If you’re thinking of creating a scalable on-line business, or you hate your full time job and want to work for yourself or you just simply want to set up a side-business, selling private label products through Fulfilment by Amazon (FBA) may be a great option for you.
- 1 What is Fulfilment by Amazon?
- 2 What is Private Labelling?
- 3 Setting up a Amazon Seller Account
- 4 Know Your Expected Profit Margins
- 5 What Product Characteristics Do I Need to Look For?
- 6 Researching Products to Sell on Amazon
- 7 Finding a Factory to Manufacture Your Private Label Product
- 8 Using Alibaba to Search for Potential Suppliers
- 9 Product Packaging
- 10 Shipping Your Product From Your Supplier
- 11 Creating Your Product Listing
- 12 Sending your Product into Amazon’s Fulfilment Centre
- 13 Launching Your Product on Amazon
- 14 What Next? – Sell Your Products in Other Countries
- 15 Expanding Your Product Range
- 16 Private Label FBA Timeline
What is Fulfilment by Amazon?
Fulfilment by Amazon (FBA) is where you list and sell your products on the Amazon website and Amazon will fulfil your customer’s orders for you. You as the seller, send your stock into the Amazon warehouse and when a customer buys your product they will dispatch it for you. Amazon will also deal with customer returns, refunds and exchanges.
Amazon essentially deals with the boring and time consuming day-to-day tasks of running a business, allowing you to concentrate on the most important aspect which is sourcing great products.
You the FBA seller will need to perform the following tasks:
- Source products to sell on Amazon.
- Create a product listing on the relevant Amazon marketplace.
- Prepare and ship your products into the Amazon fulfilment centre.
- Deal with customer queries.
- Promote your products.
- Order more products from your supplier once they have sold out on Amazon.
While Amazon will perform the following tasks for you:
- Once they receive your products they are unpacked and stored at their warehouse.
- Customer buys your product.
- The Amazon warehouse staff package and dispatch your product to the customer.
- If there are any issues with your order, Amazon will deal with returns, refunds and exchanges.
If you’ve been thinking of creating a physical products business but you’ve been afraid of having to store your products at home, FBA is a great alternative as you don’t need to worry about this. You could essentially have thousands of products stored at Amazon’s warehouse, so it’s a perfect way of building a scalable business and it also allows you to sell across many marketplaces located around the world.
It also gives you greater flexibility. You could hold down a full time job or you could take a few months off to go travelling while you still make money from Amazon.
Let’s move onto what private labelling is…
What is Private Labelling?
Private labelling refers to the practice of purchasing a product from a manufacturer and making it your own by customising it by putting your brand/logo on the product.
The main benefits of private labelling products to sell on Amazon is that there is no/limited competition unlike with wholesaling or retail arbitrage. You own the brand and have created your product listing. This ultimately means you have more control over pricing which in turn should mean higher profit margins.
Contrary to what you may have read on the internet or seen on YouTube, private labelling with Amazon FBA is not a quick rich scheme as it does involve some work just like with any business. You’re essentially launching a new product from scratch on Amazon, so apart from sourcing a product, you will also need to market your product in order for it to sell.
This is not to say that private labelling products on Amazon is not a profitable business, it can be a lucrative one. Providing you build a good brand and add a range of products over time you could create a very successful online business.
Let’s look at the following example to see what is potentially possible:
Your first product that you have sourced has profit margins of $10 on Amazon.
After a few months after launching your product on Amazon, you’re selling an average of 10 units a day. That is a profit of $100 per day and a profit per month of $2,800.
After a few months, you decide to source another product to add to your existing product range. That also has similar profit margins of $10.
Now that you’re selling 2 products, you’re making profits of:
$200 profit per day and $5600 per month
After year 2, you’ve added a total of 10 products to your brand:
10 products * 10 units selling average per day * $10 profit = $1000 profit per day
$28,000 profit per month and yearly profit of $336,000
The above example just goes to show how you can create a scalable private labelling business using Amazon FBA that is extremely profitable. Amazon also allows FBA sellers to sell on a number of marketplaces. If we decided to sell our products in three further countries our yearly profit could easily reach 7 figures per year.
Setting up a Amazon Seller Account
Before we go over how to private label a product in more detail, we first need to cover basics of setting up a Seller Account on Amazon.
Amazon has 2 different types of seller accounts. One is an Individual Seller Account and the other is Professional Seller Account. For an Individual Seller Account, Amazon charges a small fee per each item sold while for the Professional Seller Account charges you a monthly subscription fee. If you sell over 40 units per month it makes sense to go with the Professional Seller Account as it pays for itself.
Having a Professional Seller Account also provides additional features such as allowing you to generate promotional codes which are useful when you’re launching your product. You can also manage inventory, using feeds, reports and spreadsheets.
Our recommendation is to initially sign-up for an Individual Seller Account while you looking for the right product to source. Once you’ve decided on the product and it’s been manufactured switch to a Professional Seller Account.
Know Your Expected Profit Margins
Before sourcing a product you should always know what your expected profit margins will be. Never place an order with a supplier until you’ve fully calculated all your potential costs. A product which you initially thought would be profitable may turn out be unprofitable.
Your costs may include any of the following:
Sourcing & Manufacturing Costs:
- Samples costs from multiple manufactures
- Manufactured product
- Logo design
- Product packaging design
- Product photography
Importing & Shipping Costs:
- Pre-shipment inspection service
- Import duties
- Freight forwarder fees
- Shipping insurance
- Register a trademark
- Purchase UPC for your product
- Create a website
- Amazon seller account
- Deliver products to Amazon’s warehouse
Product Launch/Marketing Costs:
- Sponsored ads
- Product discounts
- Product sourcing tools such as Jungle Scout
- Feedback request tool such as Feedback Genius
- Accountancy tool such as Xero
As you can see your costs can add up so it’s important that your profit margins are as high as possible. Ideally you should aim for at least 30% after all costs so that you can absorb unforeseen costs such as customer returns.
Apart from the costs listed above, you will also have variable selling costs such as a closing fee which is normally around of 15% of the product’s sale price and FBA fulfilment fees. You can calculate these fees by using Amazon’s free FBA calculator.
For example, if we’re thinking private labelling and selling a 1 litre cafetiere on Amazon, we’ll first need to work out the costs of purchasing the cafetiere (don’t forget to add up all your costs).
Next we need to find a similar one already selling on Amazon which has the same/similar dimensions and weight as the one we’re thinking of importing. Once we have located this, take a note of the products ASIN which is found on the product listing page.
Next perform the following:
- From the FBA calculator page, under the “Find your product on Amazon.co.uk” section enter the product’s ASIN and click on the “Search” button.
- Under the “Amazon Fulfilment” section enter the “Item Price”. This is the price you’re thinking selling it on Amazon for. In this case we plan to sell it for £29.99.
- Under the “Deliver to Amazon” section, enter the cost per unit of sending the product to the Amazon warehouse. We have estimated the cost to be £0.50p.
- Next enter the price of the product which includes all your costs. In this case the costs of the product including import duties, tax, freight forwarder fees, product packaging etc is £5.99.
- Finally click on the “Calculate” button. Amazon will then display the expected net profit and the net margins of your product. In this case we can expect a profit of £16.45 and a healthy net margin of 54.85%.
What Product Characteristics Do I Need to Look For?
There are millions of products listed on Amazon but you’re may be wondering what are the main characteristics of a good product to private label in order to sell on Amazon?
Here are some important factors you will need to consider:
|Factors to Consider?||What to Look For?||Description|
|Price||Expected selling price of: £10 – £50 or $5 – $30||Don’t choose a product where your expected selling price will be too low as there won’t be enough profit margins.|
Avoid also higher-priced products where customer returns can really dent your profit margins.
Your budget will also dictate the price of your product. For example, if you have a budget of only $2000, you won’t be able to buy a product from the manufacture that will cost you $30 as you won’t be able to buy in enough quantity from your manufacture.
|Size||≤ 45 x 35 x 20cm or ≤ 18" x 14" x 8"||You want your product to be as small as possible. This will allow you to fit more of your products into the container reducing your shipping costs per unit.|
Anything too large will result in higher fulfilment charges as well as costing you extra to send larger products to the fulfilment centre.
Amazon breaks products down to 2 overall sizes, standard-size (4 sub-categories) and oversize products (4 sub-categories). Ensure your products falls in the standard-size category (≤ 45 x 35 x 20cm / ≤ 18" x 14" x 8" and ≤ 9kg / ≤ 20 lb).
|Weight||≤ 9 kg or ≤ 20 lb||Choose a product which is relatively lightweight. Aim for no more than 2kg/5 lb so that you can keep your shipping costs low and your profit margins as high as possible.|
|Type of Product||Easy to manufacture and unlikely to go wrong||Don’t choose products that can go wrong easily, otherwise you will have high return rates and this will impact your profit margins.|
Avoid electrical products especially as they can be risky. You don’t want to be finding out from an angry customer that the phone charger they bought from you has burnt their house down and now you’re facing a lawsuit.
|Seasonality||Choose a product that will sell whatever the season||Don’t choose seasonal products such as Christmas decorations that may only sell certain months of the year. You want a product that sells throughout the year. |
You may incur long-term storage fees if you have to store your unsold products for extended periods at Amazon’s fulfilment centre so always avoid this.
|Competition||Low competition products with not many reviews||You want to avoid selling products that are highly competitive which have hundreds of reviews. Otherwise you may have to spend lots of advertising to compete which means your profit margins could quickly vanish. You also want a product that you can easily differentiate from your competitors.|
Researching Products to Sell on Amazon
Choosing the right product to sell on Amazon is key. How do you go about researching popular products to sell on Amazon? You could manually go through the Best Seller products listed on Amazon, searching category by category but believe me, you don’t want to do this as it will take way too long (can take months!!) and it can be an incredibly frustrating task!
Fortunately there are tools out there to help you with this important task. A fantastic and popular tool is JungleScout which I can’t recommend highly enough and works across 9 Amazon marketplaces including the US, UK, France, Germany, Spain, Italy, Canada, Mexico and India.
It allows you to filter by bestselling products, you can also find out the total sales per month for a particular product and the number of reviews it has. It also works out the FBA fees so you don’t have to do this manually and you can spy on your competitors. It also has a niche hunter feature which allows you to identify niche opportunities easily.
JungleScout comes in two formats, a web based app and a Google Chrome extension. The web based app is more feature rich and comes with three tools, a product database, niche hunter and a product tracker. The basic web based JungleScout package starts at $39 which is a bargain especially as it should avoid you making costly mistakes by sourcing the right product. You can cancel your subscription whenever you like so you may just need it while you search for product opportunities.
Here’s our recommended JungleScout filter settings:
|JungleScout Filter Value||Reason|
|Product Tier||Filter to by “Standard”, you don’t want to be sourcing “Oversize” products as they will be costly to ship and Amazon’s fulfilment fees will be higher resulting in lower profit margins.|
|Seller||Keep the seller value set as “FBA” and “FBM”. You don’t want to be competing against a product that Amazon is selling.|
|Min Price & Max Price||Set the min price to $5 (£10), anything lower and it will be tough to make a good profit margin.|
Set the max price to $30 (£50) which should allow for good profit margins.
|Min Reviews & Max Reviews||Set the “Min Reviews” value to 1 and the “Max Reviews” setting to 25, this should bring up a product that have not many reviews which make it easier to compete against.|
|Max Weight||Set the max weight to around 15 lb which is not too heavy and should be easy to transport from your factory.|
|Min Sales||Set the “Min Sales” to around 150. You want to at least selling 5 products per day. Leave the “Max Sales” field blank you can order by this column from the results section afterwards.|
|Categories||You should probably avoid categories that are related to electronics (Appliances, Automotive, Computer & Accessories), perishable goods (Grocery & Gourmet Food), products that are related to Amazon products, or where they have a monopoly (Kindle Store, Music, Movies & TV), competitive products (Cell Phones & Accessories).|
Finding a Factory to Manufacture Your Private Label Product
Once you have identified a potential product to sell on Amazon you will now need to find a suitable factory to manufacture it. The go to site to find a manufacture/factory is Alibaba.
Alibaba is the largest and most popular business-to-business (B2B) marketplace site in the world and allows you to contact factories directly and source anything that you may require. Most of the factories found on Alibaba are located in Asia, which allows you to source cheaply.
Just to show how big Alibaba is, on Alibaba’s Singles Day in 2018 (Alibaba’s equivalent to Amazon’s Prime Day), sales exceeded $30 billion in a 24-hour period. This exceeds online sales in the US on Cyber Monday and Black Friday combined.
The typical sourcing steps involve:
- Search for suitable suppliers on Alibaba.
- Request quotes from suppliers.
- Negotiate with the shortlisted suppliers.
- Request sample from shortlisted suppliers.
- Review samples from the different suppliers and decide on the supplier to manufacture your product.
- Come-up with a purchase agreement contract laying out the terms and conditions which is signed by both parties.
- Pay the 30% deposit.
- Manufacturing commences.
- Manufacture provides timely updates regarding the manufacturing process.
- Once the order is complete, buyer employs an external inspection company to review manufactured products.
- Buyer pays the remaining 70% balance.
Using Alibaba to Search for Potential Suppliers
If you perform a search on Alibaba you will probably be overwhelmed with the number of results that are displayed. Thankfully Alibaba provides a number of filters which you can use when searching for suitable factories. Your aim is to come-up with a list of reputable manufactures who have been in business for a number of years.
Here’s what we suggest you should filter by when performing a search on Alibaba:
|Gold Supplier||Gold suppliers are vetted by Alibaba to ensure that they have a physical site and a legal trading business.|
|Trade Assurance||Trade Assurance guarantees your money back in the event that the supplier fails to deliver the terms laid out in the order contract.|
Apart from searching for Gold Suppliers and ones that offer Trade Assurance, a number of other factors you should consider when looking for reputable manufactures include:
|Criteria to Check||Description|
|How long has the company been in business for?||Try to stay clear of manufactures who have been trading less than a couple of years. Established companies are more likely to be more experienced and less risky to work with.|
|Number of transactions in the past 6 months?||On Alibaba check the number of transactions that have been made in the past 6 months for the supplier. If they are receiving regular and sizable orders this is normally a good sign.|
|What payment options do they provide?||If they only accept payment by Western Union and they don’t provide Trade Assurance then this is likely a scam. You want suppliers that offer a range of payment options including PayPal, bank transfer etc|
|Has the factory passed any audits?||Check on their Alibaba profile whether the factory has passed any audits. If they have, in means they are more likely to give more importance to producing quality products which comply with the relevant regulations.|
|Has the factory been inspected?||Check whether the factory has been inspected by an independent auditor. If this is the case, it probably means the factory has nothing to hide.|
Contacting the Suppliers
Once you have identified 10-20 suppliers, your next task will be to contact them directly through Alibaba.
You initial message should follow something like the following:
Hi <factory name/sales contact>,
My name is John Brown and I’m the purchasing agent for Orchid Homewares. We are a growing homeware brand based in the United Kingdom.
We are in the process of adding new kitchenware products to our line and your bamboo cutting board set seems to be what we are looking for.
These are the specifications we are looking for:
The bamboo chopping board set (2 units) must have the following specifications:
* Size: 40*20*1.5cm + 35*15*1.5cm
* Material: 100% bamboo
* Colour: natural colour
* Must be non-slip
Our first order of 500 will be a test order, and in the future we will be ordering 1,000 to 5,000 units.
I have a few questions which I wonder if you could answer please.
1) Are you a manufacture or a trading company?
2) Can we brand the chopping board with our logo (laser printed)?
3) What are your FOB costs for the following order quantities: 500, 1000 and 5000 units?
4) How long are your manufacturing lead times once we place an order?
5) What packaging options do you provide?
6) What are you samples costs (shipping by express courier to the UK)?
7) What are your payment terms?
We are looking forward to hearing from you soon.
John Brown – Senior procurement agent for Orchid Homewares
When you send your initial message to the suppliers, give a brief introduction about your company and try to be as specific as possible on your product specifications. Always ask for pricing for different order quantities, we would recommend only asking for a FOB (Free on Board) quote. An FOB quote includes the cost of producing your product as well as having it delivered to the relevant port/airport cleared for export on board the ship/plane by your supplier.
Once you have come up with a shortlist of at least 5 suppliers, you will need to get some samples produced so that you can ascertain the quality and thus allow you to decide on the final supplier to manufacture your product. You should always expect to pay for samples, the pricing will usually be dearer than the actual unit price.
Negotiating With Your Supplier
There are a number of factors which you will need to negotiate with your supplier on which will include:
Minimum order quantity & Price
The higher your order quantity, the more bargaining power you will have in terms of pricing.
The usual payment terms for most factories is 30% in advance and 70% once the order is complete. Never agree to pay 100% upfront before manufacturing commences as this can be risky.
Depending on how complex your product is to manufacture, it may take up to a month or more to manufacture.
You will need to agree on what happens if there is a delay in manufacturing, will penalties be imposed? You will also need to agree on the quote type i.e. is it FOB? If so, you will need to decide on the port where the goods will need to be delivered to by your supplier. Will you be using a third-party inspection service to inspect the products once they have been manufactured?
Never be afraid to negotiate, remember the more money you can save, the higher your overall profit margins will be in the end. With your first order, your aim is to make an initial smaller order so that you can ascertain whether it will sell on Amazon or not. Depending on what your product is and the price, an initial order of 200-500 is sensible otherwise you may regret later ordering 5000 units when you can’t shift them! You can always place another order when you have proved that the product sells well.
Purchase Agreement Contract
Once you have decided on the actual supplier, it is advisable that you draw up a purchase agreement contract. This document is a essentially a contract between yourself and the supplier and details such things as, product specifications, pricing, payment options etc.
If your supplier on Alibaba supports Trade Assurance, you can use the document in case anything goes wrong with your order and you can get refunded by Alibaba.
The purchase agreement contract can include such things as:
- Specifications of the product. Don’t forget to include photos of your sample if there are no issues with it.
- Packaging details i.e. what text should appear on the packaging, does your logo need to be printed as well (see more about packaging in the next section)?
- The unit price in $ and quantities ordered and total costs.
- The type of quote i.e. is it FOB? Details of the airport/port the goods need to be transported to.
- Payment terms.
- Penalty terms in case production is not completed within the specified timeline.
- What shipping marks should appear on your cartons?
- Any confidentiality agreement details i.e. the seller is unable to disclose that they produce products for yourself.
In regards to paying your supplier, PayPal is considered a safe way to pay them. We would recommend that you use Transferwise for bank transfers as you can get hit by fees and also PayPal’s exchange rates are not very competitive. Therefore these costs can affect your profit margins.
Using TransferWise you can pay using USD to non US bank accounts, ideal if you’re paying your Chinese supplier in US dollars. The exchange rate quoted by TransferWise is guaranteed for 24 hours and they will use the real mid-exchange rate (the going rate) so you won’t get ripped off, unlike if you use your bank to make a transfer.
You can find out more about Alibaba on our sourcing article.
You should give great importance and thought to the packaging of your private label product. Great packaging adds credibility and prestige to your brand and if done well, can affect the amount your customer is willing to pay for your product.
In a competitive marketplace like Amazon, your packaging should stand out from the competition, it should be simple but effective and it should make people want to purchase yours over the others. Having unique product packaging also prevents other sellers from hijacking your product listing.
If packaging already exists for your product, your manufacture should have an editable design file for this. Ask them for this file, it will normally be a vector type file (Encapsulated PostScript (EPS) or Adobe Illustrator file (.ai)). Don’t go with their bog-standard design but have it modified so that it looks unique and it also has your logo on it.
Unless you have a background in graphic design, we suggest you don’t attempt this yourself but you should hire the services of a professional graphic designer. You can use websites like 99designs, Fiverr or Upwork to find a graphic designer for a reasonable price. On Fiverr, you can search for a designer and then send them your proposal. On Upwork, you can create a proposal and designers will then bid for it. While on 99designs it’s slightly more expensive but you can work with multiple designers and you can then choose your favourite design.
You should never skimp on the cost of hiring a good designer. If the packaging looks appealing your customer will be more willing to pay more for your product. With poor quality design, your potential customer may perceive your brand/product as cheap, low-quality and undesirable.
Once your manufacture has sent you the editable design file, provide this to your designer so that they can modify it as per your requirements.
You may need to consider the following:
- Is your product going to be sold in just one country or several? If it’s the latter, you will need to include your wording in several languages on your packaging. You can find a translator on Fiverr or Upwork to help you with this.
- If you’re including product photographs on the packaging, make sure you use high-resolution images and ensure your photographs look professional.
- Does your product require a user manual? If it does, you will need to get one designed. If you can use your manufactures user manual instead, ensure you proof-read it and revise it if required.
- It’s often a good idea to include a product insert inside your product packaging as well. In the product insert, include details about your brand, thank the customer for their order and ask them kindly to provide a review.
- Don’t forget you will need a FNSKU printed on your outside packaging. You will also need a UPC code printed if you’re thinking of selling outside of Amazon as well.
- Does your product have any safety standard requirements that need to be printed on the packaging by law? For example, you will need to have choking warning hazard label printed if it’s a child’s toy.
Shipping Your Product From Your Supplier
Once your product has been manufactured by your supplier, you will need to get it shipped to either Amazon’s warehouse or your home/office.
If you’ve gone with a FOB quote, your supplier will deliver your goods to the agreed local port/airport cleared for export. Whether you ship your products by air or by sea will largely depend on how quickly you want your goods, as well as costs.
Shipping by sea is the cheapest way of transporting goods although it can take anything up to 4-6 weeks to reach the US or Europe. Shipping by air however will only take around 5 business days although it will be much more expensive.
If you require your goods urgently you may want to ship a few hundred units by air and the remaining units by sea so at least you can start selling your product on Amazon as early on as possible.
Importing products can be a complex process, therefore in order to save time and effort we would recommend that you use the services of a freight forwarder. A freight forwarder will deal with your air or sea shipment and handle customs clearance and tax as well delivering your goods to your local door or Amazon’s fulfilment centre. Freight forwarders that we recommend include Freightos and Zencargo.
Remember to always contact your freight forwarder first for a quote before placing an actual order with your supplier, especially as shipping costs can amount to a large percentage of your total product costs.
Check-out our in-depth importing article for more information.
Creating Your Product Listing
Once your product has been manufactured and is on its way to you, you can now start working on your product listing. This needs to be done before you can ship any stock to Amazon’s warehouse.
Take your time on creating a winning listing. Your aim is to create one that stands out and attracts potential customer to click on it and buy your product.
Before you work on your listing, first check your competitor’s listings, look to see what they are doing wrong with their listings and try to improve upon them.
Before creating a listing on Amazon, you will need to purchase a barcode which uniquely identifies your product which is called a UPC (Unique Product Code) code. You will need one UPC code per listing. You can purchase a UPC codes directly from from GS1.org which is the official UPC distributor.
A recommended tool when creating your product listing is MerchantWords. MerchantWords essentially collects the search terms used by Amazon shoppers from around the world including Europe, North America, Australia and Asia. For example, you enter your product name into the tool and it will list search term variations and it will also list the total monthly search estimate for that particular term.
There are 5 main components to a listing which you will need to think about which include:
- Product title
- Product images
- Product features
- Product description
- Hidden keywords
The product title will be one of the other key elements that your potential customer will see before they click on your actual listing. Keep your title clear but concise and try to include some essential keywords relating to your product which you have found on MerchantWords.
The product images are also another key feature that will make your customers click on your product listing, aside from the product title. Your main product image should grab your customer’s attention. Ensure the main product image has a white background. Always ensure the photos are professional looking, if you’re unable to take great photos think of hiring a professional. Include photos from different angles and include lifestyle photographs as well.
For the product features section, Amazon allows you to enter up to 5 bullet points. Include such things as product specifications as well as mention main benefits of your product. Try to include at least one keyword per bullet point.
In the product’s description section, you’re allowed up to 2000 characters. Here you can be as detailed as possible. Try to break up the text so it’s not in one block and use basic HTML to format your text so that your product description stands out.
The hidden keywords is a component of your listing which is not visible to your customers, but it is vital to include as well. Essentially you want your product showing up for as many related keyword combinations as possible. This should generally mean more traffic and sales so never forget to include these keywords.
Amazon’s Brand Registry
If you’ve got a registered trademark for your brand and you have created a website to showcase your product on Amazon (see our post about creating a website using WordPress), you should think about signing-up to Amazon’s free Brand Registry.
It offers a number of benefits including:
- Allows you to report trademark violations and counterfeiters to Amazon.
- You can list products without needing a UPC, EAN, JAN or ISBN code.
- Provides Enhanced brand content which allows to create enhanced product listings with larger photos, videos etc.
- Allows access to Headline Search ads which are visible at the top of the customer’s search results page which should result in increased sales as well as brand awareness.
To find out more information about creating a product listing please check out the following article.
Sending your Product into Amazon’s Fulfilment Centre
If you’re selling your product through FBA i.e. your products will be stored at Amazon’s warehouse you will need to ship your products to the relevant Amazon’s warehouse.
In order to do this you will need to create an inbound FBA Shipping Plan which is done through Seller Central. This essentially tells Amazon what products and quantities you’re shipping into them. Once Amazon receives your shipment and scans in the units, your product will be available for sale.
You can either get your freight forwarder to send your products directly to the Amazon fulfilment centre. Remember that you will first need to raise an inbound FBA shipment plan in advance of your order being manufactured, so that you can forward the FNSKU (fulfilment network stock keeping unit) label to your supplier as well as forwarding them the relevant shipment labels. Otherwise you can send your products to the fulfilment centre yourself once you have received your products. Remember that if your product packaging has UPC printed directly on it, you will need to cover with the relevant FNSKU label. For the full steps of creating an inbound FBA Shipping Plan, please check out the following article.
Launching Your Product on Amazon
Once your product arrives at Amazon’s fulfilment centre you’re finally ready to start selling. Your aim during your product launch is to get as many sales as early on as possible. This is not as straightforward as waiting for customers to find your product. It will usually not appear on the first few pages of your customer search results on Amazon, so they won’t know that it even exists.
In order to make people aware of your product, you will need to use Amazon’s advertising programme called Sponsored Ads. Sponsored Ads are essentially PPC (pay-per-click) ads, this means you pay Amazon when someone clicks on your ads. By using Sponsored Ads it will allow you to promote your product using relevant keywords so that it appears on the first search results page. As your product starts to sell, Amazon will start moving it up the search rankings. Amazon provides two types of sponsored ads, Automated and Manual (see more about sponsored ads in our launching a product article).
There are a number of other ways of increasing sales early on, for example you can provide discounts using promotional codes to entice customers. You can then advertise your promotions on discount and deal sites like JumpSend (this can be set-up using the “Launch” feature from the Jungle Scout Web App). Creating a website to promote your brand is also a good idea. You can drive traffic from your site over to Amazon. Add a blog to your site and update it regularly so that Google starts ranking your site.
A typical product launch will generally follow something like the following:
- Run an Automated Sponsored ad campaign for a few weeks.
- Evaluate your results from your Automated Sponsored ad campaign and find out what keywords are converting well.
- Run a Manual Sponsored ad bid on the keywords that are converting well. Increase your bid spending on these keywords.
- Create a promotional discounts on Amazon.
- Advertise your promotion on JumpSend (use the “Launch” feature from the Jungle Scout Web App).
- Contact an influencer on YouTube to see if they would like to promote your product.
- Does your product now appear organically on the first search page results? If it does, reduce spending on Sponsored Ads otherwise continue with PPC advertising.
Reviews also pay an important part when launching a product. Customers are more likely to buy a product if it has good reviews over one which has none.
In order to get product reviews you could email each customer manually asking if they could leave a product review although this is a time consuming process. Thankfully there are tools out there that can automate this process, one of which is Feedback Genius.
Feedback Genius allows you to automatically contact customers once they have bought your product. For example, you can do something like the following with the tool:
- Once your customer’s order has been dispatched, send them an initial automated mail thanking them for their order and introduce yourself and the brand.
- After a few days after the customer has received their order, send them another mail asking for them to leave a product review. Remember that you can’t ask or force the customer or provide any incentives for a positive review as it’s against Amazon’s rules.
- If after a week you still haven’t received any review, send them one last email asking if they could kindly leave feedback.
What Next? – Sell Your Products in Other Countries
Your product has now been selling for a few months on Amazon and it’s proving successful and you now want to grow your sales even further. Expanding to selling in other countries is a perfect way of achieving this. Amazon makes this extremely easy. For example, you can sell to other EU countries through their European Fulfilment Network (EFN) programme. This essentially allows you to store your products at your local Amazon fulfilment centre but sell to other European marketplaces including France, Germany, Spain, Italy and the UK. For example, if someone places an order on amazon.fr, their order will be shipped from your local Amazon warehouse to their address in France.
Signing up to Amazon’s EFN programme does have tax implications though. You can avoid VAT as long you don’t exceed the distance selling thresholds in a calendar year which vary from country to country (see the below table).For further information, you can check out our tax article.
|Distance Selling Thresholds|
Once you reach the distance selling thresholds in either one or more of the countries, you should think about joining Amazon’s Pan-European (PAN-EU) programme instead. This is where instead of having your inventory stored at your local fulfilment centre, Amazon ships your inventory to the fulfilment centres to the relevant Europeans countries so it’s nearer to the customers. PAN-EU does make VAT situation more complex though. As soon as your inventory arrives in the country, you must immediately register for VAT for that particular country. There are a number of companies out there which can help you with the tax situation. Amazon even provides their own services called Amazon’s VAT services, where for a smallish fee of $400 per country, they will register you for VAT when required and they will also file your VAT return.
Expanding Your Product Range
Now that your product is proving profitable and you’re now proficient with the process of selling on Amazon, you should think about expanding your product range. Ideally you should be looking for products that complements your existing product that you’re selling. If you’re serious about building a business for the long-term, you should be thinking of building on your brand and source products that appeal to your existing customer base. Now that you’ve gone through the process once, the second time should be so much easier. Keep expanding your product range and who knows you could have a 7 figure business in a few years’ time.
Private Label FBA Timeline
|Week 1 – Research Stage|
|1||Set-up an Amazon Seller Account.||Sign-up for an Individual Seller Amazon Account.|
|2||Sign-up to a MerchantWords.|
|3||Sign-up to Jungle-Scout.|
|4||Sign-up to Alibaba.|
|5||Use JungleScout to research products.||Come up with a list of 10 potential products to private label.||Avoid these categories:|
• Appliances, Automotive, Computer & Accessories
• Grocery & Gourmet Food
• Kindle Store
• Movies & TV
• Cell Phones & Accessories
|6||Use MerchantWords to find out how many customers are searching for your product on Amazon.||Compile a list per each marketplace of searches for your product.|
|7||Review other Amazon listings relating to your potential products.||Review your competitor listings on Amazon, find out what their customers don’t like about their products and what they do like.|
|Week 2 – Finding a Supplier|
|1||Use Alibaba to find 10-20 suppliers.||Filter by Gold Supplier and suppliers that provide Trade Assurance.|
|2||Contact your shortlisted suppliers.||In your initial communication you should:|
• Give a brief introduction about your company.
• Provide detailed product specification.
• Ask for pricing for different order quantities (FOB quote).
|Week 3 – Ordering Samples|
|1||Order your samples from your shortlisted 5 suppliers.||Ask supplier to send it through FedEx, UPS, DHL or TNT which offer on-line tracking. Ask your supplier to mark it as “Commercial Sample”.|
|2||Pay for sample.||Pay supplier for sample by PayPal or by bank transfer using TransferWise.|
|3||Ask for packaging templates from your suppliers.|
|Week 4 – Test Samples & Decide on Manufacture|
|1||Review your samples.||Inspect your product thoroughly before deciding on the final supplier you will use to manufacture your product.||If there are issues with your samples ask for it to be modified.|
|2||Decide on the final supplier to manufacture your product.|
|3||Contact your freight forwarder to get a quote to have your product shipped.||Use a freight forwarder such as Freightos or Zencargo.|
|Week 5 – Complete Packaging & Create Product Listing|
|1||Forward the packaging template to your designer.||Use a designer on 99designs, Fiverr or Upwork.|
|2||Get professional photographs taken of your product.|
|3||Upgrade your Amazon seller account to a Professional account.|
|4||Purchase a UPC code for your product.||Purchase your UPC codes through GS1.|
|5||Create your product listing on Amazon.||Ensure you use MerchantWords to find relevant keywords relating to your product. Use these keywords in your listing.|
|Week 6 – Sign-Up to Email Feedback Tool & Work on Website|
|1||Sign-up to an automated email feedback tool.||Sign-up to a feedback tool such as Feedback Genius.|
|2||Work on your WordPress site to promote your brand.||Check-out our article about setting a WordPress site.|
|Week 7-8 – Get Manufactured Products Inspected & Shipment|
|1||Once your products have been manufactured get third-party inspection company to review your manufactured products.||Use an inspection company to review the following:|
• Correct number of units are in the cartons.
• Inspect products at random to ensure they match your specifications.
|2||Get 100 units sent by air and the remaining units get them shipped by sea.||Shipping by sea can take anything from 4-6 weeks so ship some units by air so that you get some to sell straightaway.|
|3||Pay the supplier the outstanding 70%.|
|Week 9 – Promote Your Product|
|1||Set-up an Automated Sponsored Ad campaign.|
|2||Set-up a promotional discount on Amazon.|
|3||Promote your promotional discount on JumpSend.|
|Week 10 – Review Your Ad Campaign & Optimise Listing|
|1||Review the results from your Automated Sponsored Ad campaign.||Compile a list of keywords that are converting well.|
|2||Set-up a Manual AD campaign using the keywords that are converting well.|
|3||Optimise your product listing with the relevant keywords that are converting well.|
|4||Start working on your blog relating to your website so that you promote your products on Amazon.|
|Week 11 – Register for Brand Registry|
|1||Register for Amazon’s Brand Registry.||Once your trademark has been granted you can sign-up to Amazon’s Brand Registry.|
I hope you have enjoyed reading this article. Clearly it’s quite a lengthy article, if you do have any questions please feel free to ask.