White-labeling is one of the best ways to earn more money in less time on Amazon. Discover how to white-label your first product and secure a competitive advantage over sellers on Amazon!
4 types of sellers on Amazon
- Buy a discounted product from a store (like Walmart) and sell it for a higher price on Amazon
- This is called "retail arbitrage"
- Sellers of their own custom or handmade products
- Established brands (like Kellogg's or Nike) selling their products
What is white-labeling?
A white-labeler buys a generic product from a factory, customizes it (if desired), and then pays to add their logo. This is a great way to create your own brand without spending a fortune!
There are 4 main reasons to white-label your products.
- Higher profit margins
- You are the only person selling your brand
- Better price stability
- Unlike resellers, you are not competing with other resellers, so there isn't a "race to the bottom price"
- Safe from Amazon's sudden policy changes ("E-commerce disaster strikes")
- These changes mostly affect resellers
- Saves time
- Instead of driving all over the city hunting for deals, you can stay home and click "order more inventory"
There are 5 main steps to creating your first branded product.
- Conduct product research
- Choose a product
- Create a logo
- Negotiate with manufacturers
- Place your order
White-labeling case study: My first experience
I will use my first experience to reveal the steps I took.
Step 1: Research products
Overall, this was my least favorite part! The amount of available products suffocated my enthusiasm.
I decided to write down 5 basic criteria to push me along:
- Something I myself would use
- Lightweight (cheap shipping)
- Not breakable (arrive intact)
- Low wholesale price
- High markup (at least 50% profit margin)
Step 2: Research manufacturers
Now that I had a product in mind, I need to find someone to make it.
I know one thing: I wanted to work with affordable, efficient, and quick manufacturers. This made China an easy choice. Though there are many options, Alibaba and Aliexpress are two of the best. If this is your first time, learn how to protect your money on Alibaba and find good suppliers.
Product:✓ Platform: ✓
Step 3: Create a logo
I don't know how to do this, so I used a freelancing website called Fiverr. For $5+, you can get a logo designed within 24 hours. I chose to use this Fiverr freelancer and bought the $10 option because it includes the vector file + gives you 2 possibilities to choose from.
Product:✓ Platform: ✓
Step 4: Negotiate with manufacturers
I messaged 8 manufacturers on Alibaba. They all sold the kind of product I wanted. I asked them 5 main questions:
- 1 - Do you ship to Amazon's warehouses?
- I use Amazon FBA; I don't sell from my house
- 2 - Can you handle logistics?
- I don't want to find my own shipping company in China
- 3 - Can you add my label to your product?
- The price is usually so cheap that I don't bother asking
- 4 - Can you send a sample for free? If not, can you refund the sample if I place an order later?
- If you want your label on the sample, they'll usually add an additional $20 fee
- Sadly, being charged $50 for a sample of a product that only costs $5-$10 is normal. This is because they always ship it express (expensive) and they only want serious wholesale buyers.
- 5 - What's your MOQ (minimum order quantity)?
- It's often less than stated and can be negotiated
Product:✓ Platform: ✓
Logo: ✓ Price: ✓
Step 5: Place my first order
After two weeks of research, I chose to purchase 300 units! ✓
- $8 per unit +
- $1.20 shipping per unit X
- 300 units =
Note: I did not request a sample of the completed product. I saw the unbranded sample and the factory sent a picture of the branded product. I simply didn't have the money for it.
Current status (June 27, 2017)
My first order should arrive at Amazon's warehouses sometime next month (July 2017)!
The biggest headache
You will learn a lot throughout the whole process. Honestly, the learning curve isn't nearly as steep as you think.
That said, there was one problem I ran up against again and again: sea vs. air shipping.
I started my company 5 months ago with $2,000. I've been placing small orders here and there to test the waters. I've been hesitant to place big orders, but know that it's necessary. Wholesale prices make the potential profit margins worth the risk!
At that time I still wanted to place a small order (50 units), but none of the manufacturers could find a logistics companies to handle my small shipment. They all said the same thing: "If you buy 50 units, we can only send it by air. It will be $15 per piece. But if you want to buy 300 units, we can send it by sea. Then it will only be $1.20 per piece." Whether true or not, this is the same response I received from 5 different factories.
In the end, I didn't care. I knew I wanted to place a large order, but was just scared that I'd screw up. I comforted myself, saying, "if worse comes worse, I can make up the loss by working a minimum wage job for 2 months."
Learn from my mistakes: read more about how to import your products!
Did I mess up? Or will I succeed in my first experience? Ultimately, only time will tell. Sign up for a free weekly newsletter or check back next month for an update!