In this guide you’ll read about the first steps in starting a private label business.
The main focus points will be related to setting up an ecommerce business, choosing an Amazon marketplace, learn about Amazon Seller Central and how to make safe international payments.
Most importantly, I’ll explain why it’s critical to build a private label brand and the advantages of branding.
Chapter Quick Links:
- Why you need a company to start selling on Amazon
- Choose the region and Amazon business marketplace
- How to set up Amazon Seller Account
- Get familiar with Amazon Seller Central
- Choose the best online payment platforms for money transfers
- Brand enhancement through Social Media
- Learn the advantages of branding ecommerce products
- How to create a private label brand image
- The benefits of Amazon Brand Registry
- Actionable steps: start an ecommerce business and build a private label brand
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Why you need a company to start selling on Amazon
Your first step in the private label journey is to start a company that covers ecommerce activities. Having a legal entity sets up the correct interactions between you, your customers and all the third party companies you will work with: Amazon, Shopify, manufacturers, banks etc.
In your activity you’ll be issuing and receiving invoices, reports and official documents. More importantly, you will receive money from customers and you’ll have to pay Amazon, your suppliers, and various online services.
To keep everything in legal order, you will need an accountant and a legal entity to conduct your business.
I highly recommend you hire an accountant, preferably one that has knowledge of online businesses. Usually they’ll have some other connections and partners to help with other aspects of your new business, so they can be a valuable part of your activity.
Make sure you take these costs into account when figuring out the budget you want to invest in your new business, first as an Amazon FBA seller and later as the owner of your own Shopify store.
You’ll also need to open a bank account for the business, as this will be a key requirement for your Amazon Seller account. Choose a bank that has good rates and prices, internet banking and doesn’t have roadblocks in online transactions.
You’ll also want to figure out a company name and secure an office location, but these requirements generally vary country by country.
Don’t stress too much about the company Name, as your goal will be to build a brand. Your customers will know you by the brand name and the company name will be just a legal requirement.
For some extra reading, check out the Doing Business website, owned by The World Bank. You’ll find country by country details here regarding costs, legal entities, days it takes to finish the administrative procedures, taxes and comparisons with other countries.
Choose the region and Amazon business marketplace
A big decision is choosing the marketplace where you want to start selling. Since our initial focus will be Amazon, we need to look at their options.
As of right now, Amazon offers 13 Marketplaces: USA, Canada, Mexico, Brazil, UK, Germany, France, Italy, Spain, Japan, India, Australia, Arab Emirates.
The biggest market is still the United States, followed by the UK and Germany, so these should be your primary areas of focus when it comes to deciding your marketplace strategy.
Once you’ve created your Amazon Seller Central account, you can use the same one for selling in the USA as well as the UK. Seeing as these are the biggest markets for Amazon, most of this guide will be focusing on them.
The majority of the information in these guides is applicable to all marketplaces, but do bear in mind that there are various country specificities that need to be taken into account. The biggest hurdle is the language barrier, as everything needs to be adapted to local needs.
As a rule of thumb, the UK has less competition on products but fewer overall sales figures. The USA has a huge number of sales, but the competition is extremely fierce, especially in several categories like Sports, Supplements etc.
Be mindful of fiscal regulations, namely the Sales Tax in the USA and VAT in the UK and most European countries.
In your aren’t a US based legal entity, the Sales Tax is deducted and handled by Amazon directly from your sales, based on the legal information you provide when setting up your account.
If you plan on selling in the UK, you will need to apply for a VAT code. This can be done remotely, if you contact a local accounting firm or use the Amazon services.
Keep in mind that if you plan on selling in other European countries you will need VAT codes for each of them.
Important Note: As long as you keep your products in UK fulfilment centers, the sale is considered to have been done in the UK, hence you pay VAT only there. Make sure that in the account settings you haven’t set the option to spread your inventory in different countries depending on demand. Once you make a sale from a fulfilment center in Italy for example, you will need an Italian VAT number to be fully covered fiscally.
Finally, always pay attention to international developments, as both the UK Brexit and the US-China trade disputes can have a significant impact on your new business. Be mindful that the international scene is always changing and a successful entrepreneur needs to stay up to date with current developments.
Amazon has a nice guide on international selling that goes into a bit more detail regarding the topic, and I suggest you have a look over it to get a better feel for what an international business entails.
How to set up Amazon Seller Account
Creating your Amazon Seller account is quite straightforward. Just make sure you opt into a business account, not a buyer account.
You will be required to provide several documents to prove your identity and the company’s legal status. Your ID, company registration number and bank account details will have to be translated into English and authenticated by a notary.
The official document list required by Amazon is the following:
1. Credit card
2. Phone number
3. Company registration details
4. Primary contact information
5. Beneficial owner information
6. Bank account information
You also need to keep in mind that the Seller Account is not free. You will be charged a monthly fee by Amazon. For the first few months when you won’t be making any sales you can request a refund, so you don’t have to pay until you start selling your product.
Get familiar with Amazon Seller Central
There are two sides to Amazon: the Amazon Store, for regular customers, and Seller Central, for companies.
You can use the Amazon store to search for products, their descriptions, pictures and prices and generally get a feel for what people are buying and what sellers are offering.
On the flip side, Seller Central is where you will be running and managing your business from. It’s important to get accustomed to it, since you will be spending a lot of time in this platform.
The main actions you can take in Amazon Seller Central are:
- Keep track of products
- Check stocks
- Track orders
- View or change details about your account
- Receive notifications
- Manage shipping details
- Manage advertising campaigns
- Download monthly reports
Choose the best online payment platforms for money transfers
Regardless of the local bank you use, it’s a good idea to also work with a financial intermediary company.
The major benefit is that you bypass currency exchange losses, especially when Amazon sends your earnings to your bank account. Even if you have a local bank account in USD, when Amazon sends your earnings, they get converted to local currency and then reconverted to USD. The exchange rates are usually favoring the banks, so you lose some money on each transaction.
To bypass this issue, you can use an intermediary that can receive the amounts in USD and then send them to you locally in USD, without any other conversion. Each transaction will cost you around 1.5% to 2% depending on the company. You would still be gaining around 3% more revenues overall by bypassing the unfavorable exchange rates.
There are a few payment platforms available out there, each with their own advantages and disadvantages.
Payoneer – A payment platform dedicated to global commerce. It offers options to receive international payments via marketplaces and networks, receiving accounts like Amazon FBA or payment requests. Payoneer also allows you to manage your funds and make payments directly from the Payoneer account.
Revolut for Business – In their own words, Revolut for Business is a business account platform for domestic and international payments, designed to save you time and money. They offer domestic and international money transfers at great exchange rates, accounting tools to track your finances and automation options to save time and reduce the risk of errors.
World First – A global payments platform for international trade that offers business accounts in 10 different currencies. They specialize in making and receiving secure international payments at very good exchange rates.
Brand enhancement through Social Media
When people show off your products in Social Media posts and interactions they are actually identifying with your brand.
They offer legitimacy to your company in front of other potential customers, which in turn will lead to more organic sales. You’re basically getting better exposure in the market without spending money on advertising.
On top of user-generated content, don’t neglect your own posts and content on relevant Social Media platforms: Facebook, Instagram, Twitter, Pinterest etc.
Regularly posting useful and insightful articles, photos and stories about your products and Brand gets you extra attention and traffic. It gives you more exposure and ultimately leads to more sales from people genuinely interested in what you have to offer.
If you want to create beautiful and engaging posts for your social media accounts, I highly recommend Stencil. It will allow you to quickly create beautiful social media graphics using a simple but powerful design tool.
To keep track of everything going on in your social media presence, look no further than Social Bee. Social Bee is a social media management tool that allows you to schedule posts, re-use content, keep track of your engagement and automate a lot of the activity related to your social media presence.
Another big reason to leverage Social Media is that Amazon only lets you post 9 pictures on your product page which limits the customer’s ability to see your product in as many situations as possible.
Having those 9 pictures distill the essence of your product is something that you will have to do if you want to be successful. That doesn’t mean that you can’t use your social media presence to share as many pictures of your products as you want, either presentation images, people using them, videos etc.
Most platforms have started to offer users the possibility to shop directly from their social media accounts. This is a huge opportunity to increase your sales in the long term, since you already want to have a solid online presence and community around your Brand and you can use the integrated tools on each platform to boost your sales. By far the most useful tools will be the advertising platforms integrated into most Social Media environments, but we will cover these in later articles.
Finally, something to keep in mind is that some products have an easier time on social media and are more marketable by their very nature.
However, even if you have an “unsexy” or boring product, there are ways to be creative and think outside the box to put the spotlight on your Brand. I would actually argue that these “unsexy” products have even greater success with a good campaign, and greater odds of going “viral”.
No matter the type of product you have however, the power of Social Media is real and should not be a wasted opportunity. Instead it should be a tool to help you expand your brand and reach out to more and more customers.
Learn the advantages of branding ecommerce products
When starting your ecommerce business your goal should be to build a brand, not just to sell some products. This route is a bit harder, but the payoff long-term is significant, and I will try to outline some of the major benefits of this approach.
First of all, by having a second product under the same private label Brand you are able to leverage a lot of the work you’ve already put into the first one.
You can easily use the same logo, so you don’t have to spend another 50$ on a new one. You already have background knowledge about the general market and likely consumers because of your research from the first product and you can use the same trademark associated with your brand.
Keep in mind that the long term goal is to build your own Shopify store, so having products from the same niche will make it easier to build a consistent theme for your shop.
The second major benefit of a brand is related to customers, as you’re giving them more options to buy from you.
If you’re managed to capture emails or contact details from customers who bought your first product, you can easily reach out to them once you launch the second one. You can entice them with discounts, bundles with your first product, various special offers or even gift boxes with your products.
Overall, the extra product will get you a higher AOV (Average Order Value) from each customer, which in turn will climb you higher on the Amazon rank, as you are bringing more sales and value with each purchase.
Amazon is encouraging this, as you can see various sections of “customers who bought this also bought…” and “frequently bought together”.
If you’re missing out on this chance to offer your customers something that complements their first purchase from you, you’re allowing the competition to squeeze their products on top of your own offer.
Another positive of having a second product in the same niche is the ability to leverage an existing relationship with your current supplier.
Chinese manufacturers are specialized, so it’s not uncommon to find one supplier manufacturing different related goods. This will help build extra trust, possibly get some discounts and save time in logistics when it comes to packaging, shipping, customs support etc. It’s generally easier to deal with one contact instead of several.
The downside to this is that you’re putting all your eggs in the same basket. If anything goes wrong, it goes extremely wrong. Long term you will want to branch out and work with multiple suppliers even for your first product, especially when you start growing and you’ll need more quantities of inventory.
Finally, by building a brand with multiple products, your customers will perceive you as an established and experienced company that they can trust.
This will bring in extra exposure and will give people a chance to “bond” with your company and your brand, and in turn this will lead to more free exposure and user generated content on social media networks.
By building a brand you set yourself up for long term success, and each little step actually has an overall compound effect on your sales and your growth.
How to create a private label brand image
The most basic starting point of a brand identity design is a logo, a graphical element that identifies your company or products.
The characteristics of a good logo are:
- Simplicity: it should be easy to recognize and remember
- Memorable: it’s distinct and unique
- Adaptable: you can easily use it in a variety of circumstances without needing to change it
- Longevity: it stands the test of time by having a simple design with evergreen colors that match the Brand identity
You’ll want to build an identity for your brand across your website, product and packaging, marketing materials etc. This will include having the same color pallete, same typography and same logo.
All of these elements, along with your customer interaction, the quality of your products and the way you act as a company will form your brand image. This is ultimately what your customers will remember about the interaction with your company.
Ar first you can start building your brand image with a logo either by creating it yourself or by reaching out to a designer.
The first option is using a tool like Stencil to create your own logo and graphics for your brand. It offers a variety of stock images, templates, fonts, icons and graphics so you can design your own brand from the bottom up.
The other option is hiring a designer on a Fiverr. A multipurpose freelancing platform, Fiverr offers a lot of options to hire talented people.
You’ll still need to come up with a general theme and direction you want for your brand, to give the designer a starting point.
If you do choose to create a logo with a designer, make sure you request the files in PNG, AI and Vector formats. Get a package with unlimited revisions preferably, since it’s almost impossible to have a perfect logo on the first try. You will also need to request the commercial copyrights to the design.
The benefits of Amazon Brand Registry
Having a trademarked brand gives extra benefits in the Amazon platform. It can offer support in case your intellectual rights are infringed and gives you extra options in your product description area.
A brand registry also protects your listing from Amazon hijackers trying to jump on your product listing or trying to take your product photos.
By applying for brand registry within Amazon you will get access to a tool which allows search by ASIN or pictures so you can easily identify and report hijackers.
This will allow you to quickly find out if anyone has made changes to your listing (title, bullets, pictures etc.) and report them so the changes are reverted without your customers being mislead with false information.
In order to get registered as a brand on Amazon you will need:
- A brand name
- Brand Registry Number
- Images of your logo and brand name on the products you sell
- The product listing category
- The countries where the product is manufactured and sold
You can register your brand in any country that has an Amazon marketplace, regardless of where you are actually selling. You can sell on US, register you brand officially in UK and still be eligible for brand registry.
However this will not actually legally protect you in the US, as you will need to extend your registry for the USA as well. It is however a nice “loophole” to get the Amazon Brand Registry benefits a bit quicker.
To give you an idea, brand registry in the UK takes about 3 months to complete, and in the USA it takes about 1 year.
When you go ahead with the Trademark registration, also buy your Domain name. There are various companies scanning recent registrations and buying domain names related to the requests. They then re-sell these at exorbitant prices. I recommend you use a service like NameCheap to secure your domain name as soon as possible if you know your Trademark has a high chance of being approved.
Extra benefits of having Amazon Brand Registry:
- Access to extra options in the product description section of your listing’s product page
- Allows images, charts and infographics in the product description sections
- Makes it easier to tell your brand story and connect to customers
- If you have multiple products, you get access to an Amazon Brand Store. You can customize this further with pictures, videos, and more text options. This increases your brand’s visibility, trustworthiness and reputation, leading to more customers
- You can create Headline Ads, that show up on top of search pages. These are paid ads, targeted on your keywords, that allow up to three products to show in a banner.
- Access to the Amazon Early Reviewer Program. For 60$ per parent ASIN, for a product with a sell price of at least 15$ and with less than 5 reviews, Amazon will send people to your page to buy your product and leave reviews. They will do this until you reach 5 reviews, which are not guaranteed to be good.
Actionable steps: start an ecommerce business and build a private label brand
- Start your ecommerce business
- Hire an accountant
- Open a bank account
- Establish your budget
- Apply for an Amazon Seller Account
- Register on an international payment platform
- Create your brand image
- Make branded social media accounts
- Do trademark research so you can apply for Amazon Brand Registry