Are you currently wondering the pros and cons of Amazon FBA wholesale vs. private label?
Many Amazon sellers are weighing their options and shifting gears today – so it’s vital to understand the major differences in each selling method. Now, keep in mind: they both work, and they both have their own upsides and downsides.
So if you’re looking for the ultimate comparison guide to sort through Amazon FBA private label and wholesale… you’ve come to the right place. Let’s dive right in!
Use this outline to skip to any section of this page:
- What’s the difference between Amazon wholesale and private label?
- Amazon Wholesale: Pros
- Amazon Wholesale: Cons
- Amazon Private Label: Pros
- Amazon Private Label: Cons
- Which is better: wholesale or private label?
What’s the difference between Amazon wholesale and private label?
When it comes to Amazon, there are two main ways to sell products: through wholesale and private label.
Wholesale selling involves partnering with a manufacturer who will sell their products to you. Once you purchase them and ship them to Amazon, you become a seller for an already-existing ASIN and listing – and you’re responsible for handling the remaining steps in the selling process.
Private labeling, on the other hand, involves creating your own unique product that’s sold exclusively on your own, brand new listings. These are products that are created by a manufacturer, but sold under a different name (which you get to choose).
This could be a different name owned by the brand, or a different company altogether – it’s your choice in most cases.
For example, an Amazon private label product might be a shirt that’s made by Amazon, but sold under a different name like “Anvil.” Or, you might source a private label product from a manufacturer called Hopko, but they allow you to engrave your own logo onto the product and sell it under your own brand name.
With private label products, brands don’t have to worry about other companies cutting corners or using lower-quality materials. Private label products can be helpful for sellers looking to expand their product lines without spending too much money on research and development – and you should check out these branding tips to increase Amazon sales as well.
They also tend to be more affordable than similar products from other brands. This is because Amazon doesn’t have to pay any middlemen fees like retailers or distributors – which can be a major advantage for budget-minded shoppers looking for high-quality products.
Ultimately, which approach is right for you depends on your goals and what you’re willing to put in effort. If you’re looking for a quick and easy way to get started selling on Amazon, wholesale may be the best option. But if you want more control over the products you sell and are willing to put in the extra work, private labeling is a great choice.
Let’s discuss each option below:
Amazon Wholesale: Pros
Latch onto a trustworthy brand’s credibility
When you sell wholesale products, you’re selling brand name products. This can be seen as a good thing, as it increases your credibility and trustworthiness. After all, if people are buying products directly from the source, they can be sure that they’re getting the real thing and not a knockoff. By selling brand name products, you’re also establishing yourself as a reliable and trustworthy seller. This can be important when it comes to building long-term relationships with customers.
Already-established search volume
With wholesale, there is already a demand for these products from customers – which means that you won’t have to spend as much time and energy marketing them. In addition, you’ll be able to verify search volume with the many keyword search volume tools out there… so you’ll be able to generate traffic and sales immediately.
One of the best things about selling wholesale products is that you can find items that are popular and in high demand. This means that you’ll be able to sell a large amount of items quickly, and you won’t have the sizable risk of your products collecting dust on the shelves. Plus, since there is already a market for these products, you won’t have to spend as much time or money trying to create a brand new product line yourself.
Easier supplier/manufacturer relationship to handle
When you’re selling wholesale products, you’re dealing with quality manufacturers. This means you don’t have to worry about getting scammed or putting up with unreliable service from Alibaba suppliers – and you’re getting products that are made well and last long.
It also means that you can trust the quality of the products you’re selling. When you’re selling products online, it’s important to have trust from your customers. They need to know that they’re buying a good product that will meet their needs.
By selling wholesale products, you’re able to provide that trust. You can be sure that the products you’re selling are high-quality and will meet your customer’s needs – which is a key factor in building trust with your customers and helping them to feel confident in their purchase. When they know it’s a quality product from a reputable source, they’ll be more likely to come back to your store in the future as well.
Amazon Wholesale: Cons
Heavy competition
When selling wholesale products on Amazon, it is important to remember that there is a lot of competition. This is especially true if you are selling products that are popular and in high demand. In order to be successful, it is essential to have a strong marketing strategy and to focus on providing excellent customer service.
It is also important to price your products competitively. If you charge too much, customers will be likely to find a cheaper alternative elsewhere. However, if you price your products too low, you may not make as much profit as you would like.
Ultimately, it is up to you to decide what price point is best for your products. However, it is important to keep the competition in mind and to make sure that your prices are reasonable.
You must develop relationship with manufacturer
The process of selling wholesale products on Amazon requires approval from the manufacturer. In some cases, they may deny or reject you. This is because the manufacturer wants to ensure that their products are being sold through authorized resellers.
It’s important to build a good relationship with the manufacturer so that they will be more likely to approve your application. If you can provide them with a strong business case, they may be more likely to grant you approval.
Restrictions on marketing
When selling wholesale products on Amazon, you must adhere to the manufacturer’s terms and guidelines for marketing. This typically means that you cannot market the products in any way that competes with the manufacturer’s own marketing efforts. This includes using any of the manufacturer’s trademarks or copyrighted materials in your own marketing materials.
It’s important to remember that when selling wholesale products on Amazon, you are representing the manufacturer, not yourself. In order to maintain a good relationship with the manufacturer, be sure to carefully follow their guidelines for marketing their products
Amazon Private Label: Pros
Greater marketing & growth opportunities
One of the best things about selling private label products on Amazon is that you have complete control over your branding and marketing. You can create a unique brand identity that resonates with your target audience, and design targeted marketing campaigns that speak to their needs and interests.
In order to really maximize your potential when selling private label products on Amazon, you should capitalize on all the marketing and advertising opportunities available to you – especially when PPC advertising on Amazon is worth it.
This means creating a comprehensive marketing plan that includes online and offline marketing channels, as well as targeted advertising campaigns.
You also get to lean on Amazon’s massive authority to drive traffic to your store – whether it’s with SEO (outside of Amazon) or selling on social media. With over 300 million active users, Amazon is a powerful platform for reaching potential customers. By leveraging modern-day advertising tools and targeting capabilities, you can reach precisely the right audience for your products.
There are plenty of opportunities for success with private label. By taking advantage of all the marketing and advertising options available to you, you can create a winning strategy that drives sales and profits – beyond what you can achieve with wholesale.
More control & flexibility on the products
When you sell private label products on Amazon, you have more control and flexibility over the product and packaging design, marketing, and bundling. You can choose the products you want to sell, and create a unique brand that stands out from the competition.
With wholesale, the manufacturer requires you to stick within their rules and guidelines – but with private label, you can dictate the entire strategy yourself, since you own the brand and rights. Want to adjust packaging? You can do that. Want to change the colors and design? You can do that. It’s effectively your product now.
Opportunity for greater margins & scalability
When you sell private label products on Amazon, you have the opportunity to make greater profits than if you were to sell other brands’ products. Private label products are products that are made and sold by the same company.
This means that you have more control over the manufacturing and pricing of these products, giving you the ability to offer them at a lower price point and still make a profit.
In addition, private label products are easier to scale – because you can boost your conversion rate more than other types of products (with excellent marketing, copywriting and optimization on your listing). When you sell private label products on Amazon, you can enjoy all of these benefits and more.
Amazon Private Label: Cons
Start from scratch
There are a few other negatives to selling private label products on Amazon. First, you’ll have to start from scratch with zero brand recognition and zero reviews. This means you’ll need to put in a lot of hard work and marketing in order to get your products seen by potential buyers. Additionally, it can be difficult to stand out from the competition on Amazon, as there are tens of thousands of other sellers offering similar products.
Keep in mind – while your private label products might be unique, you’re likely still targeting the same keywords everyone else is. This means you need superior marketing skills and competitive insights, in order to ascend beyond the competition.
Must properly vet suppliers & product quality
When selling private label products on Amazon, you will need to find reliable suppliers. However, this can be difficult as some suppliers offer low-quality products or even scam sellers. It is important to do your research before selecting a supplier and to be prepared to switch if necessary. By taking the time to find a good supplier, you can ensure that your products are high quality and that your customers are happy.
Greater time commitment & uphill battle
Another downside to selling private label products on Amazon? It takes a while to start generating sales, so it’s not the best option for sellers who are looking for a quick turnaround.
You’ll need to invest in good marketing and branding in order to differentiate your products from the competition – since nobody knows about your product from the start. Unless you’re willing to put in the extra work (along with executing a strong “go-to-market” strategy with effective product launch skills), it might not be worth selling private label products on Amazon.
Which is better: wholesale or private label?
There is no definitive answer when it comes to deciding whether wholesale or private label is better for selling on Amazon. However, let’s go through a final reminder on the key factors you need to remember:.
One key factor to consider is the amount of competition in your category.
If there are a lot of other sellers selling the same product as you, you may want to consider using a private label strategy. With a private label product, you can create a unique brand that will help you stand out from the competition. Additionally, by creating your own brand, you will be able to control the quality of your product and how it is marketed.
Consider how much money you want to spend on product development.
With a private label product, you will need to invest in developing a new product. This can be costly, but it may be worth it if you can find a unique angle or USP for your product. With a wholesale product, you can save money on development costs since you will be buying products that are already developed. However, you will need to compete with other sellers on price and may not have as much control over the quality of the product.
Ultimately, the best option for selling on Amazon depends on your specific business goals and the competitive landscape in your category. If you are looking to create a unique brand and have some money to invest in product development, then private labeling may be the better option for you. If you are looking for a less expensive option and are willing to compete on price, then wholesale may be a better choice.
