Amazon Private Label vs. Wholesale - Which Is More Profitable?
- Dollan Prep Center
- Jun 5
- 10 min read
Private label offers higher long-term profit margins—often between 25% and 40%—but requires more upfront investment and branding work. Wholesale has lower margins, usually 10%–20%, but provides faster entry and lower risk.
According to Jungle Scout’s 2024 State of the Amazon Seller Report, 59% of successful sellers prefer private label, while 26% focus on wholesale due to faster cash flow and scalability. Which model is more profitable depends on your resources, risk tolerance, and long-term goals.
Side-by-Side Look
Private Label
Private labeling on Amazon involves sourcing a generic product—often from manufacturers in China or India—then branding it under your label. You create a unique product listing, design packaging, and handle marketing to build customer loyalty.
Key Characteristics:
You own the brand and listing.
Full control over pricing and positioning.
Higher startup costs (typically $2,000–$5,000 minimum).
Long-term value if the brand gains traction.
Example: A seller finds a yoga mat factory in China, creates a new brand called “FlexZen,” customizes the mat and packaging, then lists it on Amazon under their private label.
Amazon Wholesale
Wholesale selling means buying products in bulk from established brands or distributors at discounted prices, then reselling them on Amazon at retail prices.
Key Characteristics:
No need to create a product or brand.
You resell known products like “Lego,” “Olay,” or “Philips.”
Moderate upfront cost ($1,000–$3,000 to start).
Competition on the same listing using Amazon’s “Buy Box.”
Example: A seller gets authorized by Hasbro to resell toys. They buy 100 units of Monopoly at a wholesale rate and compete with other sellers on Amazon under the same listing.
Profit Margin Comparison: Private Label vs. Wholesale
Choosing between Amazon's private label and wholesale is not just about product sourcing — it’s a decision that directly affects how much profit you can make, how fast you can scale, and how much control you have over your business.
Let’s break it down with a detailed comparison table:
Model | Average Profit Margin | Typical Upfront Cost | Time to Profitability | Control Over Branding | Scalability Potential | Risk Level |
Private Label | 25% – 40% (or higher) | $2,000 – $10,000+ | 3 to 6 months | Full (product, price, brand) | High–brand grows over time | High (inventory risk, launch failure) |
Wholesale | 10% – 20% | $1,000 – $5,000 | 1 to 3 months | None (you sell existing brands) | Medium – growth limited to account size | Moderate (less upfront risk, but limited control) |
Profit Margin
Private label sellers consistently report higher margins—often 25% to 40%, and sometimes exceeding 50% with optimized sourcing and brand loyalty, according to Research Gate.
Because you're not sharing the Buy Box, you can set your prices, upsell, and introduce variations (bundles, new sizes, etc.). Once your product ranks well, advertising costs can even decrease over time, improving margin.
In contrast, wholesale sellers typically work with 10% to 20% margins, largely because they face constant Buy Box competition. Even if you source a product at 50% below MSRP, you may still have to compete on price just to stay active. Lower margins require higher sales volume to achieve the same profit as a private label brand.
Upfront Investment
Private label requires a larger upfront cost due to product development, branding, packaging, photography, trademarking, and marketing. Many sellers report needing $3,000 to $5,000 just to launch a single SKU. Those investing $10,000 or more often do so across multiple SKUs or higher-ticket categories (like home appliances or sports gear).
Wholesale sellers need less cash to start. Because you're buying in bulk from a brand or distributor without needing customization, most sellers get started with $1,500 to $3,000. There’s no need to spend on branding, content, or trademark registration — just product sourcing and shipment to FBA.
Time to Profit
Wholesale wins here. You can place an order with a distributor and begin selling within a few weeks. If you're fast at prepping shipments and winning the Buy Box, you could break even or profit in the first 30–60 days.
Private label sellers face a longer runway. You need to find a factory, order samples, finalize your design, and prepare a launch strategy — including ads. Most sellers break even after 3 to 6 months, though for competitive niches (like supplements), it can take longer.
Control Over Branding
Private label sellers enjoy complete control. You own the listing, set the price, write the copy, design the packaging, and grow a customer base loyal to your brand. You can also expand into DTC (Shopify, Walmart.com) or retail shelves — something wholesale sellers cannot easily do.
Wholesale sellers rely on existing listings. That saves time, but it also means you're at the mercy of Amazon’s Buy Box algorithm. You can’t change product images, titles, or pricing structure, and you compete against 5 to 30 other sellers on a single listing.
Scalability
Private label has unlimited scalability, especially if you find a product-market fit. You can expand into multiple ASINs, upsell complementary products, and grow your brand’s lifetime value. Some sellers turn one private label into a 7-figure brand and then sell it for 3–4x annual profit.
Wholesale is scalable, too, but only to a point. Growth depends on your access to inventory and distributor
relationships. You can hit a ceiling if you don’t secure exclusive deals, and you're often competing with big resellers who operate at razor-thin margins but huge volumes.
Risk Level
Private label carries more upfront risk, especially for first-time sellers. If your product flops or your reviews are poor, you're stuck with inventory that’s hard to liquidate. Sourcing from overseas also adds shipping delays and quality control challenges.
Wholesale is less risky in the short term. You're working with known brands, and products are often easier to liquidate, even if your pricing drops. But the long-term risk is in sustainability — you don’t own the brand, so you're always one distribution deal or Amazon policy change away from losing your spot.
Real-World Example:
Metric | Private Label Seller (Niche Home Product) | Wholesale Seller (Brand Toys) |
Monthly Revenue | $18,000 | $22,000 |
Net Margin | 34% | 12% |
Net Profit | $6,120 | $2,640 |
Ad Spend | $1,500 | $800 |
Repeat Customer Rate | 21% | 2% |
Months to Break Even | 5 | 2 |
The private label seller makes less gross revenue but earns 2.3x more monthly profit due to margin control, brand loyalty, and pricing freedom.
Startup Costs: What You Spend
When choosing between private label and wholesale on Amazon, your startup capital plays a crucial role. While both models require some investment, the way your money is spent — and the potential return — is very different.
Expense Category | Private Label (Approx.) | Wholesale (Approx.) |
Inventory | $1,500 – $6,000 | $1,000 – $3,000 |
Branding & Packaging | $500 – $1,000 | $0 |
Amazon Fees | $39.99/month + 15% of sale | $39.99/month + 15% |
Marketing (PPC) | $500 – $2,000 | $100 – $500 |
Product Photography | $200 – $500 | $0 – $200 |
Total Estimate | $2,700 – $9,500+ | $1,100 – $3,700 |
Private label is a business launch. You’re creating a brand from scratch, so expenses like product photography, custom packaging, and ad campaigns are essential. PPC costs are higher upfront since no one knows your brand yet.
Wholesale is more of a resale operation. You skip branding entirely and often use the brand’s existing product photos and listings. Your main costs are inventory and FBA fees.
Startup Bros notes that for sellers with less than $2,000 in capital, wholesale is typically the safer starting point. But for those aiming to build long-term equity, the extra $1,000–$4,000 investment in private label can pay off in margin and valuation down the road.
Time Investment: Setup Speed vs. Brand Building
Besides money, your most valuable asset is time. How quickly can you get your Amazon business off the ground? Here’s how private label and wholesale differ:
Private Label (Longer Setup, Bigger Payoff)
Launching a private label requires a multi-step process that can stretch over 2 to 6 months:
Sourcing: Find and vet manufacturers, often overseas (2–4 weeks).
Sampling: Order and test product samples (2–3 weeks).
Branding: Design packaging, logos, product inserts (1–2 weeks).
Trademark Registration (optional but recommended): Can take 3–6 months, though you can start selling with a pending application.
Photography + Listing Creation: Hire a professional or do it yourself (1–2 weeks).
Launch Strategy: Run PPC ads, build reviews, optimize listing (ongoing).
Total Time to Launch: ~8–16 weeks on average.
This is the “slow burn” model. But if successful, you have a branded asset that can scale across multiple SKUs and platforms.
Wholesale (Faster Entry, Less Setup)
Wholesale works more like traditional retail:
Approval from Brand/Distributor: 1–3 weeks, depending on paperwork.
Place Bulk Order: Often ready-to-ship products.
Labeling/Prep: Can be done by you or a prep center.
Ship to Amazon FBA: 1 week average.
Total Time to Launch: ~2–4 weeks on average.
It’s possible to start generating sales within your first month. However, the tradeoff is that you’re selling products on someone else’s terms, not building your brand.
Amazon Seller Survey Insights (2024 Edition)
To give you real-world context, we analyzed 2024 data from Jungle Scout and Helium 10, two of the most reliable sources for Amazon seller trends.
Question | Private Label | Wholesale |
% of Sellers Using the Model | 59% | 26% |
Avg.. Monthly Sales | $5,800 | $4,300 |
Avg. g.. Monthly Profit | $1,740 | $645 |
% of Sellers Profitable After 1 Year | 66% | 54% |
% Reinvesting Profits into Inventory | 78% | 60% |
Private label dominates among serious sellers. Nearly 6 in 10 Amazon sellers are choosing private label, not just because it’s trendy, but because it offers better profit potential and a path toward brand ownership.
Monthly profit is significantly higher for private label sellers, with a 169% difference on average. That means you’d need to sell almost 3x as much in wholesale volume to match a strong private label seller’s income.
Reinvestment rate is higher in private label businesses. This reflects confidence in long-term growth — sellers are scaling, not just flipping.
Profitability takes longer, but the payoff is higher. Two-thirds of private label sellers become profitable within 12 months, and many use that momentum to launch second or third products.
FBA Fees: What Both Models Share
Whether you sell private label or wholesale, Fulfillment by Amazon (FBA) involves fees that impact your profit margins. Both models are subject to the same Amazon fee structure, but the way they manage costs, especially advertising, can differ significantly.
Fee Type | Description | Applies to Both Models |
Referral Fee | ~15% of the final selling price, charged by Amazon on each sale | ✅ |
FBA Fulfillment Fee | Based on product size, weight, and category, typically $3.50–$8.00/unit | ✅ |
Monthly Seller Fee | $39.99/month for a professional seller account | ✅ |
Storage Fees | Charged monthly for inventory stored at Amazon warehouses | ✅ |
PPC Advertising Spend | Optional but essential, varies by niche and model | Varies |
Interpretation:
Fixed Costs: Referral fees and FBA fees are non-negotiable and apply to both models equally.
Storage Penalties: Excessive storage or slow-moving inventory (common in over-ordered wholesale or under-performing private label SKUs) can lead to additional charges.
Advertising Difference: Private label sellers typically invest more in PPC (Pay-Per-Click) advertising — often $500–$2,000/month — because their products start with no visibility. Wholesale sellers often ride on the existing sales velocity of a brand and may only spend $100–$500/month to defend the Buy Box.
Private label sellers must pay to be seen. Wholesale sellers pay to stay visible. Both have costs, but private label ad budgets usually drive long-term equity, while wholesale campaigns are often defensive.
Which Amazon Model Is Right for You?
Now that we’ve covered profit margins, startup costs, seller behavior, and fee structures, the most important question remains:
Which model fits your personality, risk tolerance, and business goals?
Here’s a direct comparison to help you decide:
Decision Factor | Choose Private Label If... | Choose Wholesale If... |
Budget | You have $3,000+ to invest | You’re starting with under $2,000 |
Time Commitment | You can wait 3–6 months to become profitable | You want cash flow within 1–2 months |
Brand Control | You want full control over product listings and branding | You’re okay sharing listings with others |
Marketing Skills | You’re willing to learn or already know PPC, SEO, etc. | You want minimal marketing involvement |
Risk Tolerance | You’re okay with upfront risk for higher long-term returns | You want a lower-risk way to resell proven products |
Exit Strategy | You want to build and eventually sell a brand | You’re focused on monthly income, not long-term value |
Private Label is ideal for entrepreneurs who want to build an asset. If you think like a brand owner, enjoy creative control, and are ready to treat your Amazon store like a startup, this model can generate serious ROI over time. It’s more work up front, but the payoffs — including the potential for acquisition — are much greater.
Wholesale is better for those who want a transactional, volume-based business. If you’re good at logistics, enjoy analyzing supplier lists, and want to minimize creative tasks, wholesale gives you a faster and more stable income path with fewer moving parts.
Long-Term Exit Value
Private label brands have sellable value. A successful brand with:
$50,000/month in revenue
25% net margin
Consistent reviews and trademarks
…can sell for 2x–4x annual profit through aggregators like Thrasio or Empire Flippers.
Wholesale businesses, on the other hand, are harder to sell unless they have exclusive distributor contracts.
Final Takeaway
After working with hundreds of Amazon sellers—from first-timers testing their first wholesale order to seasoned private label brands preparing for acquisition—we’ve seen both business models succeed. But we’ve also seen exactly where each one tends to break down.
Private label sellers who succeed treat Amazon like a brand-building platform, not just a sales channel. They’re strategic with packaging, invest in high-quality listings, and build customer trust. The brands that scale fast are the ones that do the hard work up front: product research, factory vetting, competitive PPC, and customer service. We prep and ship thousands of private label units every month, and the ones that stand out always prioritize branding and consistency, and they’re the ones buyers want to acquire later.
Wholesale sellers succeed when they stay organized and operationally sharp. The best ones source constantly, move quickly on distributor deals, and understand how to protect the Buy Box without a race to the bottom. From our side, they value fast turnaround times, tight inventory control, and cost-effective FBA prep. The smart wholesale sellers grow by scaling with systems, not by reinventing the wheel.
So here’s our blunt, experience-based advice:
Choose private label if you want to build long-term value, can handle slower upfront returns, and are ready to own every part of the process, from product to presentation.
Choose wholesale if you want a faster, lower-risk entry, enjoy managing logistics, and plan to turn inventory quickly while riding the momentum of existing brands.
Neither model is “easier”—but each fits a different kind of seller.
As a prep center, we’re here to support both. Whether you’re building out a brand or moving 10 pallets of name-brand stock every month, your success comes down to clarity, consistency, and execution.
You bring the strategy. We’ll handle the prep.
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