This post is by Anojan Abel, Founder of ShelfTrend.
eBay is not traditionally the first venue that sellers think of when looking to develop and launch their own private label brands.
Amazon, however, has attracted hordes of private label sellers, thanks to its strong catalog-based model, effective marketing options, and hands-off order fulfillment using FBA – all features that eBay has lacked.
But major changes are underway at eBay. Slowly but surely the marketplace is casting off its flea-market image and implementing big technology changes, that make it much more attractive to brands and private label sellers.
In this post, I’ll explain what has changed at eBay to create this new opportunity for private label sellers and brands, and how businesses can get started early and capture the crucial first-mover advantage.
Private labeling and eBay
In the past, eBay had little in its favor to attract serious private label sellers and brands. For example:
- No way to guarantee visibility in search results
- Limited or zero product catalog information to add rich content to their inventory
- Weak functionality to get user reviews and build a brand reputation
- Limited methods to cross-promote items they want to move faster
- Higher effort and time required to stay on top of support, shipping, returns and staying compliant with selling policies
However, over the last few years, eBay has started to make improvements in these areas, and, in certain categories, private label products are seeing success.
So, what’s changed?
Features like eBay Promoted Listings and Promotions Manager now allow sellers to increase visibility and provide promotional offers to drive higher sales velocity.
The huge structured data project is enabling a less cluttered approach to shopping with product experiences like Group Similar Listings and Our Pick (the Amazon Buy Box equivalent) getting exposed to more buyers.
There are more product reviews being generated and exposed on listings pages, which build trust and the chance of making a sale. Sellers should expect product reviews to grow further as eBay now sells more new, fixed-price items than used items and auctions. More often than not, eBay competes directly with Amazon, bricks and mortar players, and pure online retailers.
What does private label look like on eBay?
There are a few categories on eBay where private label disruption is working, such as Home and Garden. If you search for chainsaws on eBay UK, for example, you would notice that among the major brands there are also some private label brands getting traction, such as Parker and Rocwood.
In comparison, here’s how the chainsaw category looks on eBay Australia. Private labels are even more exposed in search results, and as you can see, this has translated into more sales. Brands such as Baumr-AG, MTM and Yukon are delivering a product at a sub-$200 price point and proving popular with buyers.
In fact, the seller who dominates this category was even featured in the Australian national media, where they spoke about how they approach developing private labels through research to avoid a race to the bottom.
If you search for chainsaws on the eBay US site though, it still shows a very brand-heavy offering, yet to be disrupted by private labels.
This could be because US buyers have different buying habits and prefer big brands, or it could simply be that sellers haven’t taken the opportunity yet.
Regardless, if you have a good relationship with a supplier in this field, eBay US may be worth exploring.
The eBay opportunity
As a marketplace for private labels, eBay is in its infancy compared to Amazon, where private labeling is well established and a very popular choice of business model. This means that eBay presents a sizable opportunity to sellers who are willing to do their research, find and source their own products and develop their own private label brand.
The opportunity is there for experienced eBay sellers, who are yet to develop their own brands, as well as seasoned Amazon private labelers looking to increase sales and diversify.
Amazon sellers are perhaps better positioned for success, as they already have experience of sourcing products, building brands and meeting customers’ needs, so they can hit the ground running. They may even be able to dominate categories with their existing Amazon private label brands.
Where should you start?
Look at areas of low supply where you might be able to sell a higher-priced product among fewer competitors.
For example, if you are looking at building a private label product for the fitness tracker category, on eBay.com you will see a lot of generic inventory at less than $25, and a lot of branded products (FitBit etc.) above $135.
At the low-price point just a few listings dominate, with more than 100 sales per week. But there is a clear lack of supply between $50 and $135. What type of product and value-added features might fit in here?
You will need to research deeper into the product types and value-added features to determine if there is a market opportunity to be had. In the chainsaw category, for example, private label brands offer a little extra power output as well as better prices than their major brand competitors.
If you have a good relationship with your suppliers then share your findings (make sure they sign an NDA!) to get an independent perspective. If an item close to what you need already exists, consider ordering a small consignment printed with your own brand, and listing it on eBay to test how buyers receive the product. The findings you get will be invaluable.
This is not an easy way to grow a business, compared to traditional eBay business models such as reselling and liquidation. However, the private label sellers we speak to are investing for the long term, and are willing to put the time into research and testing. They learn from their efforts and always see better results than getting into a race to the bottom.
As eBay makes the move to a catalog-based model, with features like Group Similar Listings, selling generic products is going to become even more competitive.
The benefits of being able to build a brand and differentiate your products are clear. By offering your own branded products, you can get more visibility, reduce competition, and command a higher price.
Why? Because in a similar fashion to Amazon, offering your own private label brand makes your listing unique. As the only seller offering that brand you’ll retain your own listing and won’t have to fight other sellers head-on.
This post was by Anojan Abel, Founder of ShelfTrend, a service which provides global eBay market research to online sellers.
Before starting ShelfTrend, Anojan Abel worked for ten years at eBay in the UK and Australia, in areas including payments, search and buyer experience.