How to Develop Amazon Private Label in China
For 32% of Amazon sellers, the primary business goal for 2021 is to launch a new private label in China. It takes a lot of time and energy to invest in China’s private brand from conceptualization to actual implementation. But, More and more sellers and brand owners on Amazon are also willing to do this because they have witnessed the success of private label products and discovered the advantage of relatively small competitiveness of development private label in China.
What is a private label product?
Private label products are those manufactured by third-party manufacturers and sold with your brand label. The manufacturer has no right to interfere with the label or brand of the product. It is up to the seller to determine the product design, brand logo, label, packaging, and other creative elements.
If the seller has formulated a very detailed strategy, has specific resources and industry expertise, these are very profitable to develop Amazon’s private label in China. This article explains how to start a private label in China business and share a few tips to help you succeed.
How to Start with Private Label in China
1. Do market research and determine the categories and products to be sold
Brainstorm the activities, services, or product categories you are interested in, and then list the products related to each product. Starting with a broader list, you can gradually narrow the scope to ensure that you find a more niche product. Make sure to take into account existing or potential demand, including any sales fluctuations or seasonality. Also, ask yourself if you can create recurring demand. You can also research social media to discover any emerging consumer trends.
2. Cooperate with experienced suppliers or manufacturers in China
Suppliers play an essential role in the success of your private label products in China. Although cost is critical to determining the right supplier, it is not the only factor. When making your options, you should consider the cost of labour and materials and the impact of currency appreciation when purchasing in China.
Besides, sellers have to spend a lot of time looking for experienced suppliers similar to the products you want to produce to ensure that they are reliable. Establish rapport over the phone and conduct on-site visits to their manufacturing plants to get a clear understanding of how and where they produce your products.
Whether you choose a website like Alibaba to establish contact with manufacturers or establish a direct relationship with suppliers yourself, please strike a balance between product quality and cost to ensure that low-cost products do not produce inferior products. At the same time, the seller should also check the minimum order quantity and understand its quality assurance (QA) process to reduce the risk of any defects or quality problems.
3. Conceive and confirm the brand logo and product design and packaging
The main benefit of selling private label products on Amazon is that it is less directly competitive, which means you will automatically win the “Buy Box” on the ASIN. Although sellers may face indirect competition, no one will sell products with the same brand, packaging, value-added benefits, and functions or competitive advantages.
In addition to the product’s physical components (such as the product itself and packaging), you can also set a compelling value proposition and brand story to make your brand stand out from the competition. These intangible elements of a brand can help increase brand awareness, consumer engagement and social proof.
To attract potential buyers, sellers can inject unique and bold colours, fonts and design elements into the logo and packaging and be consistent in all other products added to the private label product line to prove its consistency. When creating a brand concept and design, we need to make sure that our decisions are beneficial to attracting potential target customers.
4. To strictly test the quality of product samples
After understanding the price, ranking, reviews, sales, trademarks and other information of the target product, the seller can proceed to evaluate the product. After finish a private label in China, be sure to get samples from the supplier to ensure their quality. Other specifications meet your expected requirements before selling. Sellers can share product prototypes and packaging with different people to collect feedback on all the issues to be resolved before starting to order products in bulk.
Generally speaking, we will divide the private label sample testing into three stages :
1) Internal testing stage: It lets employees participate in the use of new products, find more obvious product defects and deficiencies, and modify them.
However, internal testing does not guarantee that employees are the target customers of private label products. Therefore, they can only find some obvious product issues but cannot provide a more in-depth view.
This requires entering the second stage: public testing.
2) Public testing phase: It is the phase form of user experiment. The method is the same. That is, some customers are invited to test, and they are asked to answer the designed questions.
3) Continuous testing phase: This phase is to provide customers with a part of samples for continuous use, because we know that some customers buy products for early adopters and are not really needed, and this continuous testing can tell customers Whether you really need your product, and this determines whether they will continue to buy your product or service, especially for FMCG products.
5. Determine good Amazon logistics and distribution strategy
When deciding which logistics method to choose is better, you need to understand which products have proven successful in those distribution methods.
Does your product need special treatment? Are they susceptible to extreme temperature fluctuations? Do you want to use the Amazon Prime logo on every product you sell? Do you have complete customer service and return process, or do you want Amazon to handle these logistics issues?
Finally, no matter which route you ultimately choose, you should consider the store’s operating scale, product category, and annual business goals.
6. Re-Check the cost and profit.
After a product has gone through the audition, research, and sample testing process, the seller should calculate its cost and gross profit again. This is a very critical step.
The cost of developing a private label in China including purchasing the product, commissions fee, logistics/freight fee.
In terms of gross profit, it should calculate like this:
The gross profit of a private label product = selling price-purchase cost price-freight fee-platform commission fee-other expenses.
Other expenses include promotion expenses, storage expenses, operating costs, etc.
After a comprehensive calculation, if private label China product still has a lot of profitability, then you can develop this private label in China.
Develop Private label in China conclusion
There are certain risks in developing a private label in China, and the whole process requires time and energy, research, review, etc. As long as the store is still in operation, developing private label in China will not stop. Although the selected products may not be suitable for the market, the seller will gain a lot of experience. However, if you strictly control and personally participate in the entire process, this will be more able to increase your profit and sales.