This post is by Philip Murphy, Digital Marketing Manager for Private Label Sk.in, a skin care manufacturer for private label brands.
The advantages of selling private label skincare products on Amazon are substantial. But to succeed, you have to work through some of the challenges that go along with being on the world’s largest ecommerce site.
Yes, you will have immediate exposure to an enormous market, but you will also have to contend with strong competition, tough policies imposed on sellers, and – when using Fulfillment by Amazon (FBA) – potential inventory issues.
Fortunately, most of these challenges and others can be handled with research, planning, and diligence.
1. Find the right manufacturer
There’s more than the cost to consider when you are choosing a private label manufacturer.
Seek out a manufacturer that is already experienced with private label skin care products similar to the ones you want to produce. Speak with them about their process. Visit them if possible. Ask about their minimum order requirements, and how quickly they can scale up as your business grows.
Consider if they offer extra services that you want, such as packaging design or fulfillment. Ideally, you will want to find a manufacturer who you can work with on a long-term basis and treat as a partner.
2. Follow the regulations
Skincare products are not regulated by the FDA if they do not make any medical claims. But, if they are meant to not only improve appearance but also promote a change (such as an improvement or a cure), then the products will be classified as both a cosmetic and a drug.
To find out which category your product is in, consult the FDA webpage on the topic. The FDA also regulates the use of the term “organic”, labeling, the cleanliness of manufacturing plants and ingredient safety.
3. Protect your brand
Your own original logo, business name, and slogan are legally yours, but should another party ever contest your right to it you will want the protection that comes from having a trademark formally registered. Without trademark registration, another brand can successfully claim your name and you’ll no longer be able to sell your product.
The first step in the registration process is to do research to be sure that you are not unintentionally copying another company’s concept. If your trademark is free to use, you can file your application.
Registering your trademark not only protects your business but also gives you extra advantages on Amazon. In an effort to reduce counterfeit items and trademark infringers from their marketplace, Amazon created Brand Registry for owners of registered marks. The registry gives registered brands a prioritized listing above other sellers, and offers optimization tools to help with sales.
4. Get through Amazon’s gate
About a third of products sold on Amazon are in gated categories, which are restricted to sellers who can establish their legitimacy and demonstrate good business practices. Amazon currently restricts access in this way for topical skin treatments.
Increase your odds of approval by demonstrating good past performance (less than 4% late shipment rate, less than 1% defect rate and less than 2.5% pre-fulfillment cancel rate). Also maintain your own website, provide invoices showing past purchases, work with an established manufacturer, and submit all requested forms.
An Amazon rep will guide you, so pay attention to their feedback and respond promptly.
5. Compete in your category
The advantage of selling private label products is that no one else is selling the exact same item. But with that advantage comes the effort required to attract buyers to your brand.
Some strategies include:
- Packaging: The colors, fonts, bottle shape and design elements of your packaging and other branding is crucial to drawing the attention of your buyer. Imagine who your ideal customer is, and then create the design that will draw their interest. Are they looking for luxury, or something bright and trendy? An all-natural image, or a strong, industrial look? Test out a prototype with a group of your ideal buyers for feedback.
- Story: Is there something unique about the origins of your company or the people it employs? Can you say something intriguing about your key ingredients and where they come from?
- Community: Your products may become part of a larger lifestyle brand you sell from your own site or social media account. Using Amazon and your own site to reinforce each other could be a great means of growth for your business.
6. Manage inventory
First, you will need to choose whether to manage inventory yourself, use FBA, or engage the services of a third-party fulfillment provider. One of the first key factors in choosing among these options is determining if your items need any special handling.
Private label skin care products, as well as many other health and beauty products, often require special handling due to:
- The perishable nature of their ingredients.
- The fragility of some containers.
- The potential for creams and liquids to create a mess if a container should break.
If your ingredients are especially prone to damage from temperature extremes, or if your branding depends on very particular packaging and sensitive handling, then FBA may not be the best option for you.
Your own fulfillment
You may be tempted to save money by keeping your inventory in your garage and shipping packages out yourself, but many sellers find that this arrangement becomes unmanageable once you need to send out more than 10-20 items per day. Even if you have staff to help you, the unfamiliar complexities of order fulfillment might cause a Shipocalypse and temporarily close down the rest of your office.
Using a 3PL
Using a third-party logistics provider (3PL) may be a good choice if you need special treatment for the temperature, handling, and packaging of your private label skincare products.
However, to make the arrangement worthwhile, you will need to interview 3PLs to see which already has experience handling products similar to yours that require the same special care. Once you have found some good potential matches, compare candidates based on the services they offer, locations of their warehouses, packing and delivery times, and quality control measures.
If you use Amazon’s own fulfillment services, be certain that your packaging can withstand being handled roughly and dropped. If Amazon thinks that your packaging could leak, they might decline to stock it, so you may want to add shrink bands or other protective measures to your packaging.
Adding form-fitting cushioning within your packages will help avoid breakage, but you will have to balance the additional protection against the increased cost of packaging materials and shipping and storage fees for larger packages.
Amazon has a financial incentive to avoid spoilage in their warehouses, and their seller page lists guidelines for displaying the expiration date of your products. Note that products sent to Amazon’s warehouse within 50 days of expiration will be discarded.
7. Keep track of returns
Amazon allows returns of any purchase for any reason within 30 days of the purchase date. As a third-party seller, you are obliged to match or exceed Amazon’s policy, and your return conditions must be stated clearly on your storefront. To make it easier for your customer, you must provide a return address in the United States, a prepaid return label, or a full refund without the need to make a return.
If you get a return notification from Amazon, check to see if the product was returned outside of the allowed window, which would relieve you of having to match Amazon’s return policy. Find out the reason for the return and inspect the package if the customer claimed it was damaged.
If the product was returned too late, or if it was claimed to be damaged but was actually unopened, take the issue up with Amazon via Seller Central. If there was, in fact, a flaw in the contents or packaging of your product, track down the cause and find ways to prevent it from happening again.
It’s better to catch a problem early on than to try to fix it after many customers start complaining. Handling returns and customer complaints may sometimes be frustrating, but by staying positive and responsive you can safeguard your seller rating.
8. Listen to (and cultivate) your feedback
Positive reviews are crucial to establishing customer trust and boosting your Amazon sales ranking. In many cases, customers are reluctant to purchase a product if it has very few reviews. This applies doubly to private label skin care products. Customers will not know your brand and the experience of using the product is of paramount importance.
Amazon forbids sponsored reviews in order to protect the integrity of its review system, but you can add notes to your packaging or website asking for honest feedback. Ask your buyers to contact you first with any problems before leaving a negative review so you can have a chance to correct the situation.
Amazon requires some effort if you want to sell on its platform, but it also offers great potential for success.
This post was by Philip Murphy, Digital Marketing Manager for Private Label Sk.in. Philip loves crafting content that helps online entrepreneurs build their business.
Private Label Sk.in provides manufacturing and fulfillment services, to help business owners bring their private label skincare ideas to market.