Wholesale Vs Private Label: Which Amazon Model Is Right For You?

If you are an Amazon seller or you are planning to be one, you might get confused about choosing a private label or wholesale to start selling. Amazon wholesale or private label, both are good in their ways. Anyhow, we think that private label is better than the wholesale in many ways. 

Amazon wholesale or private label, both have their pros and cons. It entirely depends on you, what to choose that suits best for selling in your current situation.

We know that Amazon marketplace gives people the power to make money through a lot of ways. So many ways, that most of us have to choose how we can dedicate our time and resources in the best possible ways.

In this post, we are going to mention the reasons why private label is better than wholesale if you are an Amazon seller.

AMAZON WHOLESALE VS PRIVATE LABEL

Wholesale is the practice of purchasing a branded product in bulk quantities from any manufacturer, supplier, or distributor in any particular niche and then resell it to consumers.

A private label product is manufactured by a contract or third-party manufacturer and sold under the brand name of the retailer. As a retailer, you can have your own labeled packaging that will differentiate your product from that of the competitors. Hence, it is an excellent business model to earn profit margins that are out of this world. (I do the private label model in fact!)

The Benefits of Private Label Selling

We have mentioned that private labeling is better than wholesale because it comparatively has greater benefits. You can read some of the benefits of private label selling below.

You can Build a Brand from Scratch

With private label, you have excessive control over customer service, reputation of your brand, and targeting higher sales. You are certainly starting a business that will hold a greater monetary value than a wholesale business. Therefore, if your brand is successful you can sell the products at a higher price.

The Potential is Boundless

If you have lots of investment, then you can certainly create an extensive business at a faster pace. You are usually not limited by the number of products available. You can build, create or manufacture anything from any type of niche as long as you have the investment.

The Competition is Less

As all the items are under your brand name, you will never have to share the buy box. You will also be able to apply for Amazon’s Brand Protection program. This means that nobody can sell on your listings.

Control Over Supply Chain Private Label

When you are selling products under your brand name, you get to make the decisions! Therefore, when you own the brand, you can work directly with the manufacturer and order to produce units as per your demand without any limitations. You can ask the manufacturer when to start producing the products as per your requirements. There is also an option to make changes in the product for the next orders. 

The Downsides of Private Label Selling

Everything has its advantages and disadvantages at a certain point. Likewise, private label selling also has some downsides which you should know.  There might be chances that you might experience the following downsides.

• Hijacking of listings by competitors
• Time commitment for creating Amazon listings or branding
• Manufacturing lag
• Lag in import
• Competitor filing a copyright or trademark infringement notice with Amazon

Moreover, to be more cost-efficient many sellers prefer ordering products in bulk from China. In this case, the biggest problem one can face might be the commitment of time and money.  If you get a bad supplier then it means you will risk all your investment and lose your Amazon selling business with the blink of an eye.

Advantages and Disadvantages of Amazon Wholesale

In wholesale, you buy an inventory from a supplier. The products are already branded and are manufactured by well-known manufacturers. In this case, you have the advantage of jumping on the track with the branded products rather than building a brand from scratch.

Advantages of Amazon Wholesale

• Products already have an Amazon listing
• Many products have a sales rank on Amazon
• As the product is already a brand, the cost of advertisement is less or zero
• Generally, less time-intensive
• Easy to scale

Disadvantages of Amazon Wholesale

• A wholesale license is required (it’s a lengthy process usually takes 4 to 5 weeks)
• Other merchants might be selling your product which might cause price erosion
• Competition will be fierce on your listings
• You have to sell yourself to the brand manufacturer which gives you lesser control

Consequently, it means that there is more competition and lower profit margins than the private label selling. You can still choose items that have a well-established reputation in the market and sell them in a greater quantity.

Hence, a wholesale business can be set up in a few days, like 10 days are enough for it. It can also be scaled as quickly as you prefer.

Final Thoughts for You

So wholesale or private label model? I am biased and would definitely try to convince you to go for the private label model in person, but I still have to uphold an impartial neutrality to be fair to some wholesalers here. (Still go for the private label model by the way. 😀 )

I have mentioned the breakdown of benefits and the challenges that are linked with the Amazon wholesale as well as private label selling. This should ultimately help you in making an informed decision regarding the path that suits you the most. Cannot think of new ideas or you are generally not a creative type? Then perhaps wholesale model will suit you better. If you want to build a brand that has a legacy (I am serious when I say legacy, you can pass this business down to your kids!), then private label is the way to go!

You have to consider some elements before selecting the path. For example, your business objectives, target of sales for the month or year, and categories of the products. You will have to identify and analyze the situation for your business model. You should go for a business model that is most lucrative according to your business needs.