When it comes to eCommerce, most of us already know two things: online retail is a burgeoning business, and Amazon has a leg-up on the rest of the market. According to marketing firm BloomReach, “55% of consumers turn to Amazon first when searching for products online. And even if they find an item on another retailer’s site, 9 of 10 of shoppers will come back to Amazon to conduct a price comparison.”
With statistics like this, it’s not hard to imagine why thousands of entrepreneurs are flocking to the eCommerce giant to start a business in the physical product industry.
Launching a company that sells products on Amazon has never been easier, and yet every year we see hundreds of startups flop. The biggest culprit? Because starting a selling business on Amazon is so easy, most business owners never take the time to truly understand what it takes to build a profitable business.
The key to establishing a profitable eCommerce business is having an understanding of what makes a company in this industry sustainable. It’s also important to learn from those that have reached success and are experienced.
So let’s break it down. What exactly is private labeling? It is simply the process of buying a generic product and selling under your own brand. Big chain stores do this all the time. Any Kirkland brand products you find at Costco, for example, or Room Essential products in the Home Goods section at Target are all items that have been private labeled. But again to be successful, you need to do it right.
Here are top six strategies for creating a profitable private label business:
- Choose a Product to Private Label.
Figuring out what to sell is one of the biggest challenges new online entrepreneurs will face, but there are some great opportunities out there and successful new products are being launched all the time. Remember that conducting product research will take time. Here are a few tips for generating new product ideas:
- Identify the frustrating or time-consuming experiences people are having. Recognizing a pain point or problem that potential customers have and then providing the solution is a timeless approach to making sales.
- Identify customer passions. Almost as good (maybe even better) than solving a customer pain point is catering to a customer passion. When consumers are passionate about something they will often spend more money. Because passionate consumers are generally more involved in both the industry and the buying process, you may also find deeper customer loyalty to your brand.
- Identify the competition. Are there no competitors, a few competitors or many? Tons of competition doesn’t necessarily mean you shouldn’t join the ranks — it can actually indicate a huge market opportunity. To stand out, you’ll have to get creative with marketing by answering questions such as, “What makes you different? How do you offer unique value to your customers?”
- Capitalize on cultural trends. Get out and talk to people. Stay active on Twitter, Snapchat, Facebook, and LinkedIn to see what people are talking about. If you pay attention, you might be able to filter out a short-term fad from a long-term trend.
- Develop a Reliable Supply Chain.
Find a trustworthy supplier to source your product from, and take the time to build a life-long relationship with them. Most people start the search for a supplier online. Sites like Alibaba, Global Sources, HKDTC, Salehoo, and Made In China are all great places to start. Alternatively, you could visit domestic or international trade shows to connect face-to-face with suppliers and test products in person.
- Always Sample the Product Before Buying.
Some suppliers will offer to ship you free samples, others will ask you to pay for shipping, and some will not offer anything for free. Unfortunately, many overseas suppliers are constantly bombarded by people hoping to get a freebie. This can make them wary and cause them to charge for samples, usually with a clause that if you order a commercial quantity they will deduct the cost of the sample. If they do not suggest that, you could ask them to do so before ordering samples.
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