How to Avoid a $10,000 Private Label Mistake
We share, in this podcast episode, five ways to avoid private label mistakes, if you are just getting started in the Amazon Private Label business.
Mistake #1 – Listing Products That Are Already Too Saturated – You might get stuck with $10,000 worth of stale, dead inventory if you launch a “Me Too” product (one of the most common private label mistakes we see). This is a product that already has too much competition before you even launch your product, which only means one thing…disaster! It can be tempting to join the hundreds of sellers following the popular trends of the fidget spinners, or the mandoline slicers, but it is actually the worst move you could make. In order to even begin to compete with those many sellers, your marketing budget needs to be quite lucrative, so that’s not the move you want to make launching your first Private Label product.
- Remember, “the Riches are in the Niches!” Finding the right product is key.
- 80% of your time should be spent on product research. Our Private Label course comes with a product evaluation tool that helps sellers answer their own questions about the strength of their products.
- Even if your listings aren’t all that great, or your keywords could use some help, most of the time, the right product is going to yield some fabulous results.
Mistake #2 – Wanting to Do a Test Order for All of Your Products
– Test orders won’t give you an adequate picture of how your product will do full-scale because all orders require a launch strategy. If you only order 25-50 units, you won’t invest in a strategy that generates the type of sales velocity that you are aiming for. Sellers who run test orders won’t take the time to invest in amazing photos for their listings. They also won’t invest in really good copyrighting. Sellers hurt themselves in the process when they don’t gain the traction needed from a successful full-scale launch, because they may have an excellent product that never gets the chance to get off the ground.
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Mistake #3 – Ordering Too Many Units – There is no hard and fast number for the right amount of units you should order for a product, but our Private Label course helps sellers discover the metrics needed to calculate their product’s demand. So sellers should spend the time and do the research for each product they are launching. This research should be based on the following:
- The amount of units that are currently being sold. It is tempting for sellers to overestimate the actual demand of a product. They may find themselves spending capital on products that takes them over a year to sell, all because they overestimated the demand of their product.
- Negotiating a supplier’s MOQ (Minimum-Quantity-Order). An initial first order that is much lower than the MOQ is OK to negotiate with the supplier. You want to check for quality and if it’s good ensure you will be placing a larger order in the future.
- Balancing the Cash-flow on hand. Sellers should avoid using up all of their cash-flow on a large order, especially if the order doesn’t yield the results they expect. It is better to err on the side of a conservative order and be able to have the capital for a larger shipment the next time around.
Mistake #4 – Making Your Price Way Higher Than the Current Competition – Making slight adjustments to your product doesn’t necessarily mean you should raise the price significantly. Sellers should plan a strategy where their product comes in at a lower price in order to undercut the competition. A seller needs to think like a consumer who is looking for the cheapest price on the first page of search. However, the reason sellers raise their prices is because they struggle with getting the margins they need for the product, but rather than raise the price, and not make any money on a product, sellers should take the time to find the right supplier that will give them a good quality product.
Mistake #5 – Not Budgeting for a Market Budget – Spending every single dollar on inventory and shipping costs, leaves no room for a marketing budget. Our Private Label evaluation tool allows for that metric to be discovered so that you can plan accordingly. Consider the following as a part of your market budget strategy:
- Budget for photography services – Consider our amazingfreedom.com/magic photo services which charges $129 for 7 images
- Budget for copyrighting services – Consider our service available amazingfreedom.com/listing
- Budget for sponsored ads – even if it’s just $10/day budget initially.
Follow these tips to Avoid some of the most common Private Label Mistakes.