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Starting a private label business in 2020


As any astute reader may notice, it’s been a long-ass time since I updated my blog, this is mostly a result of a second child and focusing energy on print on demand and client work (I even made a whole new site dedicated to print on demand and Etsy right here : www.stayathomeseller.com)

But, all this doesn’t mean I’ve been resting on my Amazon laurels, quite the opposite in fact. These days, I focus my amazon time on helping clients and brands, mostly with copywriting listings and ppc, but I’m still there in the amazon trenches and boy oh boy, how the game has changed.

So, without any more waffle, here are my thoughts, make of them what you will.

The golden age has passed

For the past 4 years, I have been hearing some version of the question ‘is it too late to start an amazon business in XXX’, and you know what, even when I started, I thought the US was looking a bit saturated.

But, in reality, the best time to plant an (Amazon) tree was probably 7 years ago – probably with ASM 1 before Amazon became the darling of scammers and fake gurus the world over.

If you are starting now, or want to start now, the truth is, it has never been more difficult or more expensive. I’m not saying impossible of course, but it was so, so much easier before.

Those who got started earlier and managed to launch a few decent-selling products will have an accumulative advantage that a new seller, for the most part, can’t compete with, starting with private label in 2020 and beyond, you’re looking at major consolidation of the market.

Your competitors are now from all over the world and some of them have very deep pockets, people in China are bribing Amazon employees for direct access to data and a cottage industry has popped up around destroying the business of competitors.

https://www.theverge.com/2018/12/19/18140799/amazon-marketplace-scams-seller-court-appeal-reinstatement

This is a fantastic article and I highly recommend you read it

Fun Fact, Amazon as a cottage industry is also totally saturated

Savor the delicious irony because I am also a service provider in this space and I’ve seen it change and morph alongside the Amazon selling opportunity.

But there’s also consolidation in the software & service side of the business and each software company, like JS or Viral Launch, offers more and more services, from PPC management to listing copywriting.

There’s like one million Jungle Scout clones and a load of the software makers also offer paid training and services. In fact, one of the reasons I stopped working with smaller PL sellers is because, basically, I got put out of business.

But think about it, how many versions of a ‘product database’ software have we seen? Most are worthless copies, but people are still trying to get rich on amazon software for sellers and that ship has passed a long time ago!

This is why it’s harder now

Back in the day, you could launch on amazon and get your first 15 reviews very easily – you didn’t have to do all of the brand building, pre-launching, post launching, front and back end funnels, e-mails and yadadadada.

This of course was one of the main appeals of the amazon business model, this is how the hype machine started.

Of course, you could still do these things and even back then I was using Facebook groups and list building pre-launch, although I would still also launch products ‘the lazy way’.

But generally, it was like walking into a playground and fighting toddlers, nobody was optimizing properly, nobody was doing good keyword research, but now, the playground is full of jacked 18-year-olds that know MMA.

FACT: Amazon now wants brands

What this means is, now, if you really want to do something on amazon, you need brand registry, which involves getting a TM registered (time and money) and a shit ton of other hoops.

Now there are advantages to being brand registered, such as ECB content, enhanced features etc, but it’s no good if you have no proof of concept and you’re testing products.

Sure, you can still sell without brand registry, but with the competition making nice brand stores and enhanced listings, you will be hard pushed to stand out.

Scott Volker, who rose to guru status of the back of his Amazing Seller Podcast has now rebranded himself as, you guessed it,’ a brand-building guy’, which is fair enough because how many podcasts can you make just about selling on amazon?

The point is, Amazon is leaning towards brands.

I was going to build a brand anyway.

Building a brand isn’t just slapping your own sticker on shit and making changes to products. Needing new molds or even just having your own branded products, means you have much bigger MOQs and more risk.

This is all fine, but it means that the risk level is higher and the opportunity is nowhere near as accessible as it was when I started when you could potentially build something (then scale after proof of concept).

Of course, this still won’t stop newbs binge-watching sugar-coated trash youtube videos from fake gurus and launching some wack silicone kitchen spatula and mistake packaging with a logo designed on ‘Fiverr’ for a ‘brand’.

Getting reviews is f***ing hard as shit

Reviews are a big part of converting and being competitive and getting this is very hard.

Back in the day, it was so easy! We had review groups and nice software for issuing coupons.

Then amazon banned it and implemented its own inferior version (Vine) which they charge us for.

Then amazon made doing giveaways and sales a PAID EXTRA. Now, you have to actually pay amazon a flat fee to even run a sale which you will lose money on and pay amazon FBA fees on (all to help your rank).

It’s outrageous.

Now, to get reviews, you have to be extra savvy and use things like inserts + free gift people get by scanning a code then put them in a mani chatbot sequence (I was always an advocate of the packing insert, but insert + chatbot + free downloadable is solid).

Or you can go black hat and pay for reviews (made up of seller farms that buy a product, you reimburse them and you pay an extra 5 bucks per review).

And while we all want to be as white hat as possible, don’t kid yourself if you think everyone is playing on an even field.

List a new product on amazon and tell me how fast those reviews come in – it’s a nightmare and, like it or not, people don’t want to buy 0-star products, they will go right to the competition unless you have a stand-out product, are highly differentiated or have a brand.

As a new seller, do you tick any of those boxes? If not, you have to be honest with yourself and ask the question ‘why would anyone pick my product?’

Amazon are always changing things, even listing rules

I still write a lot of listing so see a lot of this, but recently they’ve started rejecting listing that mention amazon (best on Amazon), listings that mention money back guarantees, shipping speed, comparisons (better than the other Xs on amazon ).

I’ve seen some listings supressed for something as innocuous as using the word ‘gift’.

The point is, being aggressive and persuasive with copy has even gotten harder.

So what can a new seller do?

As I’ve been saying for years, the key to success is by bundling or differentiation (since by default you won’t have a brand you can leverage).

So when you do your research, search the negative reviews and find what people complain about – then improve that. The downside here is that you will probably need a custom mold (if you’re China sourcing) and that will drive up the MOQ – but the upside is you will have a unique and improved product.

Now granted, once your supplier makes that mold, other sellers will also start selling the improved version, but you have a little head start that you can try to capitalize on.

Your other option is bundling – Amazon don’t like bundles, but I always like bringing things from different factories, consolidating in China, and shipping in that way (different product types because otherwise if it’s that easy to source from one supplier, then you don’t really have any competitive advantage as others can do the same thing easily. We want some barriers).

And of course, you can sea ship massive heavy items that private label sellers don’t touch, again, the downside being your risk leverage on an untested expensive item is high AF and you need to have a much bigger bankroll. But the upside, less competition, and smaller MOQs.

I still think ‘build and get the hell off Amazon’

Each product will typically have a finite lifespan and, these days, you should be looking to build off Amazon anyway, get yourself a brand store, a Shopify store, etc, because you should never, ever have all your business leveraged on Amazon. It can take one suspension to end everything.

I’ve seen million dollar sellers with the biggest balls in the world get bitch slapped into bankruptcy because they trusted and relied on Amazon too much.

I'm not saying don’t sell on Amazon, I’m saying use it as an extra sales channel, the way it was also supposed to be.

Own your customer data, your email list, and try to build.

The verdict – is this the rambling of a failed and jaded amazon seller?

I made some good money with private label and walked away because I prefer models that don’t suck up all my cash flow.

But my main view is now PL is not a great starting place as a lifestyle business, unless you have plenty of cash to burn (in which case you should probably be doing something with stocks).

Also, whatever you’re being sold, there’s always work and it’s never as easy as it looks.

You can still be successful on Amazon today doing retail arbitrage, selling things, dropshipping, or selling your brand products, but you have to be smart and not put all your eggs in one basket. People made millions selling facemakes on the back of Covid – if they were quick!

Experiment with different models but don’t come into private label as some kind of rube who paid a grand plus for a course and now thinks it’s just a matter of time before you can quit your job.

Life isn’t a Rocky movie and you have to be realistic.