The most successful ecommerce businesses and bookkeepers use well-documented processes. Get your ecommerce bookkeeping ready to scale with our free checklist.

How To Build Your Own Amazon Private Label [Guide]
May 27, 2022

How To Build Your Own Amazon Private Label [Guide]

Home » Blog » How To Build Your Own Amazon Private Label [Guide]

Estimated reading time: 11 minutes.

This blog gives an overview of one Amazon business model: Private Label. For a more in-depth breakdown of all the different elements of selling on Amazon,download our free guide to selling on Amazon on 2022.

“Launching your very own branded product on Amazon is one of the most lucrative ways to sell products online.”

Running a prosperous ecommerce store is all about selling products that people want to buy.

That’s why so many sellers are finding success with an Amazon private label.

But what does “private label” mean exactly? And how can you start selling those perfect products that will have customers coming back for more?

In this guide to building your own Amazon private label store:

The best advice and insights for selling on Amazon this year

There’s a lot to know when it comes to selling on Amazon. In this guide, you’ll find expert tips and advice to make sure you start strong and stand out from the crowd.

Download our free guide

First up: Let’s cover the basics of Amazon private label.

What is an Amazon private label?

Amazon private label is a business model that involves turning already existing products into redesigned and rebranded stock that’s unique to your store.

So, how does it work?

In a nutshell, Amazon private labeling consists of four key things:

  1. Take a product that already exists and create new specifications for it based on your customers’ needs.
  2. Find a manufacturer willing to redesign that product to your specs.
  3. Add your unique branding to the new product.
  4. Sell your private label product on the Amazon marketplace.

Imagine you want to sell a pair of running shoes, but you don’t want them to be the same shoes that every other seller has in their Amazon store.

How do you make your running shoes stand out from the rest?

One solution is to find a reliable shoe manufacturer, give them some design specifications, and have them create a unique style of running shoes just for your store.

If this sounds unfamiliar, think about all the big commerce brands you know.

Most of them will have their own branded products that are private label. Walmart has “Great Value,” Target has “Mainstays,” and Costco has “Kirkland Signature.”

And there’s one private label company you’ll recognize: Amazon.

That’s right, Amazon’s Amazon Essentials and Amazon Basics lines are perfect examples of a business applying its own brand to familiar products.

Private label selling on Amazon compared to other business models 

As an Amazon seller, you’ve got five business models to choose from:

  • Private Label
  • Wholesale
  • Retail arbitrage and online arbitrage
  • Dropshipping
  • Handmade

According to research by Jungle Scout, private label is the most popular Amazon business model, with 59% of sellers choosing this method.

This is more than double that of the next most popular models (wholesale and arbitrage), which each come in at 26%.

We won’t go into all the different business models here. (You can find that information in this guide to selling on Amazon.)

Instead, let’s look at what makes the private label method so popular with Amazon sellers.

Complete creative control of your products

Of the business models listed above, only Private Label and Handmade allow sellers to design their own products.

The main difference between these two is that private label sellers don’t have to manufacture the products themselves (saving a lot of time and energy).

When you set up a private label business, you can customize your products to look and feel exactly how you want them to.

This means designing Amazon private label products to suit the needs of your market.

And when those needs change, it’s usually a simple matter of calling up your manufacturer and providing them with updated specs.

Higher profit margins and less competition

“Amazon wholesale has thinner margins because it involves reselling popular brands. On the other hand, private label is all about making a brand out of a white label product which promises high margins. So, private label offers better profit than wholesale.”

Most Amazon business models require a middle person or intemediary who goes between the manufacturer and you.

Private label stores source products directly from the supplier. Other brands will not be able to mark up the price. No mark-ups means you’re paying less to stock up.

The less you spend on getting products into your store, the more you increase your profit margins (all else being equal).

And being able to design your own products means creating a product that other brands aren’t selling.

By niching down and developing a product that fills a space in the market, you increase the likelihood that customers will choose your brand over another.

You own the brand, you make the decisions

Being in control of the product branding is beneficial in a number of ways:

  • You can apply your logo and branding to all the products and packaging. This turns every item sold into a free piece of advertising.

  • Manufacturers have no rights over the label or brand. This gives you the flexibility to find a new supplier if you encounter any challenges with your current one.

  • It also allows you the freedom to redesign products as many times as you like, ensuring they always satisfy customers’ current needs.

**Important note: **It’s not uncommon for some suppliers to steal designs from private label companies and sell similar ideas to other stores. That’s whychoosing a trustworthy supplier and having clear agreements are crucial to your success.

Finally, having your own brand of products means you’re the only choice in each Amazon listing. 

When there aren’t any other sellers of your product, you gaincomplete ownership of the Buy Box.

For this reason, Amazon SEO is absolutely crucial for private label sellers.

Your listing needs to contain the right keywords to be found by the right customers. Check out our guide to Amazon SEO to learn more.

Challenges of running a private label Amazon business

Every business model comes with challenges.

Amazon private label is no different. In fact, 61% of private label sellers have reported spending more than $2,500 to get started.

This makes it one of the most expensive business models to get off the ground.

According to JungleScout, these are the greatest challenges that private label sellers face:

Don’t let these challenges scare you away from trying your hand at private label.

When you’re diving into the deep world of ecommerce, it’s always good to know what you’re up against.

How to create an Amazon private label business 

Starting your first private label store can be an intimidating task.

But if you follow the steps and trust the process, you’ll be up and running in no time.

Here’s how to sell private label products on Amazon.

1. Set your criteria for success

This step applies to every Amazon FBA business model.

Before you start selling, you should decide what success means to you.

This will give you a clear set of goals to strive towards and allow you to assess how well you’re doing every step of the way.

Things to consider when setting your success criteria:

  • Product sales per month.
  • Average order value.
  • Profit margins.
  • Average customer reviews for competitor products.
  • Product size and weight.
  • Availability of supply and seasonality.
  • Competition levels.
  • Restrictions, such as category type and other barriers to entry.
  • Customer retention.
  • Frequency of resupply (how often customers need to buy the product again).

Use milestones to measure progress so that you can keep setting higher goals as you attain different levels of success.

2. Find a private label product niche that customers are searching for

“An ecommerce niche is a smaller and more specific subsection of a larger market. The best ecommerce niches have untapped potential, target a highly specific buyer, and appeal to a much smaller audience.”

This step is critical, so you better take it seriously.

If you can’t find products that validate your success criteria, then you won’t be able to build a sustainable private label store. 

Niche products are your ticket to fast-tracked success as a seller. They offer less competition, cost less to get started, and help you connect with your customers and learn their needs.

Here are some quick tips for finding a lucrative Amazon private label niche:

  • Look for private label products to sell on amazon that meet your success criteria.

  • Use Google, social media, and even Amazon itself to research niche product ideas.

  • Consider packaging and preparation requirements (not just the purchase price and availability) when selecting your products.

  • Read negative reviews from other stores to see what their unsatisfied customers are craving.

Finally, don’t forget that Amazon has certain restrictions on what you can and can’t sell. Be sure to check these out before you invest in any potential private label product.

Learn more: For more on how to conduct Amazon FBA product research, try our in-depth guide on finding a profitable niche.

3. Source your private label product suppliers

Once you know what your niche is, it’s time to find your products.

We already mentioned that your ideal products should fit your success criteria.

Therefore, your ideal Amazon FBA private label manufacturer ought to be someone that can create products exactly how you want them.

But there’s more to it than that.

Here are some tips on sourcing suppliers for your Amazon private label business:

  • If sourcing from overseas, consider currency appreciation on top of shipping, labor, and material costs.
  • Prioritize reliability and product quality as well as cost.
  • Always negotiate terms with suppliers so that both companies are happy with the relationship.
  • Establish inventory volume and delivery times in advance to make sure everything runs smoothly when it’s time to sell.

Bonus tip: Once you’ve narrowed down your list of potential suppliers, test the quality of the products and efficiency of the manufacturers by ordering commercial samples. Don’t settle for a product or supplier until both have satisfied your criteria for success.

Learn more: How to Find and Manage Your Amazon FBA suppliers.

4. Build your Amazon private label brand

Branding is what sets a store apart from its competition.

Products are the reason people spend money. Your brand is the reason they spend it with you.

Your brand should encompass everything you do as a business.

It’s not just about logos and design.

The products you sell, how you speak to your customers, and the way you behave as a business all affect how people perceive your company.

A strong brand identity is one that speaks to your target audience.

Research how people communicate in your niche before making decisions about your branding.

When you’ve decided on how you will approach your branding, integrate it everywhere.

Make sure everything about your store screams, “This is who we are”, and that it aligns with the needs of your ideal customer.

5. List your private label products on Amazon

Before you can sell anything on Amazon, you’ll need to set up your Amazon store.

This involves creating an account, registering as private label, and applying your unique branding to each element of your Amazon channel.

Next up, it’s time to create your listings.

Be sure to optimize your listings so that customers can find them easily.

Amazon has built-in algorithms designed to help people find the exact products they need. To ensure they find yours, take time to learn about search engine optimization for Amazon.

This is what will make your products appear at the top of search results for your ideal customers.

If you’ve followed the steps above then congratulations - you should now have an active Amazon private label store.

Now let’s take it a step further.

Getting the most out of your private label Amazon store

We’ve given you the basics for getting started with Amazon private label.

But as any good seller should know, there’s always more that can be done to improve your ecommerce business.

Setting up a private label store is just the beginning.

Once business is in full swing, it’s time to form a sustainable Amazon private label strategy and think about new ways to grow your store.

If you haven’t downloaded it yet, our free guide to selling on Amazon in 2022 is the perfect resource for learning how to thrive as an Amazon seller in today’s market.

The best advice and insights for selling on Amazon this year

There’s a lot to know when it comes to selling on Amazon. In this guide, you’ll find expert tips and advice to make sure you start strong and stand out from the crowd.

Download our free guide

Ecommerce accounting is challenging, A2X makes it easy.

Discover how A2X can automatically take all of your accounting pain away.

Try A2X for Free

Are you ready to succeed with selling on Amazon FBA?

Download our free guide to selling on Amazon FBA in 2022 to learn about:

Amazon in 2022

An overview of the Amazon seller landscape and key changes.

Business models

The playbooks that different sellers use to succeed, so that you can select the right fit.

Selling fees

We break down what it costs to sell on Amazon and the fees at each step along the way.

Fulfillment options

Discover the ways that you can send products to your customer base.

Product research

How to find winning product opportunities to list on Amazon.

Creating your account

The steps to setting up your Amazon seller account.

Listing your products

How to get your products online and optimize them for success.

Attracting and retaining customers

Use these tips to find your audience and convert them on your offerings.

Automation and growth

Important automations and integrations to get your business ready for scaling up.

Where to learn more

Find more places that you can learn what's needed to enable your growth.