Digital Nomad Desires: What is Amazon FBA Private Label?
Welcome to part 4 of our Digital Nomad Desires series. Thanks for sticking with us so far! If you’ve just joined us, our Digital Nomad Desires series is following our journey trying to earn an income online while we travel this awesome planet. We’ll be sharing our efforts, findings, ideas, tips, trials and hopefully successes along the way. We’ve only just started, so if you want to catch up then check out this link for all the posts so far in the series.
PIN for Later?
As you may have read in previous posts, we spent some time in Chiang Mai looking into other ways of making money online along with this blog. In the last post, we discussed ‘What is Dropshipping?‘ as it’s a business model we seriously looked into. Another business model we researched quite heavily was Amazon FBA. Particularly Amazon FBA private label.
What is Amazon FBA?
When we refer to Amazon, we’re talking about the world’s largest online retailer, not the South American river which we hope to visit one day. Amazon.com is available in many countries around the world so we don’t think we need to explain more about the company. But if you want to know more then read this.
What a lot of people don’t realise about Amazon is that the company doesn’t only offer everyone the chance to be customers, we can all also sell items on Amazon if we wish to. Anyone can apply to be an Amazon Seller and if approved, can set up an Amazon store. A bit like Ebay.
So we looked into how to sell products on Amazon.
There Are Two Ways To Be An Amazon Seller
Normal Seller: One is to buy inventory, storing it at home or in a warehouse and when someone makes an order, you ship to the customer. You also deal with customer returns.
Amazon FBA Seller: Another way of selling on Amazon is to use Amazon’s FBA service. FBA stands for Fulfilled By Amazon. What this means is that instead of storing your inventory at home or in your own warehouse, you send it all to Amazon and they’ll store it in one of their own warehouses. Then when a customer makes an order, Amazon will ship it straight to your customer for you. Awesome!
An Amazon seller’s inventory is often built by finding reduced/sale items on other online stores and physical stores, which are then sold on Amazon at a higher price to make a profit. Others might create their own inventory if they have their own business such as furniture making, arts and crafts etc.
Could Amazon FBA Work For Us?
The first option of holding our own inventory obviously couldn’t work for us while we travel the world. We’d need to be at home to process/ship every order and handle the inventory. But by using Amazon FBA, we wouldn’t have to be location dependent because Amazon would ship all our orders for us and even deal with customer returns and other shipping issues. Sure, we’d have to hand over a small percentage of each sale to Amazon but it’s well worth it for the benefits.
However, there’s still a problem. How do we get our inventory to Amazon UK? If we were at home we’d simply box everything up and send it to one of the Amazon UK warehouses, but that’s not going to be an option while we’re island hopping around the Philippines. And what the hell would our inventory be? Over here in Asia, we don’t have easy access to high volumes of sellable reduced items. Ideally, we’d need to be back in London where there are thousands of stores where bargains can be found.
The answer to this problem could be Amazon FBA Private Label.
What is Amazon FBA Private Label?
Amazon FBA Private Label is taking selling on Amazon to the next level. While the previously mentioned ways of selling on Amazon might be a way to make a quick buck, they’re not really proper business models and don’t have any longevity. A lot of people make a great income this way, on the side of their full-time jobs, but we can’t help feeling that it’s a bit of a Del Boy way to make money.
With Amazon FBA Private Label, you’re creating your own brand and customising existing products to sell on Amazon. There are many digital nomads in Chiang Mai making a full-time income this way so we wanted to find out more. We attended a weekly Amazon FBA Private Label meet up for a few weeks, where we learned what it’s all about.
How Amazon FBA Private Label Works
Without going into too much detail, Amazon FBA Private Label works like this:
- Find a niche product to sell on Amazon. A product that could be customised in some way to make it stand out from the crowd.
- Find Chinese manufacturers who make the product using Alibaba.com.
- Contact Chinese manufacturers to negotiate costs, minimum orders and customizations.
- Decide on a manufacturer.
- Receive samples of your customised item until you are happy with it.
- Get manufacturer to add your own brand label to the product.
- Get manufacturer to ship inventory directly to Amazon.
- Cross fingers for orders!
At first, the idea of contacting Chinese manufacturers seemed quite daunting, but with today’s e-commerce boom, we learned that they are used to dealing with individuals, especially individuals selling on Amazon. As long as you’re filling their minimum order quantities, they’ll be happy to work with you.
If you’re wondering what we mean by “customising an item”, it could be something from as simple as changing the colour/material to adding a bespoke accessory like a carry case. As an example, we know someone successfully selling a high-quality beer growler with an added leather case that can be carried over the shoulder. Perfect for carrying around music festivals etc.
It’s All About Finding A Niche Product
As with all online business ideas, the word ‘niche’ is thrown about ALOT! If you don’t have a niche, then you’ll get lost in an already saturated market. It’s no different with selling on Amazon. The key to success is finding a niche product that meets many criteria. As a reward for joining the weekly Amazon FBA Private Label group in Chiang Mai, we had access to a Niche Product Selection Tool. This was created by a guy who’s had much success with Amazon FBA Private Label. He’s been able to travel while he continues to make Amazon sales on various items.
There are also paid for tools like Jungle Scout which are supposed to be essential if going into this business. Jungle Scout is able to break down sales stats for any seller and product on Amazon, which will help anyone in the process of choosing which product to sell.
Amazon FBA Private Label Has Its Problems
After a few weeks attending the meet-ups, we learnt that Amazon FBA Private Label isn’t as easy as it may sound.
It Takes A Long Time To Launch A Product
We discovered that the process of finding an item to getting it online on Amazon takes several months. Very experienced Amazon sellers claim that they can complete the process in 6 weeks but that’s VERY rare. In most cases, if making customizations, the process of working with Chinese manufacturers can be very slow. Weeks or months can go by as you wait for samples, and often several amends/samples are needed until it’s ready for retail.
A British couple living in Chiang Mai, who are successfully selling 24 separate customised items via Amazon FBA Private Label, revealed that one particular item took them 1 year to launch. The delays were mostly down to one particular customization! We’re aware that this could be a worst case scenario but it’s definitely something to think about.
Initial Costs To Get Started Are High
Initial costs to launch a product properly are quite high. Most people in the business suggest investing around £1500 on your first product. These costs cover elements such as:
- Inventory based on minimum order
- Shipping to Amazon (boat or plane)
- Brand label design and printing
- Professional Product Photography
- Advertising (Amazon, Google, Facebook etc)
Finding A Niche Product Is Difficult
We and many other people in the group found it difficult to find a niche product. There are many boxes to be ticked before it’s worth investigating further with manufacturers. Even when using the group’s Niche Product Selection Tool and other tools like Jungle Scout, not many products seemed like a viable option.
Selling on Amazon is already a very saturated market and there are many different people selling the same product, even products thought to be niche! We’re not saying that it’s not possible to find niche products anymore, after all, you can sell anything on Amazon, but it’s getting increasingly difficult as more and more people discover this way of making money online.
Amazon FBA Private Label Conclusion For Us
Like Dropshipping, we decided that because of the above concerns, Amazon FBA Private Label is not for us. Again this is mainly due to us currently being too nomadic. We’d need to be based in one place for what could be several months, while we wait to receive samples and correspond with manufacturers.
Plus, although Amazon would look after the shipping, it would still be down to us to deal with customer queries. Amazon is notorious for closing seller accounts if customer queries are not dealt with within 24 hours. We know that there’ll be many occasions when we won’t have internet access for at least that amount of time so it’s too much of a risk to take. It would be a disaster to spend all that time and money to then be shut down due to not replying quickly to a simple customer query.
For now, we’ll continue to work on Finding Beyond as we travel. Providing we have good enough internet in the Philippines, we’ll keep posting and hopefully growing our readers. We’ll also soon start to experiment with monetizing the blog to see what happens. We’ll make sure to share the outcome! 🙂
Are you travelling the world while earning an income online? Or do you have digital nomad desires like us? Maybe you’re an Amazon seller? We’d love to hear from you by commenting below.