Amazon FBA Wholesale vs Private Label: Which One Is Right For You?

Amazon FBA Wholesale vs Private Label: Which One Is Right For You?
  • 2022 Sep 05
  • Mike Lahi
  • 0

Are you curious about the Amazon FBA wholesale vs private label debate? In this post, we’ll explore the pros and cons of both methods so you can decide which one is better for you. We’ll also provide some tips to help get you started. So, what are you waiting for? Let’s get started!

What Is Amazon FBA Wholesale?

Amazon wholesale FBA is a program that allows Amazon sellers to source products from wholesalers and has those products fulfilled by Amazon. Amazon takes the best care of storage, shipping, and customer service for the products, so the seller only needs to worry about sourcing products and generating sales. Amazon’s vast customer base and world-class fulfillment network make it an appealing option for sellers looking to scale their businesses. 

And because Amazon charges fees based on the size and weight of the products being fulfilled, it’s generally more cost-effective to use Amazon’s fulfillment services for larger or heavier products. If you’re selling smaller items, you may be able to save money by fulfilling orders yourself. But if you’re selling products that require Amazon’s fulfillment expertise, then Amazon wholesale FBA is definitely worth considering.

How Does Amazon Wholesale FBA Work?

Under the program, Amazon acts as a middleman between the business and the customer, taking care of storage, shipping, and customer service. This arrangement can benefit businesses that don’t want to deal with the hassle of setting up their own eCommerce platform. However, it’s important to note that Amazon does charge fees for its services. So businesses need to carefully consider whether the wholesale FBA program is right for them. Amazon wholesale FBA can be a great way to get your products in front of Amazon’s massive customer base. But you need to weigh the costs and benefits to decide if it’s right for your business.

amazon fba wholesale vs private label

What Is Amazon Private Label?

On an Amazon private label business, you can only sell products that you legally own. To put it another way, a private label company sells the product on Amazon under its own brand name. It could be products you manufacture or white label products purchased from a vendor.

As a private label retailer, you must brand the product before releasing it to the public. If you buy from a white label manufacturer, your supplier may share a contract with another private label company. You will not have to develop a whole new concept to sell products under your own label.

Private labeling is widely used by the world’s largest retailers, including Amazon sellers, Walmart, eBay, and Shopify.

How Do Amazon Private Label Brands Work?

In a nutshell, Amazon private labeling is when a manufacturer produces products specifically for sale under a retailer’s brand. For example, let’s say you want to sell your own brand of cosmetics on Amazon. You would find a manufacturer that manufactures cosmetics and ask them to produce a batch with your label. Then, you would ship the cosmetics to Amazon FBA warehouses or your own facility and then list them for sale on your Amazon store.

It’s really that simple! Of course, some more details are involved, such as ensuring that your product meets Amazon’s quality standards and getting it listed in their search results. But the basic process is pretty straightforward. If you’d like to learn more about how the whole process goes, tap on the link below to read our ultimate guide.

See Also: Amazon Private Label, Zero-To-Hero Guide for Beginners

What Is the Difference Between Amazon Private Label and Wholesale?

When it comes to Amazon businesses, there are two main types: wholesale and private label. Both can be highly profitable, but they differ in a few key ways.

Wholesale businesses involve buying branded products from manufacturers or distributors at a discount and then selling them on Amazon at a higher price. On the other hand, private label businesses involve creating your brand and having the products manufactured to your specifications.

One of the biggest differences between wholesale and private label businesses is the level of risk involved. The risk is relatively lower with a wholesale business because the product is already known. With a private label business, you’re taking on the risk of product research, manufacturing, and marketing your own products.

Another difference is the amount of control you have over your business. With a wholesale business, you’re largely at the mercy of the manufacturers or distributors you buy from. With a private label business, you have complete control over every aspect of your product, from design to pricing.

 Finally, private label businesses usually require a larger up-front investment than wholesale businesses. This is because you’ll need to cover the costs of product research, manufacturing, and marketing your Amazon product. However, if done correctly, a private label business can offer so much higher profit margins than a wholesale business. Ultimately, deciding which type of Amazon business to start comes down to personal preferences and risk tolerance. 

amazon fba wholesale vs private label

Benefits of Private Labeling on Amazon

Own Your Own Brand

Private labeling means you own the brand, unlike wholesale. It allows you to market, grow, and price products for maximum profit and sales.

Higher Profit Margin

Because you directly source from a manufacturer, your costs are lower than if you resold other brands’ products. Buying wholesale products from the brand owner or a vendor who marked up the price lowers your profit margin.

Full Control

Private label products require a new Amazon listing. You can easily change prices, images, copy, and keywords. Wholesalers sellers will have so much trouble doing any of those.

No Buy Box Competition

If you resell on Amazon, you must compete for the Buy Box. You won’t make the sale if you don’t win the customer’s Buy Box. But you’ll always be the only seller with a private label brand and own 100% of the Buy Box.

Competition

If you start as a private label seller on Amazon, nobody else can compete with you on your product details page. So you won’t have to worry about other sellers undercutting your listing and stealing your customers.

Benefits of Amazon Wholesale

Less Initial Investment

Developing a mid-level private label brand necessitates a sizable initial investment. Manufacturers require large orders, and to compete, you must keep the cost per product low. However, you will need a much lower initial investment to begin wholesaling on Amazon.

Lower Risks

Spending a significant amount of money on product launch and branding brings on a unique set of risks for Private label sellers. Because you don’t have to bet on product research, branding, launching a new product, and marketing it, Amazon FBA wholesale is much less risky.

Low Order Quantity Minimum

Private label manufacturers typically accept large order quantities, resulting in high storage and shipping costs. It also raises the risk of dead inventory for the company. However, Amazon wholesale businesses can accommodate much lower MOQs.

Amazon FBA Wholesale vs Private Label, Which One Is Right for You?

There’s no straight answer to the question of whether Amazon private label or wholesale is better for you. Both have their pros and cons, and it really depends on your individual business goals and needs.

With an Amazon private label brand, you have more control over your product, brand, and packaging. You can also customize your products to a certain extent, which can be helpful in standing out from the competition. On the downside, private labeling can be more expensive and time-consuming than wholesale, and it’s harder to start since you need to create your own product.

On the other hand, FBA Wholesale is generally less expensive and quicker to set up. However, you’ll have less control over your product and brand and sell a generic product that might be identical to your competitor’s. So it depends on what really matters to you. Wholesaling might be the better option if you’re looking for a quick and easy way to start selling on Amazon. But if you can invest some time and money upfront to get a much higher profit margin, private labeling could be the way to go.

Conclusion 

Private labeling is an excellent choice if you want more control over your product and brand. However, it can be more expensive and time-consuming than wholesale, so make sure you’re ready for that commitment. Wholesale FBA is a good option if you want to get started quickly and don’t mind selling other people’s products.

No matter which side is the winner of Amazon FBA Wholesale vs Private Label for you, using Eva will help maximize the profitability of your Amazon Business. Start Your Free Trial today and observe the magical impact of genuine AI on your sales and profit.

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