Three Ways to Sell Physical Products on Amazon
The question of "how to start selling on Amazon" is one that I am often asked. I have written many articles on how to sell on Amazon successfully, and in this article, I will be discussing the three best ways to sell physical products on Amazon.
My goal with this post is to show you the three ways to sell physical products on Amazon. After reading this post, I think you'll have enough information to decide if selling on Amazon is something you want to follow.
WHAT IS A PRIVATE LABEL?
The private label product, also called "private brand", is a unique product produced by a company but packaged and sold under the brand name of another company. Private labeling allows retailers to use contract manufacturers to produce items according to their specific requirements (quality, materials, design, etc.) without investing much capital to start their own line of products.
Although private label products are usually sold at a lower price than their branded brothers, some private brands are now positioning themselves as premium products, with the highest price to prove it.
For example, you can find a manufacturer that makes Car Tracker. After determining that the car trackers sell well on Amazon and that you can make a profit, you work with that manufacturer and come up with a name for your brand of auto trackers and maybe provide customized packaging designs for them to use. The manufacturer produces the same generic Car Tracker that they already manufacture, but they label it with your their brand name so that you can sell it as your own new product.
What Is Private Label Branding?
The private brand is when a product line or brand is available exclusively to customers of a precise store or chain of stores, instead of being sold publicly by the manufacturer through many different distributors and retailers. The retailer that offers this private label may or may not be the manufacturer.
Private label products are often manufactured by a third party and simply carry the retailer's brand label. The manufacturer's brands, on the other hand, are made and marked by the manufacturer, and the rest of the supply chain simply distributes it and puts it on the shelf for retail purchase and sale to end users.
Advantages of Private Labeling
Thanks to its many advantages, an increasing number of retailers are considering the possibility of using private label products as part of their product lines. This is why:
Greater control of production: depending on your contract with a manufacturer, you can have different degrees of control over the quality of the product, the ingredients, the materials and the design.
Control over prices: as a result of its influence on the manufacture of the product, you can determine the cost of the product and establish profitable margins.
Control over the brand: given that private label products will have their own brand; you will have the final say on how, when and where they will be marketed.
Staying agile: with low entry barriers and the ability to make decisions quickly, smaller retailers have the advantage of using private label products to respond to market trends and demands.
Increased customer loyalty: Successful private brand products can be a significant boost to customer loyalty and help increase brand awareness for the retailer.
Disadvantages of Private Labeling
While the disadvantages are few compared to the advantages, we should consider them too.
Competing against big names: even if you have full control over the brand and private label goods can help increase customer loyalty, competing against established brands can be difficult to achieve. On the one hand, your brand budget will not match the financial capabilities of large dogs. Then, there is the problem of limited availability, since your private label products can only be purchased in your store, while well-known brands are available everywhere.
The dependency of the manufacturer: as it is associated with a single manufacturer, it is exposed to financial risks if the manufacturer has problems and can not deliver the products on time or with a certain level.
SELLING ON AMAZON BY DROPSHIPPING
With the recent inclusion of the Amazon sales channel in Shopify, Shopify store owners can now sell on Amazon. In this section of dropshipping in Amazon of this article, you will learn what dropshipping is, how to start dropshipping in Amazon and the benefits of dropshipping in Amazon.
What is Dropshipping?
Dropshipping is simply the process of selling a product without carrying or storing the inventory or shipping the products. In particular, dropshippers set their own product prices. The manufacturer of the product is responsible for manufacturing the product, maintaining the inventory and sending the products to the customer when the Dropshipper makes the sales.
Advantages of Dropshipping on Amazon
MINIMIZE THE RISK
- The money does not need to be paid in advance to acquire the inventory, which means that if the business does not work, the only money you have lost is your subscription to Amazon if you are a Pro Seller.
- Test new products without risk. By adding new products to your list, the risk of not selling is always in the background. Performing product research of what your customers want to buy is complicated for some seller, so it is an advantage to be able to test the product without making a real investment.
- Your business is less vulnerable to loss of income as a result of changes in tastes or trends because there is no stored inventory.
- The lower volume niche products can be offered together with the best popular sellers.
- New products are less expensive and easier to launch because they do require little or no investment before they can be sold.
- The amount of products that are damaged during shipment is usually less when dropshipping is used since it reduces the number of times the product should change hands.
- Organizing your inventory and preparing it for delivery can often be a time-consuming nightmare. The use of a third party to send items saves handling, labeling, packaging, shipping, etc. This leaves you time to focus on growing your business in different areas.
- Generally, when a retailer wants to start selling a product, they must wait until all their stock has been shipped to start listing them on Amazon. After all, what is the meaning of offering an item for sale when in reality it can not be sold? The use of dropshipping means that when you decide you want a product on Amazon, you can listing them almost immediately.
- Having the ability to sell a broader range of products is always something that an Amazon Seller wish they can do and with dropshipping it is possible. You do not have to worry about the different colors or sizes and where they will be stored, simply make a list on Amazon and your seller can take care of the rest.
- Your company could offer a wider variety of products than would be possible if you had to buy and store all the items you decided to sell.
- Products that are not practical to store (for example, large products, perishable products, etc.) are easier to sell.
Disadvantages Of Dropshipping on Amazon
PROCESSING YOUR ORDERS CAN BE DIFFICULT: Many companies that use dropshipping as a sales strategy work with multiple wholesalers, each of whom will have different requirements for processing, billing, and shipping orders. This can make things complicated. The gap amongst selling a product and then sending it can also take more time since there are many conversations and actions between you and your supplier that will take place before they are sent.
NOT HAVING ALL THE PRODUCT INFORMATION IS PROBLEMATIC: Since you never handle the products you're selling; you do not have a real idea of how they are. Since the manufacturer does not provide a sufficient description of the product that is of an adequate level, it can not answer the general questions of the customers about the dimensions, the weight, the ease of use of the products, etc., without constantly sending their questions to the supplier. The lack of information will leave noticeable gaps in Amazon Store, and this is not good for any company; Empty information can disappoint a client.
CUSTOMER SERVICE PROBLEMS: Dropshipping eliminates the responsibility for shipping but also removes much of the customer's experience of your control. There is no way to guarantee that a product has arrived on time or as described. When a customer calls to complain or ask questions, the resolution process slows down as he often does not have the necessary information at hand and the query or complaint will have to go through an external supplier before it can be resolved.
In addition, you never know about the availability of a product until a customer buys it and discovers that it has run out. This can be frustrating for customers who have the impression that they bought a product to find out that they did not. To eliminate this problem, an automated system that updates stock availability regularly during the day is preferable. You can also request an email or a phone call from the supplier if the stock has run out.
A LOT OF COMPETITION IS EVERYWHERE: Finding great dropshipping products means that they will generally come with competitors from other retailers in your sector. The margins of dropshipping products can be quite low since many manufacturers charge for compliance service, so they have little room to maneuver their prices to beat their competitors.
SELLING ON AMAZON WITH ONLINE ARBITRATION
Online arbitration follows the traditional commercial concept of buying at 'lower price and selling at a higher price'. Online Arbitration is exploiting price differences for the same product.
While the sale of items used to make profits online is a common practice that has been taking place for some time, online arbitration, on the other hand, is a relatively new paradigm in general.
What is Arbitrage
Arbitrage is the concurrent purchase and sale of securities, commodities or currencies in different markets or derivative forms to take advantage of the different prices for the same asset.
What is Online arbitration (OA)
Online Arbitration uses the tactics above with different e-commerce platforms. It means buying products at a lower price in any online market, preferably local or wholesale sites, and selling them for profit on websites like Amazon and eBay at a much higher price.
Advantages of Online Arbitration
Choose a niche category to specialize. Personally, I could also do it with comics, board games or action figures.
The higher price ranges should be between $20-200. Less than that and it is difficult to avoid platform fees. More than that and buyers scrutinize the condition/quality much more.
The product must have a decent demand. The easiest way to check this is to use an extension like Keepa that goes directly to the Amazon page or by checking the option "Listings sold" on eBay. Try and find items that sell at least five units per month.
Make sure you understand the condition and guidelines on the platforms. For example, any book that has writings or highlights on its pages is considered "good" or "acceptable" on Amazon. In addition, the difference between "as new" and "new" is marginal on many platforms. Sometimes, you can sell a product that is "like new" as "new."
Know your rates. Amazon has a 15% discount in almost all its categories and another $3 (or more depending on the weight) for FBA. I rarely sell on eBay, but I think their rates are a little less.
Do not forget the shipping costs. If you satisfy yourself, make sure you know how much it will cost to send things. Large items, however, have higher costs. And even if you send material to an Amazon dispatch center to offer it to FBA, there is the cost of shipping the products to Amazon (although this tends to be quite low thanks to Amazon's incredible UPS discounts).
Create a search list: Once you find a profitable product, mark it on a spreadsheet and track how quickly it was sold and how much profit you have earned by selling it. While apps like Keepa and CamelCamelCamel can help you determine demand, it's much better to have your own details, especially if you sell by condition alone.
Disadvantages of Amazon Arbitration
You are not really the owner of the product: Not owning the product or the brand you are selling can severely limit your profits. If you find a product that is a winner, and makes a lot of sales, you can not go and produce thousands of the same product to meet the additional demand. You are limited by your ability to obtain products from other retailers.
It requires a lot of work: Retail arbitration is a "practical" business. It does not mean that selling private labels is not, but the consistency and control over your own products in private labeling means that you can systematize, automate and outsource a lot of work. With arbitration, it is much more difficult to systematize things when it has no consistency with the product you are selling, where it comes from and what your margins will be.
The competitors are selling the same products: The arbitration sellers rely heavily on getting Buy Box, which is the box with the big "Add to cart" button on the right side of a listing. As a retail arbitrage seller, you must consider how many competitors are in the market.
Private Labeling: Remember, many drop loaders will allow you to supply your own labels so that customers do not even know that you are using a dropshipping method of sales instead of sending them your merchandise personally. The increase in suppliers and reduced shipping offers has made it easier than ever to start selling on Amazon.
Dropshipping: As you can see from the benefits and potential problems, choosing dropshipping is an option that should not be chosen without significant consideration. Issues that arise can often be resolved only with careful planning and implementation of contact between you and your supplier. With sufficient reflection, the disadvantages can be avoided.
Online Arbitrage: Choosing which product to sell is very important and try to perform adequate research on several websites. Check if the reviews are recent, decent and positive before placing an order and how much the sale and demand are to understand the demand and the online trend.
If you are already a seller on Amazon and eBay, you can get more profits in a short time with online arbitration and expand your business. As a business method still growing, online arbitrage has taken place in retail arbitrage and is growing faster.