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Amazon FBA Wholesale vs Private Label: Which One Is Easier To Manage?

June 6, 2024

The major difference between Amazon FBA wholesale and private label lies in how products are sourced and branded. In Amazon FBA wholesale, you buy products in bulk from established brands and resell them on Amazon. You don’t need to create your own brand or product listings. Instead, you sell under the existing brand name and compete mainly on price and availability. This method often has lower upfront costs and quicker sales but higher competition.

In contrast, private label involves creating your own branded products. You work with manufacturers to produce items with your unique branding and packaging. This gives you more control over the product and its marketing. Private label products often have higher profit margins and less direct competition. However, they require more initial investment in product development, branding, and marketing. Additionally, you need to create and optimize your own product listings on Amazon.

Amazon FBA Wholesale

Amazon FBA Wholesale requires a lower initial investment compared to Private Label. With Wholesale, you buy products in bulk from established brands. So, your main costs are for inventory.

In the Wholesale model, product differentiation is limited. It is because you are selling products that already exist and are being sold by other sellers, relying on the existing brand's recognition.

In Wholesale, you rely heavily on suppliers for stock. This reliance can cause supply chain issues like stockouts or delays. And, you must meet suppliers’ quality standards.

Wholesale profit margins are lower. This is because of competition with other sellers. They all offer the same products and set pricing structures.

The time to market in the Wholesale model is fast. This is because you are selling established brands with existing demand. It lets you quickly list these products on Amazon once in stock.

Amazon FBA Private Label m

Private Label has higher upfront costs. You need to invest in product development, branding, and possibly custom manufacturing. This includes packaging and market research.

Private Label allows for high differentiation. You create and sell your own branded products. This gives you the freedom to design the product, add unique features, and build a distinct brand.

In the Private Label model, you have full control over your production and supply chain. You can choose manufacturers and ensure quality. Also, you can manage your inventory well. And you can respond flexibly to market demands.

Private Label typically offers higher profit margins. This is because you control the branding and pricing. This allows you to set prices based on the value of your unique produc

Private Label involves a slower time to market. This is due to product development, manufacturing, branding, and building brand awareness. These steps are time-consuming and require much effort.

This article will help you pick between Amazon FBA wholesale or private label. It will discuss the major aspects of two business models you need to know before picking. It includes major advantages, profit margin and initial investment. At the end, we will introduce to a business model that you may find better than Amazon FBA wholesale or private label. 

Amazon FBA Wholesale vs. Private Label Business: Which Is Easier To Manage?

Category

Wholesale

Private Label

Duplicatable

Very easy to duplicate. In fact, you’re already competing against many other sellers who have the same product.

Also easy to duplicate, unless you have a trademark. or innovate on the product.

Amazon Buy Box

Difficult to win. For your product to appear, you must have the lowest price and be Prime available. This will determine your profit margins, which will fall quickly.

Easier to win. Since you have your own brand and product, you are the only competitor for the Buy Box.

Product listings

No need to create your own product listings, just add your offer to an existing product listing.

Sellers are in charge of creating and optimizing their own product listings.

Product reviews

Reviews will come in with less effort from the seller.

The seller must encourage brand loyalty, purchases, and reviews with high-quality products and responsive customer service.

Search Volume

High. Because the product is already a known brand, organic traffic is more likely to naturally come to you.

Low. Your new brand won’t have a following, so you will need to focus first on ranking your product listing with keyword optimization and PPC campaigns to get reviews.

Advertising

Less, especially if you are selling a very in demand brand.

More. You will need to pay for Amazon PPC (anywhere from $0.02 to $3.00) Also, you will need to create and optimize ads.

Control over business

Less. You have no control over product availability or even the product listing.

More. Because it is your brand, you’re in charge. You can make virtually every decision for your brand. But remember: because you’re selling on Amazon, they have the ultimate say on everything you do.

Scalable

Yes, you can continue to find more distributors / manufacturers that can give you great bulk deals and continue to list more products on Amazon.

Yes. Continue adding more related products to your brand or create new brands. Advantage of building one brand is if it becomes valuable, you can even sell the brand for 3-5x its annual revenue.

What is the Difference Between Private Label and Wholesale?

Category

Wholesale

Private Label

Product 

Well-established, trusted items.

Generic, unbranded product. Need to order samples from different manufacturers to test for quality.

Brand

Product showcases a known brand.

Seller creates their own brand. More control on increasing perceived value by creating a great brand, packaging & marketing

Time to receive your product

Less: Simply order your bulk product and it will be on its way.

More: Rather than just ordering, you will have to wait for the manufacturer to make your products with the branded label & packaging.

Barcodes

Your product should already have a barcode from the manufacturer.

Seller must find and purchase quality barcodes.

Supply Chain

Little control: If there’s no product at your Amazon FBA wholesale supplier, there’s no product.

More control: If you need more product, simply order more.

Competition

High. Everyone that is selling your product fights for the Amazon Buy Box.

Also high. While a copycat can’t remake your exact product, they can make something very similar. Amazon is an extremely  saturated market.

Trademarks

No need to create a trademark.

A trademark is not required, but it will help make your brand profitable and sellable in the future. A trademark costs anywhere from $250-$1000.

Brand Registry

Not needed. The brand you’re selling will already be registered.

Yes, brand registry is available. But you will need a trademark to enroll and unlock its awesome features.

Licensure

Yes. Most brands will want to see that you are a business and hold a sales tax permit before allowing you to sell their product.

No. You do not need a business license to sell private label products, but it helps.

Risk

Medium. There is less risk than private label because your audience knows the brand.

High. The product you branded may never sell simply because you’re unknown.

Amazon FBA Wholesale vs. Private Label Business: What Are The Main Advantages?

What are the Main Advantages of Selling on Amazon Private Label?

With Amazon FBA private label, you have more control over business decisions and profit margins. You can also unlock extra product listing features when you register your brand. With private label you have a lot more room to increase the profit margin because you have control over the product look & feel, enhancing the packaging, copywriting on the listing, product inserts, to really increase the value of the product.  Above all, there is a possibility of selling your unique brand for big money in the future.

Who it's for: Someone with a creative mind, who can become passionate about becoming great at branding, marketing, and optimizing products, listings, and ads.

What are the Main Advantages of Selling on Amazon Wholesale?

With Amazon FBA wholesale, there is less work involved. You won't have to worry about creating a unique brand or optimizing product listings & ad campaigns. It is also possible to sell product more quickly. 

Who it's for: Someone who can contact and negotiate with big brands, manage warehouses, and buy large amounts of product up front. This is more analytical thinking, it all comes down to the numbers and being able to take some risks.

Amazon Wholesale vs. Private Label: Initial Investment

According to Sellersnap, 50% of wholesalers spend less than $2500 on launch. However, for bulk purchases, the more you have to invest, the better deals you will get. Most wholesale experts agree that one should have at least $5000. This investment allows you to conduct quality product research and buy a good amount of stock.

With private label, 66% of private label sellers spend at least $2500. So your initial investment is much higher, sometimes reaching $10K or even $15K. This amount can grow according to:

  • The product you choose (take size and weight into account)
  • How well you can negotiate with the manufacturer
  • Whether you choose to outsource your brand design and sales copy for listings
  • Your Amazon PPC ad spend, and how competitive the product category is.
Bottom line: In general, Amazon FBA wholesale has a lower startup cost than private label.

Amazon Wholesale vs. Private Label: Which Has Higher Profit Margins?

Private label products offer higher margins. Wholesalers typically see profit margins around 10%-20%. However, these margins can shrink quickly due to intense competition and the need to win the Buy Box. Wholesale sellers have little control over their margins as they compete on price and availability.

In contrast, private label products can achieve profit margins of up to 40%. Since private label sellers offer unique products, they face little to no Buy Box competition. This allows them to set higher sales prices and maintain robust margins. With effective listing optimization, private label sellers can remain competitive while enjoying greater profitability.

Amazon FBA Wholesale vs. Private Label: How Long Does it Take to Become Profitable per Business Model?

Amazon FBA wholesalers see quicker returns than private label. According to JungleScout, 57% of wholesalers turned a profit within their first three months. This faster profitability is because of selling established products from recognized brands, reducing the need for extensive marketing and brand building.

Private label sellers take longer to become profitable. JungleScout reports that 65% of private label sellers took over six months to see a profit. This is because private label involves creating a new brand. It requires time for product development, marketing, and gaining customer trust. Therefore, while private label can offer higher long-term profits, it demands more initial investment and patience compared to the faster returns seen with wholesale.

Is Amazon FBA Wholesale or Private Label More Work?

Wholesale is less work than private label because you won’t need to spend any time creating your own brand. On top of creating that brand, a private label seller also must create and optimize both product listings and Amazon PPC ad campaigns. 

Remember: if you’re looking for instant passive income, Amazon FBA is not the place you want to be. No matter what Amazon FBA business model you choose, hard work is necessary to become successful. 

Amazon Wholesale vs. Private Label: What is Better for Amazon Sellers?

The answer is up to every individual business’ assets, goals, and talents. One seller might find that wholesale is the best way for them to make money online. Others might flourish under the private label model. 

Each model uses different types of brain.

A wholesaler must be a great communicator, negotiator and great at building & fostering connections with different distributors & manufacturers. Don't be afraid of putting yourself out there in social settings such as going to trade shows to make new connections with suppliers. Your role is more of an Amazon middleman. Also being great at building systems and working with numbers.

A private label person has to have creativity. Always thinking outside of the box to come up with new product innovations or ways to increase the value of existing products and come up with creative ways to convey that higher value through great branding, pictures & copywriting.  

Consider each aspect of every business model before choosing where to put your money. Think about your own strengths, and which model you see yourself actually enjoying it.

Conclusion: Why Local Lead Gen Biz Is Superior To Amazon FBA Wholesale and Private Label?

Local lead gen biz is superior to Amazon FBA wholesale and private label because of less competition and potential for passive income. The Amazon marketplace is fiercely competitive. Giants like Anker, Thrasio, Elevate Brands, Zulay Kitchen, Happy Belly, and Solimo dominate the scene. It's a tough battleground, with 54% of sellers opting for private label and 25% involved in wholesale, according to RevenueGeeks. This tough competition forces sellers to invest time and money. They must invest in marketing, product development, and pricing just to keep up.

On the flip side, local lead generation is a hidden gem with far less competition. You’re only up against 10-15 local companies, making it a breeze in comparison. This business model involves creating websites. The websites generate leads for local businesses, like plumbers, electricians, or real estate agents. Once these platforms are set up, they require minimal upkeep, providing a steady, passive income. Amazon FBA is different. There, you're always hustling to manage inventory and optimize listings. In contrast, local lead generation offers a more relaxed and reliable way to earn. And, it lacks the constant grind.

conclusion-amazon-fba

Choose local lead generation today and start enjoying the benefits of reduced competition and a more passive income. Unlock a higher-value business opportunity with fewer headaches and greater rewards.

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  1. On a site like Amazon, i would go with the Private Label route. Creating listings on Amazon are easy, but you can differentiate yourself from other sellers who are all selling your competitor's product. Plus you can create a product label design that markets your product for you. I'm willing to bet you'll make more profits with Private Label products than wholesaling something that you already have competition for.

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