To help increase the valuation of your e-commerce business, you need to have your winning product — may this be private label products or reselling products. No winning product will bring you profit if you don’t know how to sell it. In this article, you will learn two of the most common types of products that are commonly sold in the e-commerce field. You will also know how they are sold and which of these will benefit you more in the long run.
What are private label products and reselling products?
Private Label Products
Private labeling is the practice of purchasing items from your chosen manufacturer. After receiving the products, you then “brand” each unit as if you manufactured them. Some online store owners set an agreement with the supplier so they can be their private distributors. Among these two scenarios, the first one is the more lucrative source of profit in the long run.
This practice is highly comparable to building an online empire. You get to conceptualize a specific type of business and personalize it to fit a specific target market. As soon as you manage to produce a wide array of products, you may then construct a portfolio to showcase these to other potential clients. They may then be interested to work with you and market your products depending on both parties’ preferences.
Why it’s appealing: This set-up has a lot of potential for expansion. When done right, private labeling can set the trend for a specific niche. If you’re a trendsetter for a certain industry, your competitors will have a relatively hard time beating you. This is as long as you continue to expand and improve your line of products.
Reselling is also known as flipping or retail arbitrage. This is buying a bulk of one or more products from a manufacturer and selling them at a higher price. When you buy certain products in bulk, the total selling price is significantly lower. You can then gain profit from this practice by placing mark-ups for every item sold.
Some e-commerce store owners scout for items with limited-time promotions and buy the products in bulk. These owners will then compare the actual price of the items in other online stores. During the process, they will assess if they will gain profit if they buy the products at discounted prices. After the promotion period, these store owners will list the products in their online stores. The prices are usually at par or a bit lower than the standard online price. Once buyers check out their items from their carts, the store owners will start raking in their profit
Why it’s appealing: It’s a relatively straightforward means to earn big from sales. This is provided that you have adequate funds and good research skills to begin with. If you don’t have these, you should at least where to source both the capital and the manpower.
Pros and Cons
Private Label Products
Pros: If your brand is consistent in delivering great results, chances are you’ll have a good number of loyal customers. Loyal consumers can then help establish financial security for your business. In the long run, this will give you staying power in your chosen industry.
Going for this e-commerce approach helps you gain control over major elements of the business. These include the logo, the branding, and the nature of the products being sold. It also helps make it easier for you to market these products through various social media and e-commerce channels.
Cons: This approach takes a lot of time and patience before you begin to see substantial results. Aside from building up your brand, you also have to capitalize on your online reputation to have a decent following.
Pros: This is considered a low-risk approach to gain profit. Investment-wise, you don’t have to get your hands on too many resources just to get the ball rolling. The only thing you need to set your mind on is buying low and selling high. If you decide not to buy in bulk, that’s also a viable option. In this way, you don’t have to worry about your stocks going stale or getting lost in the trend.
You may even decide to buy stocks as the orders come in if the e-commerce platform and the promotional period of the suppliers permit. Most of all, you don’t have to fret about logistics because the entire process is easy to follow.
Cons: There is already a steadily increasing number of software that helps track the prices of online and “offline” products. Therefore, it’s easier for your competitors to offer a similar price for the same product that you’re selling online. This can then make your potential sales lower over time. Because the items that you sell are the same as theirs, there’s a chance that they will not buy from you.
As for branding, that’s not going to happen if you settle with reselling. Sure, you may target a specific niche and work your way up. However, you can’t sell the items with a detailed and unique marketing direction in mind. All you have to do is to stick to the industry or risk starting over again with another niche.