Imagine this: You have been selling one private label product on Amazon for three months and making around $100 profit every day. Now, you have $6000 saved up.
You want to sell more products but are unsure whether to sell more private-label products or start selling wholesale products. You want your Amazon business to grow quickly. What do you think is the best way forward?
In this blog, we’ll explain the key differences between Amazon private label and wholesale to help you decide which approach is best.
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TL;DR - Amazon Private Label vs. Wholesale
Private label and wholesale have fundamentally different business models when it comes to selling on Amazon:
- With private labels, you create your own brand and products to sell on Amazon. You control everything—the design, packaging, etc. Research, manufacturing, and marketing require more upfront time and money. However, it works if you want to own an asset and grow a business long-term.
- Wholesale means buying popular brand-name products in bulk and reselling them on Amazon. You skip making your own stuff and sell proven winners instead. This starts faster and costs less. Wholesale is suitable for beginners who want a simpler start on Amazon.
Whichever path you choose, one common challenge you’ll face is overlooked reimbursements that undermine profits. With so many complex FBA transactions occurring daily, discrepancies inevitably happen.
At Getida, we offer an effortless way to reveal and recover overlooked FBA refunds so you can reinvest in your business. Even better, your first $400 in reimbursements is completely free! Sign up now for an audit review and see the opportunity yourself!
What is Amazon Private Label?
Private label products are manufactured by one company but branded and sold by another retailer under their own brand name.
For example, Amazon Basics batteries are produced by manufacturers but packaged and marketed exclusively by Amazon. It is also one of the most successful private-label brands on Amazon.
As an Amazon private label seller, you create unique products and leverage Amazon’s platform and infrastructure to sell them. This allows full control over branding, customization, pricing, and positioning.
It also gives you a future exit opportunity —to be acquired by a bigger company or even Amazon itself. For instance, Jamie Siminoff (a popular ‘Shark Tank’ reject) sold his video doorbell company, Ring, to Amazon in 2018 for $1 billion!
What is an Example of a Private-Label Brand?
Besides AmazonBasics, prominent examples include Pinzon (Amazon’s private label home goods brand), Anker (electronics accessories), and Native Deodorant (natural deodorants).
Many major retailers utilize private labels, sourcing goods externally but marketing them as their exclusive brands.
Amazon Private Label Requirements
To sell private-label products on Amazon, you’ll need the following:
- Product research and development: Identify niche markets and create differentiated products. Conduct testing to perfect quality and features.
- Brand identity: Design professional branding assets like logos, packaging, etc. Enroll in the Amazon Brand Registry.
- Sourced inventory: Find reliable manufacturers to produce goods at scale based on your specifications.
- Amazon product listings: Create optimized listings with compelling photos, descriptions, and keywords.
- Marketing: Promote products through Amazon PPC, email lists, and social media to drive visibility.
It takes significant upfront investment but allows full control to build an asset.
Private Label Products to Sell on Amazon
Almost any consumer product is fair game for private labels, but some popular categories include:
- Kitchenware
- Pet supplies
- Beauty and personal care
- Home and garden
- Sports and fitness accessories
- Baby products
Focus on improving existing product designs or tapping unserved niche markets.
What is Amazon FBA Wholesale?
Amazon Wholesale means purchasing products in bulk from brands or manufacturers to resell on Amazon. For example, you could buy popular electronics from Samsung or kitchenware from Calphalon to offer on Amazon.
It leverages existing product demand rather than developing new goods. You buy authentic branded inventory wholesale and have it shipped to Amazon’s warehouses. Then, you sell it on Amazon through Fulfillment by Amazon (FBA).
This provides easy access to Amazon’s marketplace.
Amazon Wholesale Account Requirements
To set up an Amazon wholesale business, you’ll likely need:
- Business entity registration
- Reseller certificate or sales tax exemption form
- EIN or employer tax ID number
Note that Amazon does not require specific data and documentation to sell wholesale. Brands often require reseller permits and tax IDs to open wholesale accounts.
These credentials help show legitimate reselling intent when contacting brands. Requirements can vary based on location and suppliers.
How to Wholesale on Amazon
Follow these key steps:
- Find in-demand products sourced from established brands.
- Find manufacturers and distributors to source inventory.
- Negotiate for best bulk pricing and minimums.
- List competitive offers on existing Amazon product pages (or create a new listing with competitive pricing offered.).
- Leverage Amazon’s FBA for storage, shipping, and customer service.
It’s a faster startup but offers less control compared to private labels.
Amazon Wholesale Products to Sell on Amazon
Almost any branded consumer product can be sold wholesale.
Some examples include:
- Electronics – smartphones, laptops, appliances, etc.
- Home & kitchen – cookware, small appliances, home decor
- Toys & games – board games, LEGO sets, action figures
- Health & beauty – makeup, hair care, skincare
- Books, DVDs, music
Ensure solid existing demand and reasonable wholesale pricing.
Is Amazon Wholesale Profitable?
Yes, Amazon wholesale can be quite lucrative. According to Jungle Scout Amazon seller report, 44% of wholesale sellers and SMBs on Amazon see profit margins higher than 15%. The top 13% of sellers see a 26-50% profit margin!
However, competitive pricing impacts margins, so focus on operational efficiency and sales volume. Proper product selection and purchasing is key.
Is Amazon Wholesale Worth it?
For the right sellers, absolutely. Wholesale provides an easy launch point from which to begin selling on Amazon quickly, with lower upfront risks and costs compared to private labels.
It leverages existing product awareness and Amazon infrastructure. Just know competition can be fierce, limiting control. Also, limitations exist around branding and long-term value.
Relevant Characteristics: Amazon Private Label vs. Wholesale
When looking at private label versus wholesale, there are some significant differences:
- Product Ownership
- Private Label: Full ownership of your exclusive brand
- Wholesale: Non-exclusive distribution rights only
- Branding
- Private Label: 100% control over brand identity and assets
- Wholesale: Dictated by suppliers; limited input
- Profit Margins
- Private Label: Higher margins through controlled pricing and costs
- Wholesale: Lower margins driven down by competition
- Product Development
- Private Label: Create new products or improve existing ones
- Wholesale: No involvement; rely on available inventory
- Supplier Relationship
- Private Label: Direct coordination for custom manufacturing
- Wholesale: Buying through distributors at a markup
- Marketing Control
- Private Label: Owned and exclusive marketing channels
- Wholesale: Shared listings mean split ad visibility
- Inventory Risk
- Private Label: Higher risk as you must sell self-branded goods
- Wholesale: Lower risk as merchandise is already established
- Customization
- Private Label: Fully customize and differentiate products
- Wholesale: Limited to available wholesale inventory
- Exclusivity
- Private Label: 100% exclusive SKUs under your brand
- Wholesale: Compete with other resellers
- Intellectual Property
- Private Label: Own all IP rights over branded goods
- Wholesale: Limited licenses to distribute established IP
- Quality Control
- Private Label: Full oversight over production standards
- Wholesale: Dependent on supplier consistency
- Sales Strategy
- Private Label: Must build organic sales and rank brands
- Wholesale: Benefit from existing traffic and conversions
Running a business on Amazon can get hectic. It’s easy to miss certain FBA reimbursements when you’re focused on growth and operations.
Small discrepancies like damaged inventory or fee overcharges add up quickly. Before you know it, thousands have slipped through the cracks, hurting your bottom line!
But it doesn’t have to be that way!
At Getida, our expert auditors use cutting-edge technology to hunt down every recoverable reimbursement, securing over 85% of eligible claims. Our dedicated specialists handle the tedious data and documentation, as well as the claims process, saving you major time and headaches.
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Similarities and Differences
While private label and wholesale have some distinct differences, they also share a few core similarities in their approaches to selling on Amazon.
Differences: Amazon Private Label and Amazon Wholesale
The core differences come down to control, customization, and investment risk.
- With private labels, you create unique branded assets entirely under your ownership. However, it requires assuming the risks of new product development and introduction.
- Wholesale offers quicker monetization by riding the coattails of established brands. However, you must operate within the constraints of available inventory and supplier relationships (with narrow margins!).
Ultimately, private label favors customization, while wholesale provides a faster implementation.
Similarities: Amazon Wholesale and Amazon Private Label
That said, some commonalities exist:
- Both business models involve identifying product opportunities, sourcing inventory, listing items strategically on Amazon, and expanding one’s catalog over time.
- They also must grapple with challenges like proper inventory management, protecting profit margins, and balancing Amazon advertising.
So, some core selling skills and knowledge can be applied across models. The amount of control, risk, and customization you want leads to different strategies.
What About Amazon White Label?
A sibling model to consider is the Amazon white label. It is when a product is manufactured by one company and then packaged and sold by other companies under their brand.
White Label Pros:
- Lower R&D investment than private label
- Faster time-to-market than new product launches
- More control than wholesale distribution
White Label Cons:
- Less brand exclusivity than private label
- More competition than pioneering new products
- Requires some custom branding investment
So, the white label strikes a middle ground. Assess if existing products could suit your goals with light re-branding rather than intensive private labeling or plain wholesale reselling.
White Label vs. Private Label
White label is different from private labeling:
- White-label products are generic with standard packaging that you can brand as your own.
- Private label products are manufactured specifically for one brand with custom branding and packaging.
So, white labeling provides a starting product that you can then convert into a private label by adding your branding and customization.
Bottom Line - Amazon FBA Wholesale vs. Private Label
We hope this helps you decide between private label and wholesale.
- Wholesale may be the best way to start if you have a small budget and limited time.
- But if you can invest $3-5k and time to build an Amazon business that will fund your retirement in 5-10 years, private label has more potential!
Whichever path you choose, avoid leaving money on the table. With inventory discrepancies inevitably occurring at Amazon’s vast fulfillment centers, you must stay on top of claiming reimbursements.
However, DIY auditing can recover only a fraction of owed refunds. As a trusted partner for growing businesses, we at Getida recover 166% more by handling the entire audit and claim process for you.
Sign up now, and we’ll waive the fee on your first $400 in claims.
Frequently Asked Questions (FAQs)
If you still have questions about key differences between Amazon’s private label and wholesale models, check out these common questions:
What Are the Marketing Strategies for Amazon Private Label Products?
Effective marketing strategies for Amazon private label products include:
- PPC/sponsored ads for keyword visibility
- Compelling visual content – photos, videos
- Optimized copy, SEO, and keywords
- Social media marketing, email lists
- Product sampling, giveaways, influencers
- External traffic drivers – own site, content
It typically takes consistent, multi-channel marketing to drive new brand recognition and adoption. Be prepared to invest time and budget into countering obscurity.
Which Model Offers Higher Profit Margins: Private Label or Wholesale?
Private-label products generally allow for higher profit margins because you have complete control over pricing and production costs.
Wholesale margins tend to be lower since you must buy goods at wholesale rates and then compete on price with other sellers.
Which Model Requires More Upfront Investment: Private Label or Wholesale?
Private labels have higher startup costs due to requirements like product research, sourcing, manufacturing, branding, listing creation, and marketing the new brand and products.
Wholesale has lower startup costs as you simply source and resell finished products based on arbitrage.
