Start a business with Amazon FBA
Private Labeling and Amazon FBA
This is the one of the most crucial steps when you are Private Labeling and using Amazon FBA because everything else can be done perfectly and if we don’t choose a good product, we could possibly fail and lose our investment. That’s why the planning at the product selection phase should be researched carefully and not be rushed.
The first and most important thing you’ll be doing is finding a product to private label. This is the hardest step but with enough research and preparation you’ll be able to create a product that generates income for you on autopilot.
So lets look at some simple ways to come up with your idea:
1. Reach out: See what issues your friends, family, and others are having. You can try asking on Facebook or Reddit. People are using products and facing problems that need to be solved every single day. Ask them about the products and problems that could be improved in their daily lives.
2. Write your ideas down: Whether it’s in a notebook or on your phone, jot down ideas or products that you find cool and interesting. This could be on your way to work/school, going to the grocery store, you name it. There are opportunities everywhere.
3. Look on Amazon or Ebay: There are extensive listings and probably any product you can think about are on those platforms. We’ll be taking a look at the technique behind vetting products on these platforms a little later on.
4. Solve the problems you have: Often times we look outside of ourselves to find the answers we’re looking for but sometimes the answers we’re looking for are right under our noses. Solving your own problems could also solve problems that other have as well. What things annoy you or are things you don’t like to deal with? Can it be fixed? What do you enjoy doing? Could you sell products related to it? What do you purchase on a regular basis? Could this be something you could sell? Find a way to fix other people’s problems by solving your own and you could very well make your own product
More advanced approach to coming up with ideas:
Check out what’s selling on the Amazon Best Sellers and Amazon Movers and Shakers. This should be a great source of inspiration for ideas. Also check out eBay completed listings.
Coming up with ideas for Private label products
You can use Amazon best seller lists, also take a look at movers and shakers for more ideas. It’s a great place to look for new product ideas because you can see what the top selling items are.
Go on the page and take a look at the best selling products. Look through the different categories and subcategories. You’ll want to make sure that the products you find pass the criteria we’ve set up earlier in the article. Also keep in mind that some categories aren’t good for private labeling or have big brand names selling in them already.
Choose a category that you’re interested in or gravitated to already. Choose an area of products where you don’t need name brand to sell. Things like: appliances, kitchenware, home décor, pet accessories, phone accessories, etc.
Pick a product category you are interested in and makes money. The top categories on Amazon are Supplements, Health and Beauty, Kitchen and Dining, and Mobile Accessories. Two low competition categories are “Sports and Outdoors” and “Travel”.
Finding The Right Best Selling Products
You’ll want to find products that rank that are already high in Amazon’s ranking system. The higher the BSR (Best Sellers Rank), the more sales that product is making. Products in the 1-1500 range are really great. Don’t just focus on finding the perfect product. Since you’re building a brand, you’ll be selling a couple of different products in your niche anyways.
A good tool you can use to figure out the trends and demand of a product is Google Trends. Say we were interested in selling resistance bands, we would see that the keyword is somewhat seasonal but more importantly you can see that the interest/demand has been increasing over the years. Also something cool you can do is to check the “Forecast” box and it’ll show you what the projected trend is for the keyword. It’s awesome and can give further insight as to whether the trend will increase or decrease. Super important and useful to use when vetting your products. It’ll help you account for whether a product is really getting more popular over time, whether it’s seasonal, the potential, etc.
On top of google trends, you can search right in Google for products with specific Best Sellers Rank and in specific Categories. So for example if you wanted to find the a product with a BSR of 30 in the sports & outdoors category, you would enter this into the Google search bar: [“Amazon Best Sellers Rank: #20 in Sports & Outdoors” :Amazon.com] The underlined items are factors that can be changed depending on what you want to find. Some of your searches may yield no results or results that are slightly off and that is due to Google’s algorithm that is being updated constantly.
Google keyword planner is great for figuring out how many people are looking up keywords related to your product. It’ll give you an estimate of the monthly search volumes and also related terms for your keyword. It’s a great research tool to add to your arsenal. Go to the Amazon best seller list and look at the keywords that you see in categories/subcategories that you like. Enter them into the keyword planner and explore the potential of your product. Be sure to click on the “keyword ideas” tab to get a more accurate count of how many people are looking up the product keyword. (It’s right beside the “Ad group ideas” tab)
Categories to Avoid:
- Grocery and Gourmet Food
- Movies and TV
- Kindle Store
- MP3 Downloads
- Gift Cards
- Prime Pantry
- Video Games
Ebay categories– You’ll be doing basically the same thing as you did for the Amazon best seller list, there will be some different products available for you to explore.
Alibaba categories – Most private label products you’re going to find will be sourced from Alibaba so it’s a good place to start to look for products. And if you do find something you think will do well, you can straight to sampling and production. Some of the best Alibaba categories to check out are:
- Health and Beauty
- Home, Lights and Construction
- Bags, Shoes and Accessories
- Gifts, Sports and Toys
- Machinery, Industrial Parts and Tools
So we’ve just looked at where and how to come up with some private label ideas. Let’s take a look at how we can differentiate from the competition.
There are 3 ways where you can can do this. Ask yourself is there:
- Product I can innovate
- Product I add value to
- Product I can private label
You should examine which products are currently selling and check out the reviews. Are people giving it bad reviews? What issues do they have with it? Most people don’t think beyond the surface and just see a product that has good reviews or bad reviews.
We need to go deeper than that and ask “can something, be done about it?” This is a good opportunity to improve and provide a product that is better. Think about different characteristics of the product, size, color, quality, shape, issues, and what actual reviewers are saying about the product and how it sucks at the moment. After all, the reviewers are giving you actionable advice to make something better. The biggest advantage that you have is that most established Amazon businesses won’t change their product or improve because they have been selling for so long and what they’re doing is working so why change? It takes much more work for them to redo again and improve compared to a new seller like you who can come along and do everything well the first time and capitalize on that.
Check out the 1, 2, and 3 star reviews for the best tips on improvement. Your job is to make take peoples pain points away with your improvements.
THE VALUE ADDED TACTIC
You can also look for opportunities with popular already existing products. We’re simply looking to add more value, this could be in the form of an accessory or complementing product. It could be even be an ebook, use your imagination. Look at reviews and see what people are doing with the product. If reviewers have bought an ab roller and they’re talking about abs, maybe you could add more value by offering an ebook or even a real book that teaches how to build leaner cut abs. With the techniques you’ll learn in the sourcing part of the course, making a physical book and adding that as a bonus should be no problem.
Creating your own brand/ Private Labeling
A lot of products on Amazon and eBay are commodities meaning that they’re the same and aren’t proprietary besides the brand name labeled on the product. This means that there is also a lot of competition, something generic like an ab roller may have tens if not hundreds of sellers. You’ll need to differentiate yourself somehow. You want to build your brand and become a premium in the market. If not a premium, just not known as the cheap guys. Competing on price is not where you want to be, especially as a new seller. People buy products and will often pay extra for a brand that has authority and trust. Create a name that defines the category or types of products you’re private labeling so you can also expand into selling those products eventually.
The essentials checklist and must haves to ensure you pick a profitable product.
We discussed how to come up with good ideas for private label product, now lets take a look at the qualities a private label product needs to have to make sure it does well. It’s recommended that the product you plan on selling have most if not all the requirements below.
Some requirements of the products you will be private labeling:
Is the market viable?
Average product sale price is between $10 and $70. This price range is important because it’s where consumers don’t really have to think about purchasing. They can act on impulse decisions and buy quickly compared to more expensive products where they would need to do some research and think about the purchase. Having a lower sale price also makes purchasing your first shipment easier afterall the higher the sale price, the more you can expect to pay to make the first batch of product. We’re also not going under $10 because at the range, the margin is going to be very low.
Products have 5000 or smaller Best Seller Rank in Main Category or the sales rank is under 10,000 for each of the top 3 items. Amazon doesn’t disclose sales made on a product but it does give you the best seller rank (BSR). BSR shows you how well a product is selling in its category. This is an indicator of whether there is demand for a product in the market or not. You don’t want to start with a product that sells only a couple of units a day when it’s at the #1 spot for the keyword term. The lower it is (closer to 0), the more it is selling. A product with a BSR of 1000 is selling much more than a product with a BSR of 10,000. It’s recommended to go after products in this BSR range because they have enough sales and people buying similar products ( to ones you’ll be selling) to justify trying to break into the market. You’ll have a lot of options to choose from when you’re starting out so why not pick the prospects that have the most sales potential right? Also pay attention to main categories and sub categories. We want to focus on products selling in the main category with a BSR of less than 5000, the sub category BSR isn’t a good indicator of how well a product will do because sub categories are focused on very specific product niches rather than a wide scope of how many products are selling.
A national brand name does not rule the market. You don’t want to pick a product that has a national brand name ruling it. This is because they’ll have built enough trust and authority to draw most customers to them and it’ll be difficult to compete, especially for a new seller. When you’re looking for products to private label on Amazon, search for your products and if you see brand names on the first page it may be a good idea to reconsider pursuing that product. There are exceptions to this rule, if you find a brand name selling similar products but not exactly the same as yours, then you may be able to compete because they’re not selling your exact same product. An example of this would be if you want to sell a bird cage and you see a brand name selling a dog cage. To recap, it’s hard to enter a market with big brands that lots of people know of, you want to create a product, launch and start generating sales right off the bat
Do each of the first three items have less 400 reviews. If they do, then that’s great news. Well kind of. 400 reviews might seem like a lot, especially for a new seller but it means that they’re not so far ahead that it’s pointless to even try to compete. The top 3 spots will get the most clickthroughs because they’re right at the top and are prioritized. The question you’re asking yourself here is can we beat one of the top 3 and get in their position?
2-3 Products with Less Than 50 Reviews on First Page. This is similar to the last qualifier except we’re seeing how easy it would be if we just wanted to rank on the first page in general. Reviews are a factor that Amazon uses to rank its products so it is pretty important for a listing. Generally 50 reviews aren’t considered a lot so if there are multiple listings on the first page with 50 reviews, then it’ll be very possible to compete. Just because we’re not in the top 3 listings doesn’t mean that customers don’t look at other listings on the first page.
Can current listings be improved or optimized or are there knowledgeable sellers in top 3 listings (Using title keywords, excellent pictures, html desc., etc). Listings that are not optimized are clear signs that the competition won’t be as strong and it’ll be easier for you to rank on the first page. Things to look out for include: short descriptions, weak bullet points, low quality product photos, zero or only one product photo, missing product photos that could create more fantasy or highlight more benefits, short or non descriptive title, and vital information left out. Also remember to focus on the benefits and not just features in your listings. People don’t buy because of features, they buy because of benefits.
Top 3 keywords have over 100,000 monthly searches in merchantwords.com
MerchantWords is like the Keyword Tool, except it indexes searches straight on Amazon instead of Google. It’ll show you how many people are searching for terms on the site. I believe there are 3 free searches before you will need to upgrade for a paid account or wait until your time limit expires. It’s recommended that you have over 100,000 monthly searches for your top 3 product keywords because that guarantees enough demand and traffic in your market to justify selling your product.
Can your product sell all year long? As a new seller, you should gravitate towards products that can sell all year long, that way you’re not making sales in only one or two seasons. You can’t really afford to miss these sales especially if you want to grow your business.
Are similar products sold on Ebay? If similar products are selling on Ebay, then that means that there is a demand for it across platforms and not only on Amazon. It’s a good sign and if you’ve vetted your product and it seems good, there isn’t really a reason why it wouldn’t be sold on Ebay.
Can you expand to related/similar niche products? When you’re building a private label brand, it might take a while to start scaling but once you do you’ll want to spread into related products so you’ll have more revenue streams. Also these streams will be able to draw customers to your brand from different avenues which will help build more sales.
Does your product have multiple keywords. Listing your product for multiple keywords helps it get found on Amazon. These different keywords will be able to draw more traffic to your listing.
All of the Pay per Click ad spots being used. It shows that sellers are making sales on the products they’re advertising and that it’s more competitive.
There is no product video on the first page of Google for the main keyword. This is a sign that the product listing has not been fully optimized and you may have an opportunity to compete.
Is the product viable?
Product weighs around 1-3 pounds. This helps you to avoid large shipping cost from eating at away your margin. Also makes things easier to handle when you’re dealing with moving products or with returns. To get a better idea of the fees, you can find the Amazon FBA Revenue Calculator here. To figure out what you’ll earn from a sale, look for a product similar to yours, enter it in, enter in the price you’ll charge and then watch magic happen. The weight will definitely influence your profit margins and how much success your product will have. Lightweight products are preferred if possible.
Product is smaller than 8 x 8 x 8 inches. Smaller products are easier to deal with and also cost less to ship. Also Amazon has certain thresholds on the size of a product and pricing, after certain sizes things get more expensive.
Product is durable and not easily broken while shipping. This is a crucial. Not only will this cause refunds but it can lead to some really negative reviews for your business which destroy chances of future customers buying from you. Think simple and generic products that don’t have moving parts.
Can your product stand out from crowd with improved packaging or brand on item. We’ll look to improve products but also improving packaging can create more value for customers and help give you an advantage in sales. Product packaging is a great way to improve perceived value without changing the actual product. Can you make present our product with better packaging than something similar on the market?
Can you add something to make product more valuable? Ebook, related products/bundling. This relates to the last point about adding more value. With less reviews, sales, and experience than other sellers, how can you add more value to your product and make people want to buy it instead of just competing on price? Think about how you can add more benefits or use out of your product, whether it’s a digital addition or a physical widget, it’ll help you differentiate and find more ways to appeal to buyers.
Product can be sourced in China. The products will need to be made in China or somewhere similar because it makes economical sense. You will need to account for the cost of the product, shipping, amazon warehousing fees, amazon sales fees, and other miscellaneous fees when you’re working with FBA. If your margins aren’t good enough, you won’t be making much money!
You can purchase including shipping for less than 20% of the sales price. You want to pick the products that will have enough of a profit margin to account for the various that are going to come with selling the product. If you can get the product made for less than 25% of the sale price, it’ll leave you with 75% margin left and most likely enough to cover fees. When you have a product in mind, you can check quickly by going on Alibaba and searching for your product to get a rough idea of what price suppliers will need to make your product.
Initial purchase can be less than 500 units. You can reduce the risk involved with ordering your first round of product by conducting research and due diligence however it won’t eliminate it completely. Without a proven demand for your product yet, you’ll have to test to see if sells. Look into negotiating a smaller MOQ (minimum order quantity) to begin with. 500 is a pretty good number to start with because it won’t sell out too fast and if it does pick up traction you’ll have some inventory to prepare for getting new inventory. Of course all of this depends on the pricepoint of your product and if it makes sense. Use your discretion!
The product leads to reorders or subscriptions. This is a great way to ensure that you will have repeat business because if people are constantly looking to buy the same product again, it means that there is demand and a piece of the pie for you. It’s not absolutely necessary but if you can find a product that fits this role, it may be a lane to pursue.
The product is not a commodity and not easily purchased at local big box store. If the product can be purchased anywhere or locally, customers may not be purchase as many from you. There may be people who are too lazy to go out and will buy online but it’s something for you to consider. This is not a make or break factor.
Product is straightforward to use and won’t need instruction manuals. The simpler the product, the less information and reviews and research overall a customer will need to do to purchase it right there on the spot.
And that concludes the essential checklist of things you should vet your new product ideas with. Hopefully you understand private labeling and Amazon FBA a little better now! The more rigorous you vet your ideas, the more likely that they’ll stand to succeed. Congratulations on coming this far, you have learned how to come up with new private label product ideas, where to look for them, and how to make sure they’re more likely to be successful when you start selling.
Thanks for spending some time with us and if you enjoyed our article on Private Labeling and Amazon FBA, feel free to share it with friends or family who might benefit from this as well.
In the next level of the course, we learn how to source the products we have discovered, how to sample them and make sure we get the quality products we want to sell.