August 14, 2017
Expanding into in-house branded products is an exciting endeavor for any business. For marketplace retailers, it can be lucrative to maintaining growth and as a source of substantial profits. The largest third-party Amazon sellers focus on providing their own branded versions of in-demand products.
Below I have detailed a bit of what my work flow looks like. I hope they provide some insight on how we can ramp up the division, and a bit of what my day to day would consist of. Since my experience involves working with China, the information below assumes China as the source of product. There are always plenty of Amazon product opportunities that we can consider outside your current categories.
Identifying Product Opportunities
The first step to starting an in-house brand would be to identify products that are in good demand, low tech and low risk. Once items of this nature are proven successful, consideration of more complex or expensive products could be considered.
Researching each target category on Amazon for suitable products is a pretty straightforward process; high rank, 4+ star rated, lots of recent customer reviews. While there are plenty of research tools available, simply spending good time on Amazon would provide the necessary information to finding suitable products.
Filtering out quality suppliers requires spending good time on research, communication, and negotiation. Obtaining the golden combination of quality product, good price and low MOQ often requires fostering a relationship of confidence and trust with the supplier. They should have confidence that we are professional buyers and have a long-term interest in growing business together. Factories receive many inquiries from overseas customers, most of which do not go beyond the initial quotation and/or sample request. Having a foreign buyer that speaks the local language and has experience with the local culture often breaks the ice quite well and lets them know we are serious.
The process should start with thorough supplier research for a given product. Focusing on who’s who in producing quality product and filtering out suppliers that cannot meet our requirements.
Trading companies often stand between a factory and the customer, so taking the time to find our way to the actual factory is critical. Verification of material quality certifications and a tour (via video or in-person) often helps to filter out those who are high risk, or pretending to be the factory. Sometimes the factory set up a separate sales arm that is a trading company. All this can become clear through discussion and verification. The goal is to work directly with the right people.
Making a trip to China is often a productive way to tackle many products at one time, but is not always necessary. As we scale, on-site quality control becomes more important, so working directly with the factory is a must.
After making the initial contact and showing interest in a product, it is critical to find the right balance between quality, price and the MOQ for an initial order. My experience is that we can always reduce the MOQ and perhaps the price when there is confidence in a possible ongoing relationship with a supplier. It is important to discuss carton quantities, dimensions and weight per master carton of the specific product. Once we have this information, we can make calculate the landed costs of an item (door to door freight and import duties). Next, we calculate profitability selling it on Amazon and decide if it is worth obtaining samples.
Sometimes it’s worth obtaining samples from suppliers just for product research purposes, regardless of intent to purchase. Often, we may find the same exact product/mold from several factories, and we should do our best to understand the material quality differences between each supplier’s product.
This process consists of requesting samples (possibly paying for them), tracking receipt of the samples, tagging them with supplier names, and of course, review/testing the samples. This can be done from the U.S. without difficulty, although it takes time to round up a decent number of samples for one product. The goal is to be working on several products at a time and always have an inflow of samples coming in. Once the winning sample for a product is selected, we can work on finalizing the details of the first order.
Certifications & Testing
Depending on the product complexity and potential safety concerns, we should work with SGS (or a similar firm) in China to test our products. Some factories have certifications for their products, but there are benefits to independently certifying products.
Selling the product
Having conducted proper research on the demand and supply sides, selling the product on Amazon should be a straightforward process. My experience is mostly with low ASP products, so my sales were organically driven (no PPC). When focusing on items of a higher price point, using efficient PPC campaign as a supplemental source of traffic to listings should be considered. Generally, I like to give a product 60-90 days on Amazon before deciding if the product is worth keeping active.
Monitoring of in-house products at Amazon should be routine to ensure that the product is well received by consumers. When a product falls below target star ratings, it should be removed from the Amazon catalog. After reviewing the reasons for low ratings, it should be decided if the product deserves another chance, or if it’s best to discontinue and stop offering the product. Relaunching under a new UPC/ASIN can be considered if the product is good and fell victim to inappropriate or unsubstantiated reviews. If demand was good, but the product quality is not where we need it to be, we can work on a better version of the product to release as a new item.
If a product does not meet profitability requirements within the required time, discounting or liquidating the product would be best. Recoup what we can and then move on to the next product. While every product will not be a home run, getting some steady sellers and a few home runs can increase revenues by millions per year on Amazon.