Pros & Cons of Amazon Private Label vs Wholesale – Amazon Private Label vs. Wholesale: Which Is Really Better?

Many online marketers are curious which method of selling is better, the Amazon Private Label or wholesale? The private label program posted a large market in Europe that has a percentage between twenty and fifty percent of the sales in European supermarkets.

Private-label goods perform better than their branded counterparts. The reasons why private-label goods have higher market penetration are varied. 

Let’s find out which is better, Amazon Private Label or wholesale:

Amazon Private Label vs Wholesale: What’s the Difference between the two?

The private label represents 16% of the total retail market of packaged products consumed by individuals in the United States or a market value of $140 billion. The share of store brand products of the grocery sales for private labels recorded the highest performance in the United Kingdom and Spain.

Deciding which of the two ways to procure products to sell for Amazon needs study by comparing the differences between Amazon Private Label and Wholesale by looking at their respective pros and cons.

Let’ compare how they differ:

1. Pricing Difference – The cost differences between Wholesale and Private Labels are different. The price you pay for purchasing the stocks from a manufacturer for private label is minimal as the product does not have a brand. After acquiring a private label, you create a new product and new EAN.

Although it is not your original creation, you don’t sell similar products as your competition. You have the freedom to set your price as no other sellers have the same set of goods as yours. The downside is you will miss the Buy Box because you are not in competition with other sellers. 

Without a competitor, you have a lesser chance that your product is on the top list in the Amazon search result list. Wholesalers who buy established brands pay higher compared with no-name products that private label sellers sell. If the item for wholesale does not sell,

you lose your profit because you purchase it at a higher price. Since you have many competitors of the same brand with the same EAN, you are engaged in a price war and compete for the Buy Box.

2. Legal Responsibility Difference – Owners of a brand or trademark are liable for the product they sell. They are responsible for the damage incurred if an accident happens while using the product. When selling your product, it is vital to indicate if you are an exporter, manufacturer, dropshipper, or seller.

Since you own the product you purchase for private label, you are liable for an accident because of a factory defect, even if you did not manufacture it.

If you buy the product from a non-EU country, you become an importer and liable for legal consequences. It is ideal to purchase the products from EU countries because they are manufactured or imported to these countries and don’t become an importer.

Wholesalers have no legal responsibilities compared to private labels. Your obligation is zero if you source the product from EU countries. It is the manufacturer who has to face legal action when the product comes from non-EU countries.

3. Risk & Opportunities Differences – Amazon private label sellers have more responsibilities for the brand and products they sell. If the product does not sell because of a factory defect, they are held liable and affect the sales.

Since you purchase the product from a manufacturer through a private label, you can customise the product description and create your optimised texts for higher online visibility. As an owner of the brand, you can diversify your business by adding more items to your product listings to improve your marketability. You can also sell the brand if you no longer need it.

Wholesaling is ideal for new merchants who have not established their brands yet. The downside of wholesale is you lose the chance to create your brand or add more products to your listing. You lose your influence on the design if you add it to the current product range.

If your product is on a website managed by an inept person, you have to bear the consequences of a low-quality design.

4. Who Wins the Buy Box? – Private label sellers have less chance of competing for the Buy Box on Amazon because they have no competition. Don’t despair; you can still win the Buy Box if consumers are after your products they already tested. Some consumers try non-competing products. Once they try yours, they keep coming back, which leads your brand to the top search results.

Wholesalers have to struggle in the price war with competitors and beat each other to win the Buy Box. Other sellers use other methods like Amazon FBA to outdo each other in the Buy Box race. If you want to lead in the race, monitor your competitors and set the perfect price tag.

5. Investments Difference – Private label sellers do not need more money to procure no-name products from manufacturers. They need capital to purchase the product in bulk, pay a professional to make the label design.

They also have to buy high-resolution images from reliable websites and create the EAN for the product. If you opt to become an Amazon private label seller, you spend money for the brand promotion. If you purchase them from EU countries, you also deal with high shipping costs.

Wholesalers do not deal with other expenses aside from the money they pay for bulk orders from suppliers. They need not spend much for promoting and distribute them to end-users. Products from the European Union countries are affordable than getting them from non-EU countries.

If you want to see a wider view on Amazon Private Label, you can check out our blog: What an Amazon Private Label Really Looks Like.

FAQs

Conclusion

The answer to which of the two selling methods is the best depends on your status as a seller. If you are a new seller, wholesale is ideal as you need to establish your image and reputation as a seller. Experienced sellers can opt for the private label segment and use their skills to improve their sales.