Why Private Label?
There’s been an explosion of private labellers selling on Amazon and other platforms over the last ten years. At face value the selection, branding and selling of products represents a tremendous opportunity for creative entrepreneurs to build a business without tons of R&D costs and the headaches associated with manufacturing an invention from scratch. It isn’t as easy as it looks.
Pros of Private Labelling
Attaching your own brand to an existing product is far cheaper than making your own – and yet you can compete at the same price point. Hence…bigger profits!
Competition among manufacturers can prove to be the best opportunity for you to get the best quality products at the best possible price.
What’s more - you can control the pricing and production of the products and therefore grow at your own pace.
You can modify your products whenever you want according to the needs and requirements of your customers.
You get to create your own brand name and presence … which can be incredibly exciting and motivational.
With your brand name attached, all the positive reviews associated with the product translate to yours, which means more customers and greater profits.
Cons of Private Labelling
You are highly dependent on your manufacturer not only in terms of quality but also in production levels. Switching manufacturers can be messy, time-consuming, and costly.
Private labelled products are usually sold at a lower price (particularly at the start as you compete for traction in often crowded marketplaces) which, together with heavy advertising costs, can leave lower profit margins in that critical first phase of the business. Planning is essential!
Unless your branding is very clever, private labelled products are sometimes seen as more like replicas of branded products which leaves little room for you to develop a unique identity.
If you’re not a creative type, designing your own logo and packaging can be difficult, risky, and expensive.
It will take time, sometimes months or years to create the brand name and awareness you’re looking for (don’t listen to online gurus who promise you overnight success). It’s no secret that a private label seller selling products with lower sales rank on Amazon will blow 60-80% margin, and often more, on ad costs to push listings up the ladder.
Selling online can be pretty complicated. There are a lot of factors to keep in mind from choosing a product to designing a brand to understanding how selling platforms like Amazon work. It’s incredibly important that you understand your numbers and keep a close eye on your budget and spending. It’s also crucially important that you have patience and a cool head when you are selling private labelled products online.
A word from the author:
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Find out more: https://www.profitizer.app
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