Many Amazon sellers aim to create a new private label in China, with 32% of them having this as their primary business goal. While it requires a significant investment of time and energy, more brand owners and sellers are willing to do so due to the success of made in China private label products and the advantage of relatively small competitiveness in development.
Private label products refer to those manufactured by a third party but sold under a retailer’s brand name. Starting with private label in China involves market research, finding experienced manufacturers, designing the brand logo and product packaging, testing product quality, determining logistics and distribution strategies, and checking costs and profits. By following these steps, sellers and brand owners can successfully launch their private label products in China.
Key Takeaways
- Many Amazon sellers aim to create a new private label in China.
- Private label products are manufactured by a third party but sold under a retailer’s brand name.
- Starting with private label in China involves market research, finding experienced manufacturers, designing the brand logo and product packaging, testing product quality, determining logistics and distribution strategies, and checking costs and profits.
What is a Private Label Product?
A private label product is a product that is manufactured by a third-party manufacturer and sold under a brand label. The manufacturer has no control over the product’s branding or labeling, which is entirely up to the seller. This allows the seller to have complete control over the product’s design, brand logo, label, packaging, and other creative elements.
Selling private label products can be very profitable for those who have a detailed strategy, specific resources, and industry expertise. Developing Amazon’s private label in China can be especially lucrative. By following a few tips, anyone can start a private label business in China and succeed.
How to Start with Private Label in China?
1. Do Market Research and Determine the Categories and Products to be Sold
To start a private label in China, the first step is to conduct thorough market research. Sellers should brainstorm activities, services, or product categories they are interested in and list the products related to each category. This way, they can gradually narrow the scope to ensure that they find a more niche product. It is crucial to take into account existing or potential demand, including any sales fluctuations or seasonality. Sellers should also ask themselves if they can create recurring demand. They can research social media to discover any emerging consumer trends.
2. Cooperate with Experienced Private Label Manufacturers in China
Suppliers play an essential role in the success of private label products in China. Cost is critical to determining the right supplier, but it is not the only factor. When making options, sellers should consider the cost of labor and materials and the impact of currency appreciation when purchasing in China.
Sellers have to spend a lot of time looking for experienced online wholesale suppliers similar to the products they want to produce to ensure that they are reliable. They should 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 their products.
Whether sellers choose a website like Alibaba to establish contact with manufacturers or establish a direct relationship with suppliers themselves, they should strike a balance between product quality and cost. They should 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
Sellers can differentiate their brand from competitors by creating a unique brand logo and product design and packaging. They can inject unique and bold colors, 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, they need to make sure that their 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 finishing a private label in China, sellers should get samples from the supplier to ensure their quality. 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, private label sample testing is divided into three stages: internal testing stage, public testing phase, and continuous testing phase. Internal testing lets employees participate in the use of new products, find more obvious product defects and deficiencies, and modify them. Public testing 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. Continuous testing provides customers with a part of samples for continuous use.
5. Determine Right Logistics and Distribution Strategy
When deciding which logistics method to choose is better, sellers need to understand which products have proven successful in those distribution methods. They should consider if their product needs special treatment, if they are susceptible to extreme temperature fluctuations, if they want to use the Amazon Prime logo on every product they sell, and if they have a complete customer service and return process, or if they want Amazon to handle these logistics issues. Finally, no matter which route sellers ultimately choose, they 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. The cost of developing a private label in China includes 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 the private label China product still has a lot of profitability, then sellers can develop this private label in China.
In conclusion, developing a private label in China requires time and energy, research, review, etc. Although there are certain risks, as long as the store is still in operation, developing private label in China will not stop. If sellers strictly control and personally participate in the entire process, Amazon FBA made in China private label will be more able to increase their profit and sales.