FBA Private Label
FBA – Private Label Model
The Private Label model works just like a traditional wholesale fulfillment method for FBA except we/you are picking one product to own by acquiring license/trademarks and branding to separate it from similar products in the marketplace. The rule of thumb for Private Labeling is the “33% rule”:
- A third (⅓) of the cost should come from the acquiring of the product, licensing it and slapping a logo on it.
- A third (⅔) of the cost should come from storage and shipping costs to and from the warehouse.
- A third (3/3) is your profit margin.
Utilizing Amazon FBA to maximize your Private Label
Amazon FBA (Fulfillment by Amazon) is a service offered by Amazon that allows sellers to automate their orders. This way, Amazon takes care of handling the packaging, shipping, and subsequent delivery to the customer.
Here’s how it works: with Fulfillment by Amazon, third-party sellers send their goods to Amazon fulfillment centers before they are purchased. The products are kept at Amazon fulfillment centers until a customer buys them. Then they are picked up, packaged, shipped, and delivered by Amazon. Package returns are also handled by Amazon.
This allows for a more reliable and effective customer service and order fulfillment.
Anyone can use the Amazon FBA service, and it’s especially great for those who do not have the time to run their store but are still interested in trying out an e-commerce business.
Benefits of using Amazon FBA for Private Label
Good customer service
One of the main issues new e-commerce store owners face is learning to manage their business and ship out orders on time. With Amazon FBA, the shipping side of your business is completely covered. Amazon handles your products and makes sure to ship to customers on time.
New opportunities to gain more customers
Amazon provides multiple FBA programs as a way to assist you in maximizing profit, gaining new customers, and building loyalty in current customers. Some of these programs include; FBA small and light, FBA subscribe and save, FBA export, and multi-channel fulfillment.
Being a part of Amazon FBA can qualify you for discounted shipping rates. Some of your products may be eligible for free shipping or Amazon Prime two-day shipping. Even without discounted prices, it is still way cheaper than handling shipping on your own.
Increased storage space
You have an almost endless amount of storage space for your products because your products are being stored in Amazon fulfillment centers.
Management of returns
Handling goods returns as a new business owner can be really stressful. No worries, Amazon FBA takes care of refunds and returns, and makes your business as a whole, less stressful to run.
Common Client Questions
Will customers know you are part of Amazon FBA?
Yes, all Amazon-fulfilled products have the ‘Fulfilled by Amazon’ logo. No worries though, new customers are more likely to trust your business if they know the packaging, shipping, delivery, and returns are managed by Amazon.
How do you decide what product to Private Label?
Taking analytics from Amazon, Google, and many other research methods, the process usually starts with 5-10 products that are tested to see which performs the best. Known as reverse engineering.