Private Label has become quite trendy among online retailers, especially after online marketplaces started selling products under their own brand name. If you are an online store and use the best fulfillment options like the Amazon FBA, setting up an Amazon private label must have caught your attention if you do not already have one. No matter if you are precedently selling under a private label or looking forward to using one, this article will help you in making good decisions.
Their advantages and disadvantages of private label are as follows:
Advantages of Private Label:
In this sector, we will have a look at the advantages of selling under your private label. We have included the benefits valid to a broad range of products to suit the diverse viewers:
Upper Edge Over The Competition:
Having private labels allows you to market your products independently, and it allows you to choose the customer base on your own. For instance, if you are selling ornamental items, you can focus on the cream market exclusively or go for product bundling, which is not possible every time when it comes to unbranded items or selling someone else’s brand. In spite of sourcing these products from the market, you have complete power over the pricing models and even ask your suppliers to make changes in the product in case of dominant orders.
Better Control Over Pricing in Private Label:
Selling products with private labels has extremely zero impact on their cost price, but it provides great control over overpricing. Having Amazon private labels allows you to price your products on the source of your marketing strategy and run your sales independently. A lot of suppliers are unwilling to spend money on marketing, which is a big incentive for Amazon private labeling as you focus on branding with adequate supply accessible.
Get Brand Driven Benefits:
One of the major benefits every brand seeks to enjoy is customer loyalty. With Amazon private labeling, you can construct your brand without extensively investing in the infrastructure or HR costs. The only most important investments come in the form of marketing and packaging costs. Brand loyalty ensures that you have an idea of how many units you can sell, and it also helps in laying down a roadmap for onboarding new products.
Disadvantages of Private Label:
This section discusses the disadvantages of using a private label while selling on Amazon FBA or any marketplace.
No Real Control Over Quality:
As you are not the unique manufacturer of the item, any defects in the product quality will make you liable for the lapse. In the customer’s eyes, you are the manufacturer or the owner of the brands, and thus they will register complaints adjacent to you despite you having no part to play in the event of a quality lapse.
Unknowingly Sourcing Through Unethical Sources:
If you innocently source your products from unethical businesses or companies violating laws. The customers will still hold you liable for your suppliers’ actions. Hence, you have to stay watchful to avoid such actions. This can potentially result in boycotts and major setbacks for your product.
Procurement And Inventory Control Constraints:
As a private label, you still need to manage the smallest amount of order quantities, backorders, deadstock, and inventory turnover ratio. To keep your baseline healthy, you will have to keep an eye on these metrics. And also ensure that you do not over-purchase or undersell the stock. Amazon private labeling does slit off a lot of production-related issues, but procurement and inventory control costs still need to be managed.
Just like unbranded products, there will be difficult competition for private label products. And the possibility is, your competitors will have deeper pockets. The competition will become a crucial driver for your pricing game. And you will have the smallest control over your marketing strategy when competing against the most important brands. Complying with the market sentiment would become a must.
Summing Up of Private Labeling:
You can make a decision whether to sell under an Amazon private label or not with these points. But we would like to highlight two things for our readers:
Firstly, Go for it only if you see sufficient margin like that is the primary factor for Amazon private labeling.
Secondly, even if you start selling items under your own brand name. It is sensible to keep selling the products from other brands as it will allow you to valve an extensive customer base.