How to Make Money on Amazon in 2023: Wholesale vs. Private Label Selling
Amazon is one of the biggest online marketplaces in the world, and it’s a great place to sell products. But how do you decide whether to sell wholesale or private label products?
Before selling anything on Amazon, it’s key to understand the difference between the Wholesale & Private Label strategies
What is Wholesale Selling?
Wholesale selling is when you buy products from a manufacturer, wholesaler or distributor in bulk & at a discount, you then sell them on Amazon at a markup.
Pros and Cons of Wholesale
Wholesale is a quick route into Amazon selling that has many upsides for sellers. With all the pros of using Wholesale, it comes with some cons.
Pros of Wholesale
- Quick. You can have orders delivered from wholesalers to you and have them selling on Amazon within a week.
- Cheap. There is a much lower investment involved as products are onshore, so you don’t need to order some of the massive MOQs.
- Abundance. You have access to thousands of wholesalers in the UK & worldwide. There are hundreds of thousands of products you can buy from wholesalers.
- Accessibility. No need to develop your own products or branding. You can simply buy products from wholesalers and start selling them on Amazon. This can save you a lot of time and money.
Cons of Wholesale
- Profit Margins. As you are buying at a discount against the RRP, after the various Amazon fees, you will have a lower profit margin.
- Branding. You have no control over the branding and quality of a product.
- Competition. You will not be the only seller on a listing. Due to the low barriers to entry, Wholesale listings can often have 10+ FBA sellers.
Looking to get started with Wholesale? Why not try one of our vetted Wholesale Mentors.
What is Private Label Selling?
Private label selling is when you create your own brand and products and then sell them on Amazon as the exclusive seller. This is a great option if you’re looking to build a brand and business on Amazon.
Pros and Cons of Private Label
Private Label is a more profitable route to selling on Amazon that has many upsides for sellers. With all the pros of using Private Label, it comes with some cons.
Pros of Private Label
- Profit. As you are buying directly from a manufacturer, you are buying the item as cheap as possible, so have the potential for huge margins.
- Control. You have an ability to test products quality & branding, giving you almost full control on what is received by the customer.
- Loyalty. By building a brand, you are able to build loyalty with returning customers.
- Competition. You are the only person allowed to sell on your listings, unless you allow other sellers that buy from you.
Cons of Private Label
- Investment. It will cost you a lot more to get started, with larger order quantities from China required.
- Time. It takes a longer to launch products, as you need to firstly identify products, have them manufactured with your branding & then shipped to you, which can take anywhere from 10 days to 90+.
- Complexity. There is a much larger room for error as developing & sourcing good products requires a lot more skill.
- Failure. Higher risk of a product being unprofitable due to it not being liked by the market.
Looking to get started with Private Label? Why not try one of our vetted Private Label Mentors.
How to Buy Products from China and Alibaba
If you’re interested in sourcing products from China, Alibaba is one of the largest online marketplaces where you can find manufacturers and suppliers. Here are some tips to keep in mind:
- Research your products thoroughly before placing an order. Look for suppliers with good ratings and reviews and request product samples to evaluate quality.
- Communicate clearly with your supplier and clarify all product details, including packaging, labeling, and shipping requirements.
- Negotiate price and terms upfront to ensure you get the best deal possible and minimize your risk.
- Be aware of the different trade terms and agreements involved in buying from China, such as EXW, FOB, and CIF, and understand the implications of each.
- Plan ahead for shipping and logistics, including customs clearance and any potential issues that may arise.
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What Should I Do?
Both Wholesale and Private Label selling can be successful on Amazon. Choosing the right approach for your business depends on your goals, resources, and experience. When sourcing products from China, it’s important to do your due diligence and work with reputable suppliers to ensure the best possible product quality and pricing. With the right strategy and execution, you can build a profitable Amazon business that generates revenue and helps you achieve your financial goals. I would suggest if you are a newbie to the E-Commerce world, start with Wholesale and work your way into Private Label.
Not sure where to go from here, book a free call in with our team to go over your goals for your FBA Business in 2023.