On amazon, there are two types of models.
1. FBA (Fulfilment by Amazon) Wholesale
2. FBA (Fulfilment by Amazon) Private Label
Before explaining it further I want you to understand few things:
1. Buy Box: The Buy Box refers to the white box on the right side of the Amazon product
detail page, where customers can add items for purchase to their cart. If there are more
than one seller of a product on one ASIN then buy box will be share among sellers.
Whoever has the buy box will get the orders.)
2. Amazon buy box eligibility: Who can win the buy box?
To be eligible for the Amazon buy box, you must be a subscription-based Professional Seller who meets
Amazon’s buy box criteria and have products that are buy box eligible.
Amazon buy box factors include:
• Order defect rate
• Performance metrics
• Customer service quality
• Length of time on Amazon
AMAZON FBA PRIVATE LABEL
Advantages of Amazon FBA Private Label:
• You automatically own the Buy Box, as you do not have direct competition
on your ASIN. No one will be able to sell your product without your
permission.
• The products are manufactured by a third-party manufacturer and sold
under your own brand name.
• The manufacturer has no rights over the label or brand and you get to
decide on the product design, your brand logo, labeling, packaging, and all
other creative elements.
• The profit margins can be extremely lucrative if you find an untapped
product niche with consumer demand.
• As long as you have the cash flow, you can add additional products to your
private label line and are not limited by a certain cap on available products
the way you might be with manufacturers via a wholesale model.
• After selling for 1 to 2 years, you can sale your whole business. Formula is
“monthly profit x 36 (Months) = you will get lump sum amount” and this is
not illegal by any means.
Disadvantages of Amazon FBA Private Label:
• A significant amount of upfront capital is required with initial orders and
generally, you will want to allocate spend to advertise your private label
products to drive discovery.
• The time commitment involved with creating Amazon ASINs, product detail
pages, and branding elements such as Amazon Stores is extensive.
• There is likely more of a lead time with manufacturing and importing
private label products than selling wholesale products, particularly if you
are sourcing from overseas.
• The onus is on you to generate positive ratings and reviews, which can, in
turn, drive shopper loyalty, fuel the flywheel, and aid organic rankings.
FBA WHOLESALE
Advantages of FBA Wholesale:
1. You do not need to create new ASINs or product detail pages, which are
two standard, brand-building practices when establishing your own private
label products.
2. There is a low barrier to entry, as your most important focus is finding
reliable manufacturers with expansive catalogs who are willing to let you
sell their products on Amazon.
3. You may be able to purchase lower unit quantities with wholesale orders
than your first production run for a private label product with a large
minimum order requirement (MOQ).
4. There is a chance the lead time is less than that of private label products,
particularly if you are sourcing your private label SKUs from overseas.
Disadvantages of FBA Wholesale:
1. There will be fierce competition on your listings, given that you will be vying
for Buy Box share. Because you are not the only one who will be selling that
product.
2. You need to place a high-volume order with established brand
manufacturers and owners and, in turn, sell their products to consumers on
Amazon.
3. You will need to obtain a wholesale license, which is required in most states
to legally resell products in a wholesale manner. Amazon also require this
reselling certificate.
