10 Things to Consider Before Starting a Private Label E-Commerce Business

Thinking of diving into the private label pond? Here are 10 things to consider before taking the plunge.

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Start Small

The e-commerce market is booming. Experts insist the industry is on track to grow by 20%, annually, over the next several years. Even more appealing? The cost of entry is low and the business modeld easily scalable. So, start small; get comfortable in the niche. You can always expand operations in the future.

Protect Assets By Setting Up A Company

One of the biggest mistakes newbies make is not setting up a proper business structure. Doing so doesn’t cost much, and not doing it could result in a huge mess. How? If something goes wrong, without a protective business entity, you may become PERSONALLY responsible for any mishaps — which could, in theory, throw you into bankruptcy.

Before Picking A Product, Beware Of Compliance Standards

Not all products are created equal; some are governed by extra laws and regulations. For example, any product that comes in contact with food must adhere to FDA guidelines. In fact, rules authored by nearly seven government agencies could impact a brand or product. Dietary supplements, toys, clothing, baby products, exercise equipment — just to name a few — are all categories beholden to product-specific guidelines. Before you order in bulk, talk to an attorney about all the regulatory red tape associated with you chosen product.

Have A Defamation Plan In Place

In the quest for consumers’ gold, sometimes competitors will do unscrupulous things like cajole family members into lodging fake complaints — against you! That’s why it’s important for private label sellers to have a trade libel plan in place. Click here for more articles about legalities associated with defamatory user reviews.

Don’t Skimp On Shipping

Most private label sellers use Chinese manufacturers because they’re infinitely cheaper than just about anywhere else in the world. But the money saved on manufacturing can easily be squandered on bad shipping decisions, which can result in permanently lost cargo and shipments rejected at the US border. Word to the wise: don’t skimp on shipping; hire an import expert to handle it, if possible.  Better yet, use a fulfillment service, such as Amazon’s FBA.

Register Your Intellectual Property

Picture theft is common in the private label world. Hijackers and counterfeiters sometimes lift graphics to enhance phony listings. How do you get ne’er-do-wells to stay off your scent? Copyright images and other media content, trademark your brand, and, if appropriate, patent your inventions. Formally registering intellectual property adds another layer of legal protection.

Don’t Make False Claims

A lot of novice e-commerce sellers make marketing mistakes. They include outrageous, unsubstantiated claims in promotional material and attract the FTC’s attention. People in the dietary supplement and weight loss niches must be extra careful about promotional language because the space is subject to loads of disclosure and compliance standards. Click here to read more about false claim marketing guidelines in the U.S.

Unique, Sneaky Control Freaks Go Far

Yep, it pays to be a unique and sneaky control freak! How on earth!? Well, listing hijacking is a common headache for e-commerce sellers and marketers. You can read more about it here. But in short, hijacking is when a counterfeiter operating on an open catalog platform — like Amazon — raids, usurps and takes control of another seller’s listing. So, to minimize the chances of a hijack, it’s wise to:

  1. Take advantage of any site-specific brand protection programs, like Amazon’s Brand Registry. These opportunities give you more control over listings.
  2. Add small, unique features to your products — either functional or cosmetic — that aren’t necessarily advertised. That’s right, be a little sneak about it. By doing this, if you’re hit by a hijacker, you’ll be more likely to prove fraud if the two products don’t match exactly.

*Friend* An Internet Law Attorney

Aaron, Daniel, Raees and Hansen are entrenched in the tech and online worlds. They’ve also spent the last decade representing work-from-home entrepreneurs, aspiring moguls and businesses breaking new digital ground. If it has anything to do with Internet law, Kelly Warner is here to help.

About the Author: Founder and senior partner of Kelly / Warner Law, Aaron Kelly, is a top-rated defamation and Internet lawyer. Aaron is an advocate and strong supporter of cutting-edge, innovative ideas that embrace the entrepreneurial spirit. He and his partner have sponsored many events aimed at helping startups and affiliate marketers. Aaron also plays an active role as a respected member of the Arizona legal community, holding several positions of professional leadership, as both the Chairman of the Continuing Legal Education Committee and Vice Chairman of the Membership Committee for the Arizona Association for Justice.