If you are seriously thinking of getting into selling on Amazon, you are most likely considering two potential business models: Amazon wholesale or Amazon private label. While both models can be profitable, they have greatly different strategies and logistics to scout, source, and sell their respective products. In this article, we will be breaking down the two to see which one would be most suited for your needs and why you should eventually pick Amazon wholesale over Amazon private label.
Before we can compare these two types of Amazon businesses, let’s do a rapid rundown of both business models.
Amazon Private Label:
It is the high-risk, high-reward model for selling on Amazon. It starts with a seller finding a white label product, which is usually a generic product with no branding or labeling that can be bought in bulk from a manufacturer. Private label sellers take these unbranded products at a lower price.
Amazon wholesale is a medium-risk, high-reward model for selling on Amazon. It starts with a seller finding an accepted product, which is usually a brand-name product, and buying these products in measurements from a manufacturer or brand owner. Wholesalers take these branded products and then resell them on Amazon for a costly price.
Comparison Between Amazon Wholesale Vs Amazon Private Label:
Now that you have a general understanding of both of these business models. Let’s start comparing Amazon wholesale and Amazon private label:
Brand Recognition in Amazon Wholesale Vs Amazon Private Label:
Amazon’s private label is the established brand awareness, recognition, and reputation of their products. Private label sellers gain more business for their products, but an issue with starting a branded product is that it is directly too new. Marketing your brand can be extremely easy and may require a lot of pay-per-click ads to gain traction for your generic products. If you decide to use private label selling, be in no doubt to have a concrete marketing strategy upon branding your products.
Amazon wholesale has a load more brand recognition and awareness. Wholesalers can fundamentally resell any existing product or brand on the market. Many brands by now have dedicated consumer bases that trust a particular brand or product. Meaning there are already customers willing to buy from wholesalers.
Buy Box and Pricing in Amazon Wholesale Vs Amazon Private Label:
The regrettable fact about private label selling is that you can decide the selling price for your products, but Amazon will steadily regulate your prices to meet their condition. If you shop often on Amazon, you should be very recognizable with the Amazon Buy Box. The box will comprise the price and allow you to simply add the item to your cart or even buy the product now.
For private label sellers, this is a numerous issue because you have no control over your selling prices. You may want to sell an item at the best price, but if you decide to do that. Amazon will consciously suppress your listing so customers will be discouraged from buying your product. It clearly means that your products have the highest selling price, at least on Amazon.
Amazon wholesale is easy. For branded products, most manufacturers will have the smallest amount of advertised price that indicates the minimum selling price that all sellers must meet. If a seller goes under the advertised price, they may be penalized by the manufacturer and lose access to the products. Amazon also regulates the highest selling price for branded products but in a different way.
A problem that you may come across as a private label seller is competing with duplicate copycat products. Amazon private label leads to the embarrassment of similar or identical products with different brand names. This is extremely problematic for some private label sellers since there will always be other sellers entering your market component and there are little to no barriers to launch. They could find a dissimilar manufacturer that produces similar products. Copycat products can also reflect poorly on your products but Amazon private label and an experienceable person can do this mistake.
Amazon wholesale virtually negates this entire problem because all sellers are selling the same product and brand. With wholesale, all the sellers selling the product have to source their products from permitted brand manufacturers. Each time you source a product, the supplier must be accepted by the brand owners. And they undergo strict quality declaration processes to ensure all their products are of similar, high quality.
Defect Rates and Product Quality:
Amazon private labels, defect rates can be substantially higher. Defect rates can be immensely detrimental to your brand and product. Customers with faulty products may also request repay which may incur service fees on your Amazon account and lower inventory levels substantially. All these aspects considered, defective private label products can effortlessly demolish your brand and ruin your sales. If you are experienced in amazon private label you can easily solve these problems.
A comfort from using Amazon wholesale and selling branded products is that their quality assurance process is typically a lot higher than the standards of private label manufacturers. As a result, branded products have better quality and build. And have a propensity to have lower defect rates for their products.
Opportunities and Risks:
As Amazon private label, Amazon also gives you the opportunity to customize the item description. This allows you to make your texts SEO-compliant and achieve advanced visibility. Once you have established your brand, you can think about dilating. And as part of a diversification strategy, add more goods to your product price in order to win new markets. Last but not least, as the possessor of a Private Label. You also have the opportunity to sell your brand themselves.
If you are new to the online marketplace. It would make intelligence to first sell Wholesale in order to achieve experience. Find out how Amazon works, what makes customers tick, and see how you can well best into the marketplace. Wholesale, you do not have the opportunity to build your own brand to which you can later add additional products to grow further.
So, Amazon Wholesale vs Amazon Private Label? The fact is if you are experienced selling on Amazon and also happen to know a lot about branding and marketing. Trying to sell as the owner of your Private Label capacity be the right way for you. You can use your skills to increase your visibility and sales on the online proposal. If you are relatively new on Amazon. It might make more sense to sell Wholesale and gather a small number of impressions first. Let us not forget, however, that both options carry the equivalent amount of risk. We are positive that you will find your own, most successful, way.