Private Label

Private label means having a product manufactured for you and selling it under your own brand. It is the model most heavily advertised as "Amazon FBA", and this lesson explains what it actually involves and why this course does not recommend starting with it.

What it is

You find a manufacturer, usually overseas, and have them produce a product to your specification with your branding on it. You register the brand, create the listing yourself, and sell it as the only seller of that item.

The product does not have to be novel. Most private label products are ordinary items with a different logo. What matters is that it is not patented and the trademark is free, and confirming both is your responsibility before you order anything.

Private label is not the same thing as FBA

This confusion is common enough that the lesson corrects it directly. FBA is a fulfilment service: Amazon stores and ships your goods, whatever their origin. Private label is a sourcing method. You can use FBA with arbitrage, wholesale or private label, and you can sell private label goods on your own website with no involvement from Amazon at all.

A great deal of marketing treats the two as one thing. They are unrelated decisions.

Why it appeals

• You own the listing. No one else sells your product, so there is no Buy Box competition and no race to the bottom on price. This is the real prize.
• Margins can be much better, because you are buying at manufacturing cost rather than at wholesale or retail.
• Supply is repeatable. Order another thousand units when you need them.
• It scales, and it can be run remotely: the factory ships to a prep centre, which ships to Amazon.

What it costs to find out

The figure given in the lesson is between $3,000 and $5,000 to launch a single product, and that is before you know whether it works. Diversifying across three products, which is the advice given, multiplies it. Treat those numbers as indicative rather than current, but the order of magnitude is right, and it is an order of magnitude above arbitrage.

Everything you have to learn first

The cost is not the main barrier. The number of separate skills is. A private label launch requires all of the following, and a failure in any one of them wastes the whole investment:

1. Product research, to find something with demand and beatable competition.
2. Finding and vetting a manufacturer.
3. Negotiating price and terms.
4. Ordering a sample, then a test batch rather than a full production run.
5. Arranging a third-party inspection, because one good sample does not mean a good batch.
6. Designing the logo and the packaging.
7. Trademark and patent checks.
8. Engaging a freight forwarder and dealing with customs and duty.
9. Commissioning product photography, which the lesson prices at several hundred to around a thousand.
10. Writing and optimising a listing from scratch, because the listing does not exist until you create it.
11. Running pay-per-click advertising, because a new listing has no ranking and no sales history and will otherwise be invisible.
12. Getting the first reviews, within Amazon's rules on how that may be done.

Compare that with arbitrage, where the steps are: find product, buy product, send to Amazon, add to an existing listing.

The specific risks

• The product can fail outright. You have committed to hundreds or thousands of units. If it does not sell, that stock is a loss and it is also paying storage fees while it sits.
• Intellectual property. Selling something that infringes a patent or a trademark exposes you to legal action, and Amazon removes the listing on complaint. Due diligence before ordering is not optional.
• Competition is heavy, partly because so many courses sell this model as the easy route. The categories most commonly recommended are the most crowded.
• Long lead times. Months can pass between deciding on a product and having stock to sell, during which the market moves.

The reasonable position

Private label is a real business and a good one when it works. What it is not is a beginner's model, and the advertising that presents it as one is the reason people lose money on it.

The sensible order is the one this course follows: learn how Amazon works using arbitrage, where the cost of a mistake is a few units rather than a shipping container. Move to wholesale for repeatable supply. Consider private label once you can read demand accurately, know your true costs, and have capital you can afford to have wrong.

Private Label Products