Roadmap for Those Who Want to Do Private Label on Amazon

9 mn

December 19, 2023

Amazon
E-Commerce

The most enduring and promising business model is Amazon's private label. This model is fundamentally about creating your brand. You manufacture products in China or Turkey, brand them with your logo, and sell them on Amazon.

Of course, the essence of the Amazon private label business model being brand creation makes it quite challenging. For those with a minimum budget of $5-10,000 or manufacturers, I recommend the Amazon private label business model, where you will face higher advertising and promotion costs compared to other models due to building a brand from scratch. If you can create a successful brand in the end, you might have opportunities to attract investors or sell (exit) the brand.

Now, let me explain how you can implement the Amazon private label business model.

Stages of Amazon Private Label

  1. Set Up Your Company

The first thing to do when starting to sell on Amazon is to establish your company. If you already have a company, that's fine, but you may choose to set up your company in the USA or the UK for some advantages.

It's beneficial to have your company both in Turkey and in the target market to secure your business. Initially, you can start with just your Turkish company, but as volumes grow, you will start to face customs issues in the country of sale and feel the need for a company on the buyer’s side.

If you want to take advantage of government export supports, there needs to be an organic connection between your Turkish company and your company in the USA or the UK.

If you want to set up a company in Turkey, America, or the UK, you can use Mükellef. Setting up a company is not as hard as it used to be; you can quickly do it online. Since there is a partnership between Mükellef and Rexven, you can take advantage of a discount when setting up your company using this link.

  1. Decide In Which Country You Will Sell

Actually, if you don't have a company yet, it might be more beneficial to choose the country where you will sell before setting up your company. Having your company in the country where you will sell will provide advantages. But how will you choose the country?

The region with the most potential on Amazon is North America, followed by Europe. I recommend starting with these two regions. Most of our sales are also in America and Europe. The purchasing powers of these countries are high, which means high sales potential and profit margins.

There is more sales but also more competition in America compared to Europe. If you are considering sending products from Turkey, you can make more profitable sales in Europe with less cost as we are very close to Europe.

You should decide on the country where you will sell according to your product group. You can make a selection based on which country has more potential for the product group you plan to sell. Here, we usually decide based on sales potential and competitive conditions. I will explain how we make this decision in the product research and analysis section.

  1. Open Your Amazon Account

Of course, one of the most important stages to start is to open your Amazon account. I advise you to proceed with great care here. If you make a mistake while opening the account and your account does not open, you cannot proceed to the sales stage. If your account is closed once, you cannot open another account in the name of that person or company.

Before opening your Amazon account, you need to have a bank account. Since we could not proceed with our bank account in Turkey, you can use virtual banks like Payoneer.

You must make sure that you enter your company and personal information correctly when opening an Amazon account. All information and addresses must match. Amazon will confirm you by making a video call during the account opening phase or within a few days.

Also, to confirm your address, Amazon will send a postal code to your address. Once you enter the code inside this post into your Amazon account and confirm your address, your account will be active.

If you haven't encountered any problems in these stages, you can move on to other stages. If there is a discrepancy in your information, Amazon will ask you for additional documents. Try to provide accurate information and be honest throughout all processes from account opening to the sales process on Amazon.

Since there are currently more than 10 million sellers on Amazon and new applications are received every day, Amazon is very careful in account opening processes. I recommend that you be equally careful.

  1. Plan Your Budget

When you start selling on Amazon, remember my story; I made a big mistake by investing all my capital in products without allocating a budget for advertising and reshipping.

My advice is to plan regardless of how large your budget is. For a simple plan, we currently use a third of our budget to buy products. Another third is allocated for advertising and launch expenses, and the remaining third is set aside for repurchasing products. Many people make mistakes here.

On Amazon, your earnings won't be deposited into your account immediately after a sale. Payments are made in bi-weekly periods. Also, if your account is new, Amazon might delay payouts until after the products have reached customers and no returns have been filed. In the best-case scenario, you'll receive your first payment after a month. However, when your products start selling, you need to order and ship more immediately to avoid stockouts.

Considering the preparation and shipping time, you will need to reorder products before you have received payment for those sold. If you cannot restock in time and run out of inventory, your advertising and launch efforts could be wasted. If you run out of stock, Amazon will push your rankings back, and you'll likely need to invest a similar budget again.

  1. Research Products

After planning your budget, you need to start researching products that fit your budget. If you are a manufacturer, you can proceed by analyzing the products you already produce.

The product research process is like the first button of a shirt. If you button it wrong, no matter how successful you are in other stages, achieving a successful and profitable sale overall will be difficult.

With more than a billion products and over ten million sellers on Amazon, we need to sell in areas with sales potential but where we can also compete. In my story, one of my mistakes was choosing highly competitive areas despite a limited budget. Don't make the same mistake; choose product groups with sales potential where you can compete.

There are so many products on Amazon that you can use software at this stage. You can conduct product research using software like Helium10, Jungle Scout, Keepa, and Emparazon.

With these tools, you can find the products you will sell through various filters. We usually do keyword research at this stage. We decide based on the search volumes of the keywords and the competition in those keywords. You can also find products by browsing within Amazon. The important thing here is to analyze these products or keywords.

It doesn't make sense to enter hundreds of product categories in the Amazon private label business model. It's more logical to enter a few products according to your budget. There are already sellers on Amazon making hundreds of thousands of dollars with just one product.

So, my advice to you is to find at least 20-25 product ideas and narrow them down to 4-5 based on the criteria I'll explain soon. After getting prices from your supplier, you can proceed with the products that will generate the most profit.

  1. Analyze Products

Try to analyze the product ideas you find based on the following criteria:

  • Sales potential (How much does it sell on average per month? How much revenue does it generate?)
  • How many competitors are there?
  • Is Amazon among the competitors?
  • Are there dominating brands like Nike or Adidas?
  • What is the keyword volume?
  • Is the product trend increasing or decreasing?
  • How many reviews do competitors have?
  • What is the profit margin?
  • Are there gaps that you can fill? (You can read competitors' reviews to identify and improve the problematic areas of the product)
  • Is there a possibility for bundling?

After analyzing according to these criteria, you need to get your supply price. If you are a manufacturer, you need to determine your cost. You should make the final decision based on profit margin and return on investment.

  1. Find a Supplier if You're Not a Manufacturer

If you are not a manufacturer, you will need to find a supplier. I recommend finding a manufacturer in Turkey. If you cannot find one in Turkey, you can look for manufacturers on Alibaba, the world's largest manufacturer marketplace. Unfortunately, there isn't a platform like Alibaba in Turkey where you can find manufacturers online. Currently, we are trying to achieve this on Rexven. On the Rexven platform, you can find and contact more than 300 manufacturers with over 370,000 products.

  1. If You're Not a Manufacturer, Find a Supplier

If you're not a manufacturer, you need to find a supplier. My recommendation is to find a manufacturer in Turkey. If you can't find one in Turkey, then you can look for manufacturers on Alibaba, the largest manufacturing marketplace in the world. Unfortunately, there isn't a platform like Alibaba in Turkey for finding manufacturers online. We are trying to implement this on Rexven. You can find and communicate with more than 300 manufacturers and over 370,000 products on the Rexven platform.

Things to Pay Attention To:

  • Quality Production
  • Timely Manufacturing
  • Good and Fast Communication
  • Being Open to Development

I recommend working with manufacturers who meet these criteria, as problems in production can lead to failure. For instance, if the products are not manufactured with quality, you will start receiving one-star reviews, which could render all your investments futile.

  1. List Your Products

Once you have determined your products, you can start the listing process during production. Before listing, we use software to research keywords related to our product.

Using the most searched keywords, we create:

  • Titles
  • Bullet points
  • Descriptions
  • A+ content
  • Search terms

Our main aim is to be as visible as possible in many keywords. People find products by searching keywords. The more high-searched keywords we use, the more our products will appear to a large audience.

In product listing, one of the most important aspects is the images. Since people cannot physically see or touch our products, we pay special attention to our pictures and videos.

We prepare our images in the following formats:

  • Main image
  • Infographic - an informative photo
  • Lifestyle - a photo showing the product in use
  • A video demonstrating how to use the product

For this, you can work with our product photographers available on Rexven.

  1. Set Up Your Shipping and Logistics System, and Send Your Products

Once your products are ready, you need to create a shipping plan on Amazon and get product and box barcodes. Essentially, you're telling Amazon, "I'm sending this amount of this product."

You'll send these barcodes to your manufacturer, and they will attach them to the products and boxes. When the products arrive at the Amazon warehouse, the staff will place your products according to these barcodes. They will dispatch them when a sale occurs.

When your products are ready, you need to ship them with courier companies. If you're shipping from Turkey, you can use our partners on Rexven, such as:

  • Navlungo
  • Shipentegra
  • ShipReady
  • Quickshipper
  • PTS

You can ship with discounted prices. If your shipment is under $800, it's considered a sample; under 15,000 euros, it falls under micro-export, and over 15,000 euros, it follows classic export processes. You can get detailed information from the courier companies.

  1. Launch Your Products

When your products reach Amazon, they will be ranked low in keywords. You need to move to the forefront to make sales. For this, you need to understand how Amazon's algorithm works, i.e., how products are ranked when a keyword is searched.

The most important factors in the Amazon algorithm are:

  • Sales number
  • Conversion rate
  • Review number and rating
  • User behavior
  • How much time users spend on the listing

The key factor here is actually the number of sales. Amazon shows the best-selling products at the front. You need to be at the front to make sales, but you need to make sales to appear at the front - a paradoxical situation.

You can overcome this with giveaways, advertising, or offering very low prices. We mostly use the giveaway method, where we distribute some of our products for free. You can use Amazon's own program, Vine, or third-party software like TestMarket.io for this.

We determine which keywords we need to rank on the first page and distribute our products in those keywords to reach the front page.

Since our products don't have any reviews initially, our purchase rate is low. We use the Amazon Vine program to get our first 20-30 reviews. While doing this, we also open ads on the keywords we have determined.

We call these processes a launch.

  1. Set Up PPC Ads

After receiving a few reviews, we start activating PPC (Pay-Per-Click) ads. These are ads for which you pay per click. Initially, it might be hard to profit from these ads, but the goal is to gather data. Over time, we begin optimizing them.

Initially, we open ads considering the keywords related to our product:

  • Automatic ads
  • Manual - exact match ads
  • Manual - phrase match ads
  • Manual - broad match ads
  • Competitor ASIN ads
  • Video ads
  • Sponsored brand ads

At this stage, our goal is to obtain ad data from Amazon.

  1. Optimize Your Ads

As we start receiving ad data from Amazon, we begin the optimization process. We download and analyze ad reports weekly. The basis of optimization includes:

  • Continuing with profitable keywords and lowering the bid amount for those that are not profitable.
  • Continuing with profitable ads and closing those that are not profitable (keeping in mind that during the launch phase, we might keep some unprofitable ads open).

We constantly monitor and adjust our bid rates for optimization. This helps us lower the ACOS (Advertising Cost of Sales).

We continuously analyze and adjust bid rates and keywords. Along with this, we also need to optimize our budget. It's important to monitor at what time of the day your ad budget is getting exhausted.

We gradually increase the budgets for profitable ads to boost sales. For unprofitable ads, we start cutting the budget after the launch phase.

Ad optimization is an ongoing task. In the private label business model, I believe PPC management is one of the most distinguishing factors. You can also manage your PPC ads using software, but I don't recommend it at the start. As your budget and ads increase, you can start using software.

  1. Register Your Brand

In the Amazon private label business model, brand registration plays a key role. Since our goal is to create a brand, make sure to register your brand in the country where you are selling right from the start. If you want to benefit from government incentives, you should first register your brand in Turkey and then in the target country.

If you don't have your brand registered, others can sell your product. They can enter your listing and change everything, leaving you completely unprotected.

Moreover, when you have your brand registered, you enjoy several advantages:

  • Adding videos
  • A+ Content
  • Brand store page
  • Vine program
  • Brand protection programs (Transparency and Project Zero)
  • Brand analytics data
  • Keyword analysis
  1. Take Advantage of Incentives If You Source from Turkey

Recently, significant export incentives have been announced. If you produce or have your products manufactured in Turkey, you can benefit from up to 70% incentives on Amazon for advertising and FBA fees.

The main conditions for this are:

  • Owning GS1 barcodes
  • The products being manufactured in Turkey
  • Registering the brand first in Turkey
  • Establishing the company first in Turkey
  • If there is a foreign company, it must have an organic connection with Turkey

By taking advantage of these incentives, you can significantly increase your profit margins and sell your products at a more competitive price. Of course, there are certain limits. For your ads, support is provided for the portion below 20% ACOS, and for FBA fees, support is provided for 10% of the cost.

  1. Draw External Traffic

To grow your brand, don't rely solely on traffic from Amazon. Platforms like Amazon value traffic coming from external sources such as Instagram, YouTube, and Google. This approach will help your product reach the first pages faster and increase your organic sales. Additionally, as you learn to attract external traffic, you can start selling on your own website. You can use İkas or Shopify for this. Selling on your own website can be very challenging at the start, but it's highly beneficial for growing your brand.

I have tried to present you with a roadmap of the Amazon private label business model in 15 steps. If you want to learn more about these stages, we try to provide as much support as we can at Rexven. Once you bring your brand to a certain level, you can either attract investors or sell it to other companies. We have grown and sold a brand in this way. You can do it.

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