"Build" Guide - how to Build your Private Label Business
How did you come to be selling on Amazon?
Working as a waiter! Not really. AL saw a video on PL on Amazon and that was it!
How come Private Label?
AL was taught only PL and that’s what he’s done. He only knows about wholesale from Will Tjernlund.
Do you sell only on amazon.com or also in the UK and/or Europe?
Currently in the USA. Everyone expands their business in their own way. AL has decided to focus on building off Amazon rather than expand Amazon internationally.
How do you find products?
The “Standard” answer: try to find things that you use. Walk around kitchen/dining room and when you see something that you use, you will able to ID with target demographic because you are in it! (About 2 products found this way). Makes figuring out Customer Avatar much less complex.
Then check the numbers to see if other people are making money with the product. If they check out, go deeper.
The “real answer”: Decide on a Category e.g. kitchen. Then look in the relevant dept at the shops, in your friend’s cupboard – become mindful and the universe will show you a product! [Then check the numbers]
Do you believe in staying in one Amazon category? Or do you pick each product on its own merits/just follow the numbers?
Start with product on own merits. Then plan to expand into the category with your brand. Then start thinking of the implications – what are complementary products?
How do you deal with the increased competition in the Private Label Amazon market( esp. USA)?
A lot of people look at the competition – there is a lot of “sky is falling” thinking!
The days you could trip over something to make $100K a month are over but that was always going to be short lived. Now it’s just levelling out.
BUT The idea it’s too saturated is silly. More people starting on Amazon leads to new products on Amazon which create new markets – also if you intro a new product, you’re the only seller!
You don’t sell a product and have an Amazon business; you have a physical prods biz and Amazon is just a channel.
Do you use other sales or marketing channels?
Took a while to learn that FBA is the most affordable fulfillment centre. AL spend 6 months looking for alternatives but Amazon is the best!
The next was finding companies to connect Amazon FBA to other channels. AL has put products on Jet – long approval process – eBay templates are being built. Next month going on Sears, Rakatan. Shopify site is nearly up.
Tell us more about a “Customer Avatar”?
If you sell anything, you always have an ideal customer/target demographic. Person most likely to see, love and buy your product. Focus on them and don’t go broad – you will miss easily sales if your message is too diluted. Focus language- when you’re writing bullets/description e.g. if you sell male enhancement, the language is men “he/him”etc. – refine that ever deeper the more you know your avatar.
“Ask” by Ryan Levesque (on Smart Passive Income podcast) uses surveys for this. Do you do this?
It’s hard to do this because Amazon’s customers are not your customers. But once you have an email list, it’s very powerful, yes. But until you have that, just pay attention to your data.
If you run FB ads, look at the demographics and over time build a picture.
Gender, age range etc. e.g. Baby market – AL started with idea of just mums but gradually got more specific.
Surveying your own audience/buyers really does give you amazing results.
Yes, it is very important who you’re hitting
[Andre Chaperon the email marketing “guru” is obsessed with Customer Avatar].
Dealing with increasing competition – from moderate to tough. How do you deal with this?
Before AL used to say: “Find a product and do it really well.” Now it’s: “He who has the most SKUs wins”. [SKU=Shelf Keeping Unit, i.e. a product line]
When you start out, “failing” may be that your listing is buried in page X. Once you get to the point where you know what you’re doing, “failure”=selling only 5 a day of a product.
But if you have 300 product lines doing 5 sales, that’s a living!
Having a fleshed out catalogue is great for your brand. if you approach wholesalers you’re better placed. there are many benefits. It’s a very capital intensive approach but all of Amazon products business is capital intensive so you just have to be very intelligent with your product choices of inventory and expansion.
How do you make intelligent choices i.e. use of capital?
Most people come in thinking “If I can make $8000 sales/mo at 45% margin i could quit my job.”
AL says: “Keep your job and reinvest your money for 5 years.”
With a traditional business, you would give it 5-10 years before you give up on it. So why not with Amazon?
It’s a tough sacrifice but if you reinvest everything repeatedly, you’ll really build out your cat and have more options. That and intelligently using credit. Business credit cards are building AL’s credit and opening new SKUs.
Where would you advise using credit and where avoid?
If you can afford to make 3X the minimum payment per month, then using a credit card to expand your brand is okay. So in the end, that won’t hurt your credit. What you do have is new inventory to make new money off. This is a strategy if you have couple of products doing pretty well.
If you’re starting out, it’s more of a risk. AL did max out 3 credit cards to start because he had no capital. It’s a personal choice. But it’s not a good idea to take out credit for a highly competitive product.
What sort of margin would you aim for in general?
Aim for 50-55%. It never works out that way because of competition and price wars. AL has an average across all SKUs of 36%. But the wiggle room is there now.
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