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#60 Q& A Tuesday No. 8

Q1 David 

PRICE TESTING: Hi Guys! I have been doing a lot of price testing. Does anybody know if the price changes in the shopping cart? For example, if somebody added my product to their shopping cart as price X, but did not check out. Then, I change to price Y. Does the product, in the shopping cart, change to price Y or does it remain at the original price X as it was when it was added to the cart? Things that make you go Hmm!!!

Michael Veazey David, interesting question. I admit I don’t know the answer.

However I wouldn’t recommend changing price that swiftly or often! I’ve been guilty in the past. Problem is that you can’t make objective statistically significant measurements of the effects of price changes.

Michael Veazey I’ve recently been testing out www.amzsplit.com

Www.Cashcowpro.com also looks promising although I’ve not used it yet. It also does profit calculations to some degree. Hello profit may be better for the latter.

I am tracking down the creators of all of these things for the podcast…

Q2. Anila

So… I went on Jungle Scout to find the niche product 

Started with  Home & Kitchen -> Kitchen and Dining -> Kitchen utensils -> Cooking utensils:

A lot of Silicone spatulas came up as you would expect but what JS ran was a completely different story.

It would seem that there still is market for those wishing to sell Silicone Spatula…

Or am I reading the data wrong

According to Greg Mercer’s guidance:

1st 5 listing have under 50/100 reviews (Further down a few names dominate)

And the revenue for is good for all the top sellers and very high volume of sales

Wade I might be wrong, but I’ve always been sorting the results by rank, and then those are my top 10 ones to look at and assess. Please someone tell me if I am wrong!

Michael Veazey Well, this is the first phase or first filter of any sensible product picking system.

First of all quite a few results are for steel tongs so those need to be eliminated as irrelevant.

Then you need to be aware of giveaways.

Look at the top ranked seller.

With just 23 reviews, I don’t believe they are doing 3000 organic sales a month in this market.

Next and most important, price. At $6.49, you have to wonder what the profit is.

let’s look at ad costs which are frightening with a very competitive keyword.

If we guesstimate PPC costs per click on such a competitive keyword at say $2 per click, and if we are optimistic and say 33% conversion, that gives a cost of $6 as cost per ad driven sale.

Even if say 1/2 of sales are organic that would give an overall average ad cost of $3 per sale.

That leaves $3.49.

I don’t know what the fulfilment fees are but let’s say $1. Referal fee is $0.97 so basically $1.

So that leaves $1.53 to:

1. buy your unit, 2. inspection, 3. freight, 4. duty and customs costs 5. Receiving warehouse in USA 6. Amazon inbound shipping.

Sales can be achieved if you drop the price, spend a lot on giveaways and spend aggressively on PPC.

That’s a good set of launch tactics.

The issue is whether after that, there is profit to be made.

Q.3 Sergei

Hello Amazing FBAers!

How do you pay your freight forwarder to ship your goods to Amazon USA? Do you pay 100% directly before shipping?

I have been trying to get freight forwarders to use Escrow or to pay them 30%/70% through Alibaba’s Trade Assurance but they won’t agree to it….

Is there a way how I can be safe? Because if you pay them 100% of the sum at the beginning, then you are at their mercy and they will not put a lot of effort because they have already been paid

Btw Michael, keep up the good job, one of the best podcasts out there!

Peter Zapf I’ve usually seen the bill/invoice issued right when goods are about to get delivered (this would be US freight forwarders shipping into the US). Not up front before goods are even picked up.

But this is also different than the 30/70 for suppliers. For suppliers, the 70% is the hammer to make sure you get the quality you need, which is why you should do a pre-shipment inspection. I’ve never seen anything like 30/70 for freight forwarders.

Michael Veazey Hi Sergei,

I assume your freight forwarders are in China, is that right?

Are they are very small firm or are they an established large one? Is there a particular reason you feel worried about fraud with them?

Michael Veazey So Sergei, are these FF based in China? And where are you shipping to? US? U.K.? Europe?

I’ve not heard of anyone doing a 30/70 split with a FF. If you’re really worried then I’d suggest

1. Get one in the USA If that is where you are importing to. Or UK or wherever you are based.

2. Find one who will talk through the process on the phone and generally help you avoid newbie mistakes.

Q.4 Ella

Hi Guys – I’m new to this group! I am in the process of arranging shipping from china to FBAI by air express (arranged by the supplier), however after reading a few posts could air freight be an option? I will exceed the $2500 customs threshold so will have to engage a customs broker anyway so will it make more sense/cost effective to go air freight? This is my first shipment so a bit unsure about the whole thing but trying to work my way through it! Additionally when you say door to door (in this case does that mean to FBAI instead of having to engage a FF to move from port to FBAI). Thanks 🙂

Yes air freight could well be an option. If it’s a small consignment it probably won’t save you much over air express but The thing to do is to get some quotes then you can work on hard data.

Air Courier is nearly always the simplest option. Ask for DDP =Delivered Duty Paid. If you get DAP=Delivered At Place (sometimes called DDU Delivered Duty Unpaid which is not technically an INcoterm) you can in theory just have the courier invoice you for the Duty but it is wise to use a customs broker at least first time out.

Ask your supplier what they can get from their air express guys. Then get quotes from several freight forwarders and compare.

#54 Incoterms for Amazon Sellers, Amazon Inventory Forecasting and China Inspection – Q & A Tuesday No. 6

#54 Q & A Tuesday No. 6 Show Notes

Q1 : Gareth [INCOTERMS]

We are in the process of sourcing our first product and we are struggling with what we need to ask for in terms of delivery. Does the term FOB only refer to shipping (boat)? What is it we need to ask for to get air freight delivered to the door to FBAI (or equivalent) in the US? As we seem to be getting different responses from different suppliers?


Incoterms (“International commercial terms” in full) refer to the Freight deal you have with a supplier [aka Vendor=Seller].

There are 9 3-Letter codes denoting the 9 possible agreement types:

http://www.skywaysms.com/inco-terms-2016/


More precisely, it shows how much of the supply chain your supplier [the Seller] takes responsibility for, and at what precise point you as the Buyer take on responsibility for your consignment and any costs of transporting it/dealing with import/export etc.

The early in the Chain the Vendor passes responsibility on to the Buyer, the cheaper it is but the more work you as Buyer need to sort out yourself. Or of course hire someone to sort out.

FOB =Free On Board– strictly only for sea  shipping but Chinese suppliers use this for everything!

This is okay to use to compare quotes if most suppliers give you the price in that way.

However, that is all.

I prefer to get quotes EXW=Ex Works i.e. literally just manufacture with no Freight. However I would never place an order EXW unless using a Freight Forwarder. 

If your supplier will give you DDP=Delivered Duty Paid, this is the most expensive but simplest option. I would always start with this as a new seller unless you have expertise or experience or contacts in the freight/import area.

If you not you could go for the next best thing, Sometimes known as “DDU=Delivered Duty Unpaid”, [which really should be known as DAP=Delivered At Place in proper incoterms, but is known as DDU among some suppliers]

Note the difference between Air Freight and Air Courier. The latter is basically a well known courier like DHL, UPS, Fedex. They have their own channels for clearing customs in USA and are simplest for beginners or if you dislike freight issues!

You can always get a customs broker if shipping into USA – I’ve used Western Corporation Overseas for extra security around USA customs clearance. It will add to your costs but can provide peace of mind on first shipment.

Bear in mind that Chinese suppliers will know more than you (probably) when you’re first starting out but they are not experts in freight. Particularly bear in mind: They are speaking a foreign language! The nuances between “Freight” and “courier”, for example, may not be clear to your supplier – but they are nevertheless real when it comes to Freight. But they will be very used to using Air Express services like DHL.

If in doubt: 1. use your supplier’s courier account; stick to Air Courier; get DDP if possible or the closest you can.

OR use a Freight Forwarder if you want to do Sea Freight (a bit more involved for a first batch of first product in some ways but may be necessary for heavy items) or even Air Freight.

Q2. Chat [Inventory] Forecasting methods/techniques.

How do people project and plan for how much inventory they will need? What is important to consider when planning ahead for growth?

“Feels like you kind of have to guess a lot more in the beginning! Started off at 500 units and down to around 460. Most of those are giveaways though. only 3-4 are organic.”

3-4 units is almost no sales history so don’t try to make any predictions yet.

Get your reviews, start PPC and then after say 100 sales or two weeks or so you’ll have enough data to predict. Get some consistency if possible. If you’re buried on page 5, 10 etc, your sales will be low and also therefore will fluctuate a lot in relative terms.

The basic maths is simple:

weeks of inventory cover=Total units left of product÷weekly sales

e.g. in this case, if in say 4  weeks’ time you have 350 units left and are selling a steady 5 a day average=35 a week, that gives you:
weeks of inventory cover=350 units left÷35 units a week sales=10 weeks’ cover.

If your Lead time between placing an order and actually getting product live on Amazon is say 6 weeks, you will need to reorder at 6 weeks out the latest.  Better to add a couple of weeks for delays.

Bear in mind delays at Chinese ports, delays getting into American ports especially before Xmas, processing at FBA Inspection etc, esp. in 4th Quarter ,  time to ship to Amazon etc. 

  If you have a duff product, e.g., no sales, no profit, you may not even choose to restock it. But if you do have sales and it looks profitable or that it will be next order, then this all becomes relevant.

Q 3: Ben Leonard: Inspection.

OK, so I know inspection is important. However, is it always necessary [?] Here is my situation:

My supplier is experienced, appears professional, stocks a lot of FBA sellers, and is very helpful. They have agreed to send me photographs throughout the process of manufacture, pre-labelling, and during packing of the order ready for shipping. I plan to put in place a purchase order contract which covers all of these.

I have no reason to believe why they’d send me a poor standard of product (samples were excellent), and we have already both expressed desire for a long relationship.

In this situation, would anyone here risk not having inspection?

Perhaps inspect once, and then not again, or not for another 3-4 orders?

Michael: My answer is simple: yes inspection is necessary. Definitely on the first order. No question. The fact that your supplier is responsive and experienced is an excellent reason to work with them in the first place. But that is just good due diligence on your supplier. Inspection is a separate matter.

Listen to the 2nd half of the interview with Manuel Becvar and read notes -it has your name on it! www.amazingfba.com/53.

If it’s a simple product, a man-day (sorry ladies, that’s the standard term, sexist I know) will cost you just 100 USD with Trigo.

Either way there is no reason to skip it and every reason to do it.

If I were you, I would just get that set up and move on. 100 USD is peanuts to have peace of mind and avoid negative reviews.

As Sellers we sometimes don’t consider the sheer expense of one negative review.

If it’s early days and you have say 9 reviews with 5 stars from review giveaways and you get one 1 star review, that means average review drops from 5.0 to 4.6. That could easily halve your conversions. Assuming your Pay per click costs stay the same, that  could easily mean you go from profit to breakeven or even to loss.

You could lose your 100 USD within a week or less and then continue to lose money until you’ve either got rid of your one star review or buried it under new giveaways.

If this happens, just deal with it of course , it’s not the end of the world – but why not just take simple steps to avoid or minimise it in the first place?

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