Why Do AMZ Entrepreneurs Prefer Amazon FBA Wholesale Over Private Label?
Well, there is no doubt that when ecommerce entrepreneurs compare Amazon FBA wholesale VS private label, there are many factors that need to be considered. There are many angles that need to be discussed. Private Label comes with its own set of advantages. Still, there are businesses that prefer to go for the wholesale model first.
Here is a look at the benefits that you will get if you opt for the Amazon FBA wholesale business model.
One of the reasons that a lot of entrepreneurs compare Amazon FBA wholesale VS private label is the financial commitment that they need to make. In the Amazon FBA wholesale business model, it is 1/5th or even lesser of the financial commitment that they have to make in private label. Also, the payback period (if all goes well) is less than six months in the Amazon wholesale business mode. In case of Amazon wholesale model, you do not have make all the arrangements that are required for private label. Similarly, this reduces a lot of time for you from hunting products to selling them in the wholesale model when compared to the private label.
Reduced Amount of Investment
When comparing Amazon FBA wholesale vs private label, the entrepreneurs also need to take care of the investments. A private label business without a doubt offers a lot higher earning potential. But before you reach that point of earning, you need to invest a lot of money into your venture so that you can take care of sourcing of the product from a reliable wholesaler or supplier, procure the inventory to reach to the Amazon warehouse (if doing FBA), getting your product listing live, launching the product on Amazon and then ranking it. All these activities take a lot of money and for that you have to be patient while investing until your product starts ranking, that may take anywhere from 8 months to a year or even more. On the other hand, in the Amazon FBA wholesale business model, you do not have to go through such hassle.
Reduced Business Risk Involved
When going for Amazon FBA wholesale vs private label, you also need to calculate the business risk involved. In case of the Amazon wholesale business model, you have lesser amount of money involved as discussed above. It also means that in the Amazon wholesale model you have a higher chance of making the business profitable. On the contrary, if you are doing Private Label, it requires heavy commitment in terms of investment. This means that you would have to put a lot of money at risk. This means that if you are a risk averse entrepreneur, you can consider the Amazon FBA wholesale model with reduced payback period and less time required to make it profitable.
A Scalable Business Model
The Amazon wholesale model is scalable and you can keep on adding more products from the same or other wholesalers. This is not something that you will find in private label. Yes, when we compare Amazon FBA wholesale vs private label, to some extent both of them are scalable business models. Yet, it is very difficult to sustain that level of scalability as a private label business owner since you have to manage your brand’s online reputation, reviews and exchanges. You do not need to worry about such issues when going for the FBA wholesale business model.
No Need for Creation of ASIN or Detailed Product Page
There are many brand building practices that need to be completed for successfully launching the Amazon private label. This means creating the ASIN and the detailed product page by optimizing it with just the right keywords which would add to the overall optimization and ensure that you receive paid as well as organic traffic when ranking in AMZ SERPs. This is a tedious and lengthy process that takes a lot of time and effort which you do not require in the Amazon FBA wholesale business model.
Promise for Replication of Same Level of ROI Performance for Other Wholesalers
Amazon FBA wholesale is a business model that you can expand by using your already established success story. When you have successfully generated profits for one wholesaler, you can use this success template to showcase your accomplishments as an Amazon reseller to entice other wholesalers to consider you for reselling their product. Most of the wholesalers interested in selling via resellers on AMZ are interested in working with those who have already established their prowess in successfully executing the wholesale business model for AMZ. You can hire AMZ virtual assistants to manage your FBA wholesale business as well.
No Worries About Intellectual Property Right Infringements
The Amazon FBA wholesale business model has a low barrier to entry. The Amazon wholesale business model does not require you to go great lengths to register your business entity and brand so that no one can hijack your product listing, something that products with good sales have to deal with on a regular basis in private label. Even if there are any infringement of copyright or intellectual property rights, you do not have to worry about it. Instead, in the Amazon wholesale model, you only need to focus on increasing sales as a reseller and do not worry about tackling such issues involving infringement of copyrights and intellectual property rights.
No More Fighting for the Sales Rank
It is very difficult to attain and sustain a sales rank while selling on Amazon as a wholesaler. This is something that you need to be careful about and need to spend a lot of time and money to achieve BSR. But, when you are selling the products of an already established brand as a reseller on AMZ, they will manage their BSR and you do not need to think about maintaining it. This removes the extra pressure of selling as a wholesaler, that you are almost always under as a private label owner.
Some Limitations of the Amazon FBA wholesale business model
Proactive Management of Product Selection
In case of the Amazon FBA wholesale vs private label, you are at the mercy of the market forces and decrease in demand of a product means that you have to find an alternative product, which may not always be available right away. This may result in slow down of the sales and make things difficult for you as a wholesaler to keep the momentum of the sales always on the up.
No Ownership or Brand Equity
When opt for the Amazon FBA wholesale business model, you are just a reseller. The Amazon wholesale business model does not make you the owner of that particular brand. Thus, you will have to maintain a profitable relationship and keep delivering sales to remain relevant for successfully selling on the Amazon wholesale model. This is the other limitation that you need to keep in mind. You will get a significant portion but still not as much as the wholesaler, since they are the brand owners.
If really care about business that has quick payback period, low investment risk and reduced barriers to entry, then you definitely need to consider going for the Amazon FBA wholesale business model. On the contrary, if you want to have ownership of a brand and do not worry much about the risks involved, then you can consider opting for the Amazon private label.
AmazinEcommerce.com is a leading Amazon FBA consultant offering its services to clients across the globe. AmazinEcommerce.com is a premium Amazon FBA Private Label & Wholesale Consultancy assisting in managing your AMZ store including private label, micro-private label, listing optimization (SEO), product photography, 3D rendering, videography, EBC / A+ Content, PPC, Packaging, Design (including Store Branding), and reinstatement of suspended AMZ accounts.