Selling Brands vs. Private Labeling
Before you start looking for any products to sell via Amazon FBA, you’ll have an important decision to make. Are you going to sell a product that’s already branded, or are you going to private label? Are you going to try to create a new manual coffee grinder brand that you can build upon into the future?
Selling brands means dealing in products that already have a brand identity, whereas private label products are those for which you can attach your own name and work towards building your own brand.
Selling branded products is one of the easiest ways to begin doing business through Amazon FBA, but it’s also one in which your long-term potential is more limited. One of the most common ways of selling branded products is through a technique that’s often called “retail arbitrage.”
In short, retail arbitrage means that you find branded items that are on a deeply discounted clearance sale price at a local retailer, and then resell those items at a higher price on Amazon.com. One of the upsides of this strategy is that it’s easy to get started, and you likely already have a good sense of what constitutes a “good deal” for a particular branded product. And it’s easy to check the current lowest price on Amazon.com to see if there’s the potential for profit.
Let’s look at a couple of the manual coffee grinders that are currently for sale at Amazon.com. You’ll notice, that the grinder on the left is not branded (and sells for the lowest price). The grinders on the right are privately branded (and sell for more):
Finding Products to Sell
Your biggest single challenge in building your own Amazon FBA business is deciding what product to sell. There’s no easy answer to this, because the Amazon.com marketplace is dynamic and ever evolving.
To find the right products to sell in your Amazon FBA account, you’re going to need to do some research. Not surprisingly, one of the best tools available to conduct this research is Amazon.com itself.
- Focus on Certain Categories of Items – Some successful FBA entrepreneurs have identified certain categories that may hold a greater opportunity for new FBA sellers, as well as some categories that you might wish to avoid.
Among the FBA beginner-friendly categories are Home & Kitchen; Pet Supplies; Sports and Outdoors; and Patio, Lawn & Garden. Each of these categories contains a wide range of products, few market-dominating companies, with new products and concepts introduced almost daily.
Your manual coffee grinder falls within the “Home & Kitchen” category, so that’s certainly a positive factor.
So what categories of goods should you probably stay away from, at least for your first few FBA products? Avoid Camera & Photo, Appliances, Jewelry, Watches, and Electronics. The items in these categories can involve difficult quality control issues, and the markets are often too complicated for Amazon FBA beginners, or are dominated by large-scale sellers.
- Prohibited Products – There are certain categories of products that are not eligible for sale through Amazon FBA. A complete list can be found here: https://www.amazon.com/gp/help/customer/display.html?nodeId=201790610. [Links to https://www.amazon.com/gp/help/customer/display.html?nodeId=201790610] Some of the noteworthy exclusions include alcoholic beverages, vehicle tires, and products that cannot legally be sold and distributed in all U.S. jurisdictions.
You also may not sell hazardous materials, including any explosives, compressed gases or aerosols, flammable liquids or solids, poisons, corrosive materials, certain Lithium ion and lithium metal batteries, or vehicle batteries through Amazon FBA.
In addition, there are also some limitations and additional requirements that apply to temperature-sensitive and date-sensitive products. These include nutritional supplements and other items intended for consumption.
There are also various types of products, which require prior approval by Amazon. These are automotive parts, clothing, luggage, collectible books, jewelry, shoes, personal computers, shoes, toys and games, watches, electronics and computer software.
- Supply and Demand – Now that we’ve covered all of the types of products you’ll need to stay away from, let’s discuss how you go about identifying the products that hold the most potential for your business.
As you browse the potential products on Amazon, there are several important factors that you’ll want to consider, but you’ll probably want to start by looking at the “Best Sellers Rank” of items that are already being sold on Amazon.com. The method by which Amazon calculates the Best Sellers Rank is secret, but it’s believed that the most important elements are:
- How long it has been since someone bought this product.
- The number of product sales that have been made recently.
- How the sales figures for this product compare to similar products.
Keep in mind, that while a smaller number generally means that a product sells better, the absolute ranking of a given product isn’t as important as how its rank is trending over time. Where that rank falls within a particular category of goods is also important.
- The Importance of the Best Seller Ranking What you’re going to want to look for are items that are high enough on the Best Seller Ranking list that there is enough upside potential for it to be worth you entering the market, but not enough current sales to attract a large number of sellers.
Along with Best Seller Ranking, you should look to see how many reviews there are for the particular product. You’ll want there to be enough reviews that there’s a demonstrated demand, but again you don’t want so many that a large number of sellers are competing for future sales.
Looking at the details of the generic, manual, coffee grinder (on the left) and the branded, manual, coffee grinder (on the right), we can see that the branded grinder is currently a much better seller, although it’s also been available on Amazon for a longer period of time.
If you already have a specific item or type of item in mind, you can go directly to Amazon.com and see if the sales rank data and possible competition figures confirm your initial interest.
- Selling Price – A retail price between $10 and $50 represents a sweet spot for many potential Amazon FBA products. That price range is large enough that there’s the possibility for you to make significant margin, but not so much that customers are going to deliberate for a significant amount of time before buying.
Several items are available and manual coffee grinders are retailing on Amazon for between $13 and $38. So, that price falls right in the price range sweet spot.
- Product Size – In general, when a product is small or light, the better it is on you. Of course, you don’t want your product to be so fragile that it’s likely to become damaged during shipping (even in Amazon’s padded shipping boxes). Damaged products lead to bad customer reviews on your Amazon FBA account, which will make it more challenging to selling your item going forward.
- Find a Wholesale Distributor – This is the next step in selling products through Amazon FBA (Fulfillment by Amazon)
Where are you in the process of choosing and selling products on Amazon?