The Truth About Private Label: How I Lost $4K Selling on Amazon FBA
Private labeling has become a popular business model for many aspiring entrepreneurs looking to start their own e-commerce business. With success stories circulating online and the promise of passive income, it can seem like an enticing opportunity. However, behind the glamorized stories, there is a side of private labeling that is often overlooked – the risks and potential pitfalls that could lead to significant financial losses.
As someone who went through the process with high hopes and experienced a significant loss of $4K, I feel it is important to shed light on the truth about private label selling on Amazon FBA (Fulfillment by Amazon). This article aims to provide valuable insights and cautionary advice for those considering embarking on this journey.
First and foremost, it is crucial to conduct thorough market research before jumping into the private label business. Identifying a profitable niche is key to success. While it may be tempting to choose a popular, highly competitive product, it is important to consider the costs of marketing and advertising that may be required to stand out in the crowded marketplace. Additionally, understanding customer demand, pricing trends, and potential seasonality of the product is crucial to avoid costly mistakes.
Another area that is often underestimated is the overall investment required to start a private label business. While it is true that the initial investment can be relatively low compared to other business models, such as manufacturing products from scratch, there are hidden costs that can quickly add up. These include product sourcing, packaging design, inventory management, photography, marketing, and advertising. Underestimating these expenses can significantly eat into profits and potentially lead to losses.
Moreover, competition within the Amazon marketplace is fierce. Large established brands and manufacturers often have the resources to dominate listings and lower their prices to undercut new sellers. As a result, gaining visibility and generating sales becomes increasingly challenging. Marketing strategies such as pay-per-click (PPC) advertising can quickly drain budgets if not managed properly. Competition can be brutal, especially in popular product categories, making it essential to differentiate and provide a unique selling proposition to attract customers.
Quality control is another critical aspect of private labeling that should not be taken lightly. Opting for the cheapest supplier or failing to test product samples thoroughly can lead to subpar merchandise and ultimately negative customer reviews. Amazon places great importance on customer satisfaction and prioritizes listing products with positive ratings. Failing to meet customer expectations can quickly result in plummeting sales and damage to the brand’s reputation.
Lastly, the ever-changing landscape of Amazon policies and regulations can pose significant challenges. Sellers must stay updated on the latest guidelines and ensure compliance to avoid suspension or other account-related issues. Ignorance or carelessness in adhering to these policies can have dire consequences, including irreversible damage to the business.
While my personal experience with private labeling on Amazon FBA resulted in a loss of $4K, it is important to note that not all ventures end in failure. Success stories do exist, showcasing entrepreneurs who have managed to build profitable private label brands. However, acknowledging the risks and actively mitigating them through meticulous planning and execution is essential to increase the chances of success.
The truth is that private labeling on Amazon FBA is a highly competitive and complex business model that requires significant research, investment, and continuous adaptation. It is crucial to approach it with a realistic mindset, understanding that it is not a guaranteed path to overnight success. By considering the potential risks, thoroughly analyzing market demand, and implementing a well-thought-out business strategy, aspiring sellers can increase their chances of building a profitable private label brand.
FIND: Turnkey Businesses
LEARN: How To Make Money Online
HOW TO: Work From Home
REVEALED: Online Business Ideas
Grab a copy of my FREE Intro to Amazon Course at https://www.reezyresells.com and reply to this letting me know what you think of this video or what other videos you would like to see me make
This channel sucks
very inspiring
Thanks for your videos, Reezy. They inspired me and my father to start our own amazon fba journey. I appreciate you sharing your tips without brag about anything you achieved.
Reezy, Is it possible to change the address and mobile no. after being created seller account.?
Hi! Do you accept partnerships? Emailed you
Reezy if I have a professional selling account will I be allowed to purchase a handful of retail arbitrage items to sell at my store because then my receipt to get ungated in those categories would not match my pro account since it’s retail arbitrage…?? If I had an individual selling account would I simply upload my receipt and follow the rest of the selling instructions to attempt getting ungated? Thanks for your input as always?
yo- you keep promoting chris grant– why? he takes in 300k to mislead 75% of the customers- he dvertises he is selling fba how to— but he is selling advanced shit- he has his core team of software builders around him saying how good he is.. he is a soft ware salesman with his buddies on the sidelines— seriosly he needs to be reported to the govt…. he dont teach fma he teaches and upsells software which is a violtion of of many codes
great video thank you,
Hey Reezy just got started on Amazon today and I started listing sneakers I’ve had stockpiled since I was selling on other platforms up until this point. I had a friend who’s been doing this for a while tell me that I can’t list those items since there’s no “chain of custody” to prove they’re authentic. I’ve kept all my receipts from these purchases and used my credit card associated with my Amazon account and it’s the same one I used to buy 10 skus to get ungated. Is he right?
How much quantity is recommended to buy on the first product?
Jumping on other people's listings can be risky financially. I tried it before too! The person with the lowest rate always won the buy box. When I tried to lower my rate, someone lowered theirs lower than mine and kept winning the buybox.. Alot of money can be lost this way. Glad I'm brand registered and have my own listing.. Now, no one can jump on my product listing.
Yes, I just open my Amazon seller account. What will be my next step? They want me to work on my Yax Documents and VAT.
Thank you
I have been watching a channel for years now. I started RA years back, I started because of your channel and others. I stopped in 2020 but I plan on revamping my company. Thank you for all the info and motivation.
Hey Reezy. Quick question for you. I’ve been trying to find an answer for awhile now. When it comes to having the addresses match could I use both for my home address? I just wanna hear what you do when it comes to that.
Hey Reezy, I just watched your video and I must say that it was really informative and well-made. I loved your videos. I was wondering if I could help you edit your videos and also make highly engaging shorts for you?
I'm done sitting tight for the award advance since i acquired $18,000 in 14 days of my investment cause everyone needs more than their salary to be financially stable, its why i always advice people looking for a way to make money to try out cryptocurrency or stocks that's a good passive income, you making profit in matter of days given you invest with a good professional trader cause crypto currency and NFTs will outsmart the banking system in the neareqst future serving as a global fiat. Already making over 85% profit from my current investment
So have you sold the same products on eBay and Amazon at the same time? If so how did it work out? If not why not? Thxs kindly
how do you get an inspector?
Man bro this video is awesome, I appreciate you not talking bad about private label, most ppl point to the business model as the problem. But you pointed out what you did wrong AND found a new niche in the midst of it all. I can tell you learned from you mistakes and like you said had you realize earlier to shut down that product you could of started another one. Thanks for your honesty brother!! I am starting to sell books like how you started and I hope to get out the matrix lol
I'm not planning to do Private Label any time soon but I appreciate hearing your story so much. You are a diamond to the Amazon community. If you ain't flippin you slippin! <3
shiny new object happens in a lot of places!!!!
Would be pretty cool, if you did a case study of launching a private label product publicly like Jungle Scout did a while back. Also not sure why you kept saying the buybox did not get shared. With privat label you have your own listing, so getting the buybox is not an issue. Maybe I missed something.
same happened to me, amazing quality sample product but shipment was garbage. ppc expensive, i was down 8k
yay another Reezy video!
Mistakes is a lesson to learned in our life, don't give up Bro… I'm also lunch my first step as new comer's on AMAZON seller her in Middle East. Thanks for your motivating video every time Bro.
You nailed it on point 4. You could have the best product in the world but if you dont know how to market it, it will never move up in the ranks in amazon. Amazon is a graveyard of mismarketed products.
This seems like an honest story of a bad decision, what was your best product you’ve ever sold. To be honest, this was a really bad plan to try and sell a cheesy parachute game to an unknown consumer.
I'm so interested in private label, but I haven't taken the plunge yet. My background is in marketing so don't mind me spitballing I just like a good marketing exercise:
I think your product was a good idea, especially with the popcorn differentiation. Maybe just not for Amazon or purely marketed through PPC. I think adding the popcorn balls and selling it as a complete game with the target market being preschool educators may have worked a little better. Maybe trying an influencer strategy, finding some early childhood educator influencers to entice to demo and review your product as an affordable and cute activity. Coming up with some different games and uses to include on an instruction card. There's even the possibility of pounding pavement and seeing if any mom and pop educational supply stores would carry it. But that's all really a different strategy than what you were probably going for, and certainly would have cost more to get off the ground. Influencers aren't always cheap either. Who knows if any of that would actually help. Just goes to show that not every idea is an "Amazon" idea. But at least you got a learning experience out of it!
you sold ten million. man its time to check out a dentist. you’re online. your image is important
Thanks for being transparent and honest of what you went through. Definitely helps others from trying to make the same mistakes.
A product inspection is GOLD when dealing with ordering on Alibaba/overseas. And you don't have to do 50% upfront. Most of us only do 30% upfront and the remaining balance is paid after the inspection.
Reezy, thanks for always being transparent. You rock!
Definitely should have taken a Amazon Private Label course AND used Helium 10.
Where’s Simon at??