How to Private Label Products to Sell on eBay and Amazon
The Online Seller's News, March 17, 2014, Volume 14, Issue No. 5
Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
I have some good news for those of you who are interested in purchasing The Complete Amazon Marketing System. We recently had to start charging shipping due to the high costs, but I just found a new print-on-demand company to print the book set, which is saving me about $8 a set. So I am passing that savings on to you and have just changed the shopping cart back to free shipping.
This year Mother's Day is on May 11th in the US. The two weeks leading up to Mother's Day are huge sales days on eBay and Amazon, so now is the time to source merchandise and have it ready to sell. If you are an FBA seller, you want to start sending your goods in this week and no later than next week to maximize your potential sales.
If you recall about two months ago I told you about a private Facebook Group I was recommending for those who are interested in selling grocery and gourmet food items. Well the group filled up overnight and members have really been learning a lot. In the meantime I heard from Jessica Larrew who has just come out with a training course called Grocery Goldmine. I had a look at it and it's a really excellent way to get started in this really profitable niche.
If any of you have thought about using a virtual assistant to help with your eBay and/or Amazon business, read my last blog post about working with VA's from the Philippines. It is a pretty long post but there is a ton of good information in there.
Inventory Lab is a solution for Amazon merchants that integrate bookkeeping and analytics. I have negotiated a free 30-day trial for my readers. Just use the promo code SKIP (use all caps). Click here to learn more about inventory lab.
If you are a member of Online Selling Coach be sure and join our private Facebook group. This group replaces the forum and although we only have a few folks who have joined, there is a lot of activity and this is a great place to get advice and your questions answered by experts and other members. It's a great resource.
If you are a member of OnlineSellingCoach.com just go to Facebook, type online selling coach into the search box and click on the link to join group. Once we verify your membership you will get an approval and you can start posting questions and join the discussions
One of the most popular companies where eBay and Amazon sellers buy their shipping supplies is Bubblefast. Bubblefast sells a wide range of shipping supplies and their prices are very competitive.
The company is family run by Mark and Robin La Vine and they give great customer service. I was working with Mark last week and we set up a deal where any Skip McGrath reader can get a 5% discount on all orders (except close out items). Just type the promo code skip (all lower case) into the box when you check out and the 5% will be removed from your total. The website is www.bubblefast.com. Remember to use the code skip at checkout to get your discount.
I have told you several times about a great wholesale source, My Inventory Team run by my friend, John Bullard and his family. They now have a new service. John has moved the company into larger warehouse space and you can now purchase inventory and have it sent to John and his folks will label and ship your products directly to Amazon for you.
Since they are located in Tennessee that is close to most of the Amazon warehouses. So the money you save on shipping will offset the cost John charges for the service and your goods will arrive at Amazon much faster. The other thing My Inventory Team does is sell new liquidation goods that John sources directly from manufacturers. These are all brand new with tags and not store returns. When you buy them he will also label and ship them to Amazon for you.
Lets get started with this month’s articles:
First what do I mean by private label? Private labeling is nothing more than finding a generic or manufactured product that you give your own company name to. Another name for that is branding.
I currently have three products that I private label. Here are the Amazon listings for those:
The first two items I found on Alibaba.com. Several different manufacturers were selling them. I had my agent in Hong Kong contact several of them to get sample and determine which one had the best quality and price. We settled on a manufacturer and the next step was to come up with a Company name and logo, a UPC code and have a retail box designed. I went to www.logoyes.com and designed a logo and bought the artwork and sent it to my guy in Hong Kong. The brand name I came up with is The Smart Kitchen. Here is the logo we use on the boxes:
You may be wondering what all of that cost. The logo was about $10 and it cost me $400 to have a box designed and 500 boxes printed for the oil bottle and about $500 for the ceramic knife set.
I spent another $69 to file a trademark application online. Once I have the logo and trademark, I can use them over and over -but the cost was a one-time cost. The design of the boxes was about 20% of the cost (about $100) so that is also a one-time cost. I am not going to tell you how low my product costs are, but so far I have sold over 200 of the Press measure bottles at $21.95 and about 150 of the ceramic knife sets at $74.95 (I am currently out of stock on those but I have 200 more arriving in April).
The next product is one that cost me far less to do. The Bed Mattress holster was available from a company that was already importing them into the US. All I did was come up with another logo and trademark - Shark GunLeather - I had a cardboard insert printed up at my local print shop. I send the inserts to the importer who inserts them into the package for me and I send him the labels and packing slips and he ships them into Amazon for me in a case of 50 at a time. I have already sold over 300 of those at $24.95.
Although I am not going to tell you my costs I will say that all three of those products nets me about 50% clear after Amazon and FBA fees and shipping. The point is, this can be hugely profitable.
The biggest reason for doing this is that you own the buy box on Amazon 100% of the time. I will admit to a scary period when I sent them into FBA and since they had no sales and no sales rank, it took several weeks before the first ones sold. And yes, sales were slow at first, but they slowly ramped up and now I sell several of these products every week.
Retail arbitrage has been a hot topic for the past couple of years and there is no doubt that lots of folks are making lots of money with it.
Just in case you are one of the very few people who have not hear of it, retail arbitrage is nothing more than looking for products at local stores such as Target and Wal-Mart (and many others) and finding products on sale or clearance that are still selling on eBay and/or Amazon for much more money.
It's is not uncommon to find items you can buy for as low as three or four dollars that are selling on Amazon for over $25 and even more. Not to long ago I found some Rachel Ray insulated shopping bags at a local store for $14.95 that I sold on Amazon for $39.00 each, and all of them sold out within a few weeks. Just before Christmas I found some Lego toys on clearance at Toys-R-Us for just a couple dollars each that sold in the $19 range over the holidays. Last year just before Father's Day I bought over 50 sets of small hand tools on clearance at Home Depot that I sold for 3X my cost. So yes, retail arbitrage can be very profitable.
But there are some downsides to the business. One big issue is time. Even with an iPhone scanner it takes a lot of time to source products this way. It becomes very hard to scale your business to a higher level, as you are continually out sourcing and there are just so many hours in a day. The other drawback is that you are always selling something different, so you have to spend the time creating new listings for each new product you find. Having said that, there is one huge positive aspect of retail arbitrage -its fun! There is just some thing so rewarding about doing the work, finding that bargain and turning it into profit.
Now lets look at traditional wholesale sourcing. With this method you are basically buying merchandise from wholesale sources that will ship to you. When you run low on product you just reorder more. Essentially you have an unlimited amount of inventory available to you, that you only tap into, as your inventory levels get low. That is a big advantage as you can try lots of products, drop the slow sellers and concentrate on the faster selling items. You only have to create the listing once and placing a re-order takes a few moments by email. In my opinion, there is nothing wrong with doing a little retail arbitrage now and then -I do it when I am going shopping anyway, but I no longer make special trips to do it. As I said its fun and can be highly profitable so there is no reason to give it up entirely.
I know there are several folks out there making really large amounts of money doing nothing but retail arbitrage, but I suspect they are the exception -not the rule. So my opinion, if you want to scale your business to a really large level - say to earn six figures a year, then I think you need to look at traditional wholesale sourcing for most of your product line.
The bottom line is you can make money at both - it really comes down to what you enjoy more and what your goals are.
If you are really into retail arbitrage, there is a private Facebook group you should join. The name of the group is Scanner Monkey. Just type that into the Facebook search bar and when it comes up apply to join the group. It's a really fun group and they share a lot of info with each other and help each other out.
I generally dislike heavy products. They are expensive to ship and who wants to carry three or four heavy packages to the post office. But some products can be so profitable that it's worth the effort. One of these is Griswold Cast Iron Skillets. Just look at some of the sales results on eBay:
Can you believe those prices? And these are all items that sold. One thing I did notice, however, is that the sell through rate for the more expensive pans is quite high, whereas the sell through rate for the lower priced pans is somewhat low, but still respectable.
Not all go for that much. The normal range is closer to $100 to $500 for collectible skillets. Her are some that sell for less:
So where do you find them:
This is a niche where product knowledge is essential to your success. It turns out that there are several books on the subject. I have listed them here with links to buy them on Amazon, but you might also try your local library. If you live in a small town your library may not have these books, but most libraries can order and borrow from nearby larger libraries.
The two most important factors are age and condition. As far as age goes, in general the older skillets are more valuable, but only if they are in good condition. When you are out shopping pass up any pans with crack or splits. A little rust is Ok as long as it has not pock marked the surface of the skillet or pan.
Learn how to clean and season your cast iron pan, as there are some real dos and don'ts. Here is a link to the subject on About.com .
This is one niche where it's still very possible to make a huge score. It is not that uncommon to find a pan at a sale that you can buy for under $10 that will bring over $1000 from a collector.
You would not believe how many times I am asked that question - unfortunately the answer is not that simple.
The major determining factors to growing your business are as follows:
There are many other factors that come into play, but these are main ones that determine how big you can grow. Let's look at each one:
Time - Time is probably the single biggest factor. There are only so many hours in a day. If you also work a full time job and you are trying to build your business slowly you will eventually reach a plateau where you just can't grow any further. However, if you are married or have a partner and both of you work on the business, that effectively doubles your time and therefore your ability to grow larger is greater.
Another option that has become popular is hiring a virtual assistant. I work with a company in the Philippines, 2nd Office. They will do product research, create listings for eBay and Amazon, perform Facebook promotions and more. One of the founders of 2nd Office, Carlo Silva recently did a guest blog post for me. Its quite long but really informative if you are at all interested in hiring a virtual assistant.
If you are doing this part time, earlier I told you about My Inventory Team, a service that you can buy goods and have them shipped to and the folks there will label them and send them to Amazon for you. That is another way to save time that will help you grow your business faster.
Whether you are doing this full time or part time, don't hesitate to invest in some automation. Any mundane process you can automate will save you time that can be put to good use doing high value work. I recently wrote an article Amazon Seller Resources and Tools that lists several automaton solutions for Amazon sellers and many of them work with eBay too.
If you do this full time, your ability to grow quickly and grow larger is much enhanced. And if you have the funds to hire an employee(s) then you can grow even larger.
Money - The more products you have to sell, the faster and larger you can grow. How much do you have to invest in your business? If you start with say less than $1000 then your ability to grow quickly is hampered by that. You will have to wait until goods sell, get the profits back, order more goods. Your growth can be steady but will be somewhat slow. Starting with a low amount of capital and reinvesting the profits is called bootstrapping. It does work -but it's slow work. Nevertheless if you don't have the funds that is the only way to go.
On the other hand if you had say $5,000 +, you could invest more money into inventory to begin with, so your growth would be faster. You could invest in more goods to sell. And as I said above, the more items you have listed on eBay and/or Amazon the faster your sales will grow.
When I first started on Amazon FBA, I only had about 12 0 SKUs and my income after costs was slightly under $1000 a month. Now we have over 1000 SKUs and my income is about ten times that.
Having said that, I strongly suggest you resist the temptation to borrow money to buy inventory. The danger is when you are new you will make mistakes sourcing product. However, once you have the experience -and you know which products sell and which don't, then its OK to borrow money to finance inventory. This is especially true near the Christmas selling season. We run our business on a cash basis all year long, but every September I borrow several thousand dollars so I can really stock up on items I know will sell over the holidays. We usually have no problem paying that off by early February.
Talent and Hard Work - I am sure everyone has heard the old saying; "There is no substitute for hard work." That is certainly true, but talent and knowledge come into play also.
Part of the hard work you need to do is educate yourself to learn the most profitable selling techniques; how to do product research, how to write good title and sales copy, how to use keywords and all the things that make you successful. But you still have to work. There is no such thing as a business you can put on autopilot. I know there are people who claim they can show you how to do that -but I have never seen it actually work out.
As I said at the beginning, there are more things you need to learn and do to really grow your business, but if you address these three first you will be well on your way.
World Trading sells a very complete line of wholesale RC cars, boats airplanes, tanks and helicopters. They stock all of their products at warehouses here in the US. They even sell a remote control golf ball. You hit the ball and if you miss the hole, you can pick up your remote control and roll it into the hole.
Chh Quality Products sells a complete line of games including Chess, Backgammon, Mahjong, Dominos shuffle boards, Carom Boards, Foosball and Cribbage sets.
Self Defense Supply is one of the largest wholesalers of security and self defense equipment. Everything from spy pens to knives, and also carries a nice line of Airsoft, BB and pellet guns.
Specialty Food Distributors sells several lines of gourmet foods and they will private label for you.
Ital Foods sells all types of imported food products from Europe
K. Hall Designs creates fine fragrance goods for the home, bath, and body such as natural wax candles, triple milled bar soap, and shea butter hand cream.
Susan Shaw Ltd. designs the latest fashion jewelry with 24kt hand-cast gold and sterling silver plated metals, cotton pearls and semi-precious stones. She combines these to create beautiful jewelry.
Baird Rock Farm makes handmade honey wine and goat milk bar soap, lotion, liquid Castile soap, shampoo, conditioner, spa products.
NMR Distribution is a large distributor of toys, games and novelty items and they love working with eBay and Amazon sellers.
Wholesale Fashion Inc sells a large line of jewelry and fashion accessories. Their products tend towards the lower end in price, but do lend themselves to product bundling to get the average selling price up. And they have free shipping on orders over $200.
Nostalgic Images sells over 600 designs of nostalgic Tin signs and over 300 Designs of Collector Metal Signs, Street Parking Signs.
The Party Animal, Inc. is licensed with the NFL, MLB, NBA, NHL, and over 70 colleges. They offer appliqué embroidered flags and banners and have just expanded into licensed toys.
Entertainment Earth is a major wholesale seller of Action Figures, Toys, Replicas, Collectibles, Gifts, and More. They sell items from Star Wars and GI Joe, to The Simpsons and Anime. They represent manufacturers such as McFarlane, Sideshow, Dragon and Mattel.
Dr. Carol's Pets & PAAWS, LLC. Is a Holistic veterinarian, Dr. Carol Osborne, DVM offers organic, USA made pet health care supplies, PAAWS, Pet Vitamins, Supplements, premium food, treats, toys, books, first aid care and expert pet health advice for dogs and cats. This is her retail website so email for wholesale information.
Well that’s it for now. My next issue will be the big ASD wholesale issue coming out in early April.
P.S. If you missed the last issue, click here to read it.
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