The choice to sell wholesale vs. private label comes down to your current investment options, resources available, and of course, your goals. Wholesaling can be a great way to get started, while Private Label offers the ability to create and scale your very own brand.
More recently, there has been a considerable boost in the wholesale world with the push of a wholesale course offered and sponsored by some of the biggest names in the Amazon space. We thought it would be an excellent opportunity to break down some of the pros and cons of wholesale vs. private label selling methods on Amazon.
In detail in our previous blogs, we’ve discussed what wholesale is and how you can effectively scale your wholesale business.
Private labeling refers to products that are manufactured by a third-party and sold under a brand name.
When you choose to create a private label brand, you are essentially manufacturing products under your specified brand name. More and more sellers focus their private label businesses on the creation and growth of brands instead of selling individual and unrelated branded products.
As an Amazon seller, performing extensive product research will help you figure out which products are selling on the platform.
Product research is one of the most critical components of the Private Label process. Without the right products, a seller can face a saturated market and end up losing thousands of dollars in inventory and start-up costs.
Private label sellers must think with innovation and creativity in order to find the best products to sell. Here at SmartScout, we offer the tools to do just that! With the most extensive catalog of products found in any software, SmartScout ensures success in finding winning products!
Once a product is selected, the general rule of thumb is product differentiation. This means you take the existing product, find gaps in the market, and make your product better than the competition. By doing so, opportunity can exist to dominate that specific niche and grow a fully functioning brand.
Using a water bottle as an example, we can see just how that’s done. Perhaps your product research showed a high demand for this product but with a unique identifier such as a spill-proof lid. You then choose to manufacture this unique water bottle and sell it under your newly formulated brand. (No, we do not suggest selling water bottles!)
It sounds like a great option, doesn’t it?
Private Labelling isn’t for the faint of heart, though, and here’s why:
Wholesaling means buying products in bulk at wholesale pricing and selling those same products at retail prices.
People who chose to sell in the wholesale model understand that one of the biggest challenges is finding brands and distributors to work with. As a newer wholesaler, this can be a determining factor for your business’s long-term success. Coupled with the cash flow required to scale, wholesale may not be for everyone.
It comes down to personal preference. As you see from this article, there are benefits of both Wholesale and Private Label. If you’re looking to build a brand from scratch, then Private Label is the best route. That being said, if you have little to no experience in Amazon and would like a faster launch without the necessity of brand building, the wholesale model could suit you nicely!
Whichever route you choose, be sure to do your research and gain as much insight as possible before making your decision. It’s a good idea to perform market research, number-crunching, and focus attention on learning before you begin.
While there may be challenges selling on Amazon, as we have stated many times before, there is no better time than now to get started!
If you’re not new to wholesaling and you are looking for the best brands and products, let us help you! SmartScout offers the most extensiveAmazon brand and product finder ever made! Sign up here for your FREE 7-day trial!