Overview

Julian Schlaen and Adriana Rangel explain why many Amazon entrepreneurs begin with wholesale sourcing before launching their own private‑label brands. The discussion, featured in Helium 10 episode #77, outlines the practical steps, cost dynamics, and branding advantages that make the shift a pivotal growth move for sellers looking to increase margins and protect their listings.

Key Points

• Low upfront cost — Wholesale allows newcomers to list products that already have demand, requiring only a modest inventory purchase and no brand‑building expenses.
• Full brand authority — Private‑label ownership gives sellers control over packaging, pricing strategy, and intellectual property, which typically translates into higher profit margins.
• Supply‑chain education — Dealing with distributors first teaches inventory forecasting, shipment coordination, and Amazon FBA requirements before sellers negotiate directly with factories.
• Data‑driven risk reduction — Real‑world sales figures from wholesale listings provide concrete evidence of market viability, reducing guesswork when selecting a product to rebrand.
• Differentiation against price wars — A unique brand identity shields sellers from the relentless discounting that often erodes profits on pure wholesale listings.
• Scalable growth path — Moving to private label creates a repeatable framework that can be applied to multiple product categories, enabling sellers to expand their portfolio without starting from scratch each time.

How the Transition Works

1. Validate demand through wholesale — A seller orders a small batch, such as 150 units of a top‑selling kitchen utensil, from an established distributor and lists it under the distributor’s brand. By tracking sales velocity and customer feedback, the seller confirms that the item enjoys steady demand.
2. Gather performance metrics — Over a 30‑day window the seller records daily units sold, average selling price, advertising spend, and return rate. For example, the utensil moves 12 units per day at $24 each with a 2 % return rate, indicating a reliable market.