Selling Private Label: Best Practices for Amazon Sellers
Do you want to sell private label, but find yourself wondering where to start? Private label selling can be a great option for eCommerce merchants who want to deliver a quality product in a particular niche (or several niches), but a lot goes into getting ready. Amazon veteran and owner of Cascadia Product Testing Solutions Rachel Greer knows a thing or two about the risks and rewards associated with private label selling.
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Selling private label products on Amazon can be incredibly lucrative and rewarding, but knowing where to start can be difficult. As a merchant, it can be a great option for delivering high quality products in a particular niche — but it does come with risks.
In this webinar, Colleen Quattlebaum of eComEngine sits down with Rachel Greer, Amazon veteran and owner of Cascadia Product Testing Solutions, to discuss best practices for private label sellers. It’s an eye-opening discussion that you do not want to miss. In the meantime, here are some of the highlights.
Legal and Branding Risks
First things first, let’s talk about risk. “If you are private label, then you are legally liable for your products so you want to make sure that they meet requirements,” warns Greer. Before launching your branded products, you need to become extremely familiar with safety regulations in the United States and anywhere else you plan to sell.
Safety aside, you also don’t want to be selling anything that breaks after only a couple of uses. Remember, Amazon is a customer-focused company. If buyers are complaining about what you’re selling, it’s not going to go well. It’s essential, therefore, that you build and maintain a secure supply chain and sourcing strategy for your products.
The last thing you want is to finally make it through the effort of creating a private label only to have your business destroyed by negative reviews — or worse. Your number one priority should be to put customer satisfaction and safety above all else.
Private Label Product Testing: Know The Rules
Greer discussed the importance of understanding your overall obligations as a private label seller, as well as those that pertain to your particular selling category. Sometimes additional requirements may even be mandated by law. Don’t put your business in jeopardy by failing to be fully informed and compliant.
In most categories, product testing is the bare minimum. Yes, you could get a small business exemption from the U.S. Consumer Product Safety Commission (CPSC) to avoid some of the more onerous testing, but that won’t help you if your product is found to contain toxic amounts of lead.
For example, Greer said, “All children’s products must be tested by a third-party accredited laboratory. It is not possible to test those in-house. It is not possible to just accept what someone else says. They must be tested and certified by you, the private label.” The costs associated with this testing vary from product to product, but it’s well worth it to protect your investment, your brand and your customers.
What To Know About Inspections
When you’re just starting out as a private label seller, you need to be very involved in the inspection and auditing process. It’s essential that you personally ensure the quality of the items you’re selling, even if it means repackaging and sending them to Amazon yourself. As you grow, though, this won’t be sustainable.
“It’s probably not cost-effective to travel to China every time you want to buy something from your manufacturer,” said Greer. Instead, many private label sellers send a third-party inspector who will go through a checklist and provide a full report, including pictures.
According to Greer, one major benefit of having someone actually go to the facility is that the manufacturer can actually “make the fixes right there. Then, you won’t have to take responsibility for the package or shipment until it meets your specifications.”
That can be a crucial factor because, if you’re importing, you’ll likely be working with Freight On Board (FOB) suppliers. This means that you’re responsible for the goods as soon as they crosses the bow of the ship. When you do the inspection prior to it going to the ship, you won’t have to take possession until you are comfortable with the quality of the product.
The goal of auditing is to build up repeat orders with the same supplier. “A quality audit will give you the assurance that a supplier can actually provide you with the quality of goods you expect,” advised Greer. During an audit, factors such as the consistency of production, employee training and turnover rate will be evaluated.
“In some parts of China, the turnover rate annually is over 40 percent,” said Greer. This could result in a completely different level of quality year over year unless the supplier has a very consistent procedure for training and maintaining the quality of goods. That’s why you absolutely need to perform quality audits regularly.
Social Responsibility Audits
As a private label seller, you’ll want to find suppliers that can make quality items at a cost that allows you to maintain and grow healthy margins. At the same time, you don’t want to benefit off of the suffering of others. For this reason, social responsibility audits are a must.
You want a well-made quilt, but you don’t want it made by the hands of a young child or underpaid workforce. You also don’t want to discover that your products are being manufactured in an unsafe facility where the lives of workers are put at risk every day.
As more and more consumers pay attention to labels and question the ethics associated with manufacturing in some countries, you don’t want to be inadvertently supporting inhumane conditions and practices. Have your supplier audited so you can clearly state that your products have been responsibly sourced.
There’s so much fantastic information in this webinar. Rachel Greer is an excellent resource for Amazon sellers, so if you’re considering becoming a private label seller, take the time to listen to what she has to say. You won’t regret it!
Originally published on November 2, 2015, updated November 21, 2019
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.