sellers and less popular versions of the same item: examine how their product listings differ. Do the bestsellers have better pictures? Amazing product descriptions? A fun name or product story that hooks consumers? Whatever it is, emulate the best ones and avoid the mistakes of the others. Play the game better than the big players, and pursue that profit!
Your research here should also inspire your branding, as I mentioned above. Packaging is an incredibly important part of private labeling and making money doing it. Clean presentation and professional packaging can make or break a product, so pay as much attention to those choices as you do developing a catchy name.
For more detailed and step-by-step instructions on starting your own private label and working with Fulfillment by Amazon, I’d like to refer you to the following articles and courses:
- Krista Fabregas over at FitSmallBusiness provides a simple step-by-step on private labeling beyond the bounds of Amazon in “How to Find & Sell Private Label Products in 7 Easy Steps.”
- Jake Cain gets into the nitty gritty on succeeding at private labeling on Amazon in “Selling Private Label Products on Amazon – 5 Tips to Beat the Competition.”
- You can also check out this bestselling Udemy course from Colton Shuell: “Amazon FBA – How to Private Label Products & EARN income!”
Are you new to private labeling? Let me know how these resources work out for you! Or do you already have a few products under your belt and wisdom of your own to offer? I’d love to hear from you too, so drop me a note!