"Build" Guide - how to Build your Private Label Business
There are many things that you have to take into consideration. You have to think of your lead time and everything that goes into it. Also consider receiving time at Amazon. It might take awhile for them to check it in. When planning a strategy for your FBA inventory, you should plan for the worst case scenario. There could be issues with it getting backed up at port or issues with your supplier.
A great thing about using software for forecasting, is that they can keep track of that, whether it’s Jeremy’s Forecastly or another piece of software. It tracks inbound inventory, current inventory, what you have in manufacturing, and true sales velocity.
You also need to consider spikes in sales. You may have consistent sales every day, but a couple times a month your sales spike. This is why you need to build in a safety stock. That gives you a cushion so that if you get a surge in sales, you have enough stock to cover it until your next shipment gets there.
Forecastly has many business that use its service. The software can then use this anonymous data to make predictions about Amazon as a whole. It takes ASIN level data over the past 30, 60, and 90 days to makes prediction about future sales numbers.
Their main focus is demand forecasting. It considers your recent sales including stock out periods. If you were out of stock, it can determine what you would have sold had the product been available. It also tracks the variability of demand which is something you can’t do in a spreadsheet.
The main thing you have to be conscious of when managing your FBA inventory is, what do you need to replenish, when do you need to replenish it, and how many units do you need to replenish. Forecastly tracks all that while monitoring your inventory and will recommend your orders.
Many sellers want to use a 60 day trend to determine their sales velocity which is a bad idea. If you selling in an upward trend, meaning your sales are growing, then your sales were much lower 60 days ago. This will make your average too low. Forecastly uses a 30 day trend to get the most up to date projections.
We, here at Amazing FBA, love a rule of thumb. Unfortunately, when it comes to FBA inventory, many sellers follow a rule of thumb that won’t help them, and could hurt them. It’s the idea that you need to have X amount of days worth of inventory. Whenever they place their order, they bring it back to this magic number.
For example, if you wanted to maintain 90 days of inventory and you order monthly with a 30 lead time. When it’s time to make an order, you have 60 days of inventory. Based on this, you would order 30 days of inventory.
You don’t need that much inventory. You wouldn’t need to order for another month because you have a 30 day lead time and you’re tying up cash in stock you don’t need. The rationale behind this method is security. The attempt to avoid stock outs by keeping a large amount of stock on hand.
Amazon will continue growing their own private label brands. So Amazon is now your competitor. International markets are growing. The European markets are booming. If you’re having success in the US, you’ll want to take those products to the UK and the rest of Europe. That isn’t as easy as it sounds. You have to come up with a separate replenishment strategy as well as deal with the tax regulations. There is an opportunity, though. Especially in Germany where 40% of the sellers are non-German, and very few are American. That means they are willing to buy from foreigners, but not many Americans are there yet.
As Amazon grows, the more warehouse space they will need. They are investing in new space, but they don’t want to overdo it. You will likely see seller-fulfilled-prime see some growth as a solution to this problem though will come with its own issues.
The inbound process is likely to change. It used to be that you would just slap on a UPS label. Then you had to also do the Amazon label. Now you have to do box contents. It’s going to get more and more complicated as Amazon continues handling more inventory.
If you want to receive a free tool for launching new products, head on over to Forecastly.
Adam has been an entrepreneur for over 20 years.
Adam got started right out of high school. He knew he didn’t want a boss and was captivated by the idea of entrepreneurship. He has had several businesses but not focuses solely on Amazon. He has had online and offline businesses including a flight simulator business, hair salon, and a finance company. He has a very diverse background, to say the least. Selling on Amazon FBA came more recently.
Adam got into selling on Amazon FBA part-time while he was running an animation business. He sold that business last year and moved away from service businesses in order to start a product business with Amazon. Part of the allure of products is that it gets away from the “selling your time” type job where you make more money the longer you work. With products, once you do the hard work and develop the product, you can sell it all over the world and get paid over and over.
His animation business was growing and financially successful but he had a lot of people and a lot of moving parts. With products, it so leveraged and you can get away from that.
As a business guy, Adam found Amazon very impressive. It’s a phenomenal company. In terms of their growth and numbers you know they are doing it right. He really loved that you didn’t have to build a website, that you didn’t have to find the customers because they were already there and that they handle fulfillment and shipping. FBA just changed the rules of product distribution. It was appealing to sell into the biggest markets in the world from wherever you were. To get more of Adam’s thoughts on the Amazon opportunity, CLICK HERE
It definitely isn’t according to Adam. He did an experiment this year. He started with 6 products that launched in February or March to test what it would be like for a newcomer. They are currently around a million dollar a year products at this point. So it isn’t too late. There is a lot of opportunity to those with the necessary education.
It’s interesting because right now his European business is doing about 70% of his US business. What’s truly amazing is that his cost-per-customer (CPC) in Europe is about ⅓ of what it is in the US. Also, Europeans give more feedback than Americans. He has automated emails that go out and he gets about twice as many emails from UK residents than the US.
Adam is in .com and then Spain, Italy, Germany, France, and the UK.
The US is always appealing because it’s so big but because it’s so big means there is a lot more competition. Also, America is home many of the Amazon course gurus that have pumped out a lot of courses to those wanting to start an Amazon business. The challenge is that there are a lot of sellers that have been educated on the same strategy at the same time. So America is still a great opportunity if you have the right education and the right lens. You can’t beat the US market because it’s so big and broad.
However, if you live in the UK and feel more comfortable working there, Adam would recommend starting in the UK. It’s a fantastic market, much easier to access, much easier to rank, and a much more appreciative group of consumers. However, if you don’t live in the US or the UK Adam recommends starting in the US because it’s much easier to get started. The regulations for foreign sellers are a lot tougher in the UK and it’s a lot easier to get your account set up in the US.
Another issue is that not everyone is registered for VAT and many people won’t until Amazon requires it because it will add 20% to your prices and put those that register at a disadvantage.
One of the biggest promoters put out a course telling people to sell items for under $40 with high Best Seller Ranking. When they first launched they recommend being in the top 100 of any category. Once they began selling this idea they realized they needed to expand because they had 5000 people looking to be a top 100 in about 15 categories.
One of their flaws was the emphasis on BSR because it doesn’t really matter. That only measure who sells the most. But in business, it doesn’t matter how much you sell, rather how much margin you make. That’s the difference between turnover and leftover. Adam is looking for higher margin, less contested spaces. People don’t realize how massive Amazon is. Over 2 million sellers with hundreds of millions of products. There are a lot of unsophisticated sellers that have two images with ten reviews and are on page one. There are a lot of small sellers that looked for cheap products with high turnover where anyone can get into it. What Adam looks for is something that is difficult for people to compete and isn’t as obvious.
Adam cover a lot of this in his course at reliable.education. His first product was $160 retail. But it was costing him $40 a unit. So there was an $80 margin which gave him options someone selling a $12 product just doesn’t have. He could spend more on advertising. Even if he spent $20 per sale he was still making $60. He was completely out of the top sellers and in his subcategory there was around 45,000 and he was nowhere near the top. He still came in and started making $15,000 a month in sales and $8,000 profit.
The first thing people need to think about is that whenever you look at a market for anything, you need to think about it from a consumer’s point of view. Why will a consumer notice you? And why would a consumer buy from you and not someone else? It can’t be something they need to read about. Don’t expect them to read your copy and find some feature. Think of Amazon like Tinder. People put in a few details about what they are looking for, then go through the pictures and start dismissing them. You need to have good photographs, but you also need something good in the photograph. So try to get something that is visually different. Some key detail or feature that will grab the buyer’s attention.
For example, if you look up desktop calculators on Amazon, they are all black or grey except for one that is green. Now if you look at car covers, they are all black or grey or blue. But if someone came with a car cover that had a cool saying, or was bright pink, it’s going to stand out. The question is, how can you innovate, visually, at the core design level. It’s not about the best title or description, anyone can do that. The big thing is to think like a customer. Just follow Jeff Bezos advice, “Be in business for the customer.” In the end, the best products are going to win.
To get more advice or free training from Adam, just go to reliable.education
Can you tell us about any products that you get asked to review that are over-saturated and there are too many of them out there?
It can depend on the season. For example, during the summer he was getting a lot of review requests for money pouches and passport holders that you would use when you travel. As we get closer to Christmas he will likely start getting a lot of requests for lights and other holiday items. Keep this in mind if you have seasonal items.
For instance, let’s say you are going to sell neck pouches for traveling. You know the summer is going to be the busy time for travel so you want to plan ahead and start getting reviews in spring or even winter. You want to get ahead of the competition.
If you wait until June, the reviews will have received several requests for similar items and may not want any more. Also, reviews may take a couple weeks for the reviewer to get around to it. If you wait until June, it might be in July when the review comes in. At that point, you have already missed a good portion of the traveling season. As a bonus, if you get your reviews early, you are prepared for customers to start looking to buy these items. Click here for more information on the European summit if you are looking for tips on breaking into the European market.
Other items he gets requested a lot include flashlights, bike lights, headphones (bluetooth and wired), LED lamps, garden lamps, solar/ battery powered lamps.
Amazon has banned the use of super URLs, have you had any issue with this?
(A super URL is the address Amazon uses when you search for items and listings get ranked higher based on the keywords people search for. There are tools that will mimic this super URL and makes Amazon think people are finding your product based on keywords that they didn’t search for and thus these products get listed higher.)
Augustas hasn’t seen much of this lately. It used to be that the requests would give instructions directing you to go to amazon.de/keyword and it will be the third item down. This would build your ranking for that keyword but it was very inconvenient for the reviewer and often Augustas would ignore the instructions and simply locate it by the ASIN. He doesn’t get these much anymore and there is even a service that will mimic that URL so you don’t need to go through all that. However, be warned that Amazon is cracking down on the tactic and has even started removing listings.
A tip from Augustas for sellers that do fulfilled by merchant rather than FBA. If you have a good relationship with a reviewer, you can use them to make sure your staff or external warehouse is doing a good job. Augustas had a seller that had his own shop and staff that packaged everything. Augustas would give him feedback on the packaging and ways to improve it or if something was missing. It’s a good way to test for quality assurance. It’s better to get private feedback from a reviewer rather than a very public negative comment from a customer.
How important do you think reviews are in general for listing conversion?
Some people may not believe a review is genuine. As a reviewer, it might be difficult to leave a bad review if you have a good relationship with the seller. So rather than giving a 4-star review, you may give 5 because of the customer service.
As a customer, Augustas will always compare reviews especially if one doesn’t seem genuine. And if he sees a short review from a customer that hasn’t left many other reviews, it will hold more weight because it’s a casual shopper that wanted to leave their experience rather than a top reviewer. He noticed on one particular item that he was giving 2 or three stars and the reason why, and he saw the rest of the reviews were all 5-star reviews from top reviewers because they were getting free stuff.
Do you think, as a shopper, that the quantity of reviews is important for conversion? Or is quality more important?
Augustas will look for 2 or 3 quality reviews. If it’s just 2 or 3 lines he will often skip it and look for someone that wrote a couple paragraphs. If he sees that the person got the product for free in exchange for a review then he will look for another one and compare. But definitely, he wants to see a few quality reviews.
Augustas was looking at another product some time back and noticed they were getting close to 50 reviews a day. However, they are said they got the product for free. This went on for a while, around 50 reviews a day and they had around 1000. About 6 months later he went back looked and found that they almost completely stopped getting reviews. They might have gotten another 50 organic reviews which showed that they might not be getting many sales. They invested a lot to get all those reviews but that didn’t translate into actual sales because they weren’t quality reviews.
As a buyer, how important is the quantity? Are you looking for 100 reviews or are you happy with 5 as long as they are long quality reviews?
A few good reviews are great. If he can get a good idea about the product from a few well-written reviews then it doesn’t matter if there are 50 more reviews.
For more info on the European Private Label Summit, click here where you can learn other tips for succeeding in the European Amazon marketplaces.
What about photos and videos? Do you think they make a big difference to the impact of a review?
Oh yes. Since sellers cannot upload their own videos they really like it when the reviewer does one. Some sellers have approached Augustas about reviewing their products because they saw the videos he did.
Now Augustas will upload about 10 photos and a video for each review he does, and as a buyer, it holds more weight than what the seller uploads because it is an actual customer’s unboxing rather that the photoshopped images the seller is putting out. Depending on the product, in his video, he will show how the product is used. This could be particularly beneficial if it can be complicated. This way buyers can watch how it’s done rather than be dissatisfied with your product.
Does it make a difference to Amazon if you have a lot of top-reviewer reviews?
Probably not. It’s unlikely that Amazon would weigh top reviews more than regular reviewers. In fact, Amazon doesn’t really like these free reviews. He did an interview with a private seller that used to work in Amazon and according to him Amazon is all about the customers, and when reviews are getting free products then they are losing the true connection between the product and the customer. It may be, that in the future, it will be more difficult for this type of reviewer to exist.
Even as sellers, we know that these reviews aren’t completely genuine. It’s different than when as a customer, you buy a product, you really like it, and decide to go and leave a review. It’s likely that Amazon will make it more difficult and in fact, in the US, they are starting to require that sellers can only give a 50% discount for reviews.
Tell us about the private label online summit
Augustas wanted to start his own private label business but it ended up not working out and he got into reviews. He noticed that people often had a lot of questions about Europe and there wasn’t one place you could go for consolidated information about getting reviews in Europe, different languages, taxes, and many other topics. Augustas decided to help out by gathering experts about all these different topics. He has about 20 speakers that will be sharing their knowledge. He has some sellers from the US so you can hear their stories and follow their paths. There is a lawyer from Germany that will discuss some of the laws and regulations you have to follow, especially in Germany where they are a bit stricter.
He decided to go with a virtual format because it’s easier to set it up, it easier for the speakers to be there, and it’s easier for the audience to be able to get all the information.
If you have had any desire to sell in Germany, this is a great resource to learn what you need to know. If you’re a UK based seller, you can still be based out of the UK and sell in Germany. Your orders will be fulfilled by the UK warehouse. If you are in the US, don’t let the language barrier stop you, it’s not that difficult to work around.
Do you have any websites/events/places that people can learn more from you or contact you?
Any parting words of wisdom?
Treat you reviewers like your customers. Forget you are giving them something for free and treat them with respect. You will get more and better feedback from them.
What are the major freight paperwork and how do we overcome those?
If you are using a courier or one of the freight professionals, they do all that for you. You don’t have to worry about the various paperwork, custom claims, etc. This is a skill these guys have been working on for years, they can do it better and more efficiently than you, so let them do it. UPS is around £11 per shipment for customs clearance. DHL is right around there as are most of the others. Since you’re importing the product, most of the paperwork is done by the exporter and you’ll end up with the VAT and the duty. Both of these are calculate off the commercial invoice.
One thing the Chinese like to do to be nice, is send the shipment as samples. If they are a sample, that’s fine. However, if you’re shipment is 500 units, that clearly isn’t a sample. At some point, the guys at HMRC are going to catch on and you may end up with penalties as well as your future shipments getting more scrutiny causing delays.
You have a proper business, so you want to make sure you do things by the book. It may cost you more in duties, but you want to build your business on solid ground.
Another they offer is to lower the cost of the invoice to stay under a certain value at which point things become more complicated. Is that something to avoid as well?
At the end of the day you’re evading taxes, which simply put, is wrong. Also, if you get caught you may end up getting put on a list which will further delay you in the future. If one of the customs officials gets to digging around and realizes your products are valued at more than what was declared, they will put you on a watchlist. Ongoing shipments will be inspected and paperwork will be scrutinized which will hold up your shipment.
Do you need to instruct your suppliers about commercial invoices or will that be checked by DHL or UPS?
A commercial invoice is just like any other invoice. It will detail the value of what your purchased, the goods you purchased, the delivery address, the importer on record’s address, and the commodity code. That is a global code that details what the product is classified as which you can find on the HMRC website. So when the shipment comes in they can charge import duties.
Is that something the Chinese supplier will automatically put on the invoice and get right?
Well… they’ll put it on the invoice. It may not always be right and there is no way of going back and saying this is wrong, so you’ll just have to double-check it and next time you order tell your supplier that they put the wrong commodity code on it. Which could save yourself some money since the import duties can vary depending on this code. It can range from 0-12% on top of VAT.
How is VAT calculated? Is it the value of the goods only? So if I have 500 units that cost $2 a piece, is VAT calculated on that $1000?
It is the commercial invoice value + freight + duty. VAT is calculated on the total of all three.
Is there anything else we need to get on the commercial invoice? Say I order a shipment, sent to your prep company, do I need to make sure all that is on the invoice and how do I communicate that to DHL or whoever?
It does need to be on there, but in Greg’s experience if doesn’t matter. It seems to be a daily battle with FedEx, or DHL trying to get the person on the commercial invoice or airway bill. It doesn’t matte who the consignee is, Greg seems to always get the bill sent to FBA Pep UK at his address. If you look at the paperwork that comes with it, it clearly states the correct customer but they seem to ignore that.
How do you handle that, when you get the invoice in stead of your customer?
It depends on the customer. Some will just pay it which is fine. Even though it’s FBA Prep UK on the bill, they can’t sort it out. The customer has to contact them and tell them that they will accept that invoice.
The biggest takeaway seems to be that it’s best to just use a freight forwarder or use your courier and make sure that your name and the company name is on the paperwork.
Those guys are the professionals. They are doing this day in and day out. Sure you can learn it, but that’s time better spend on your company and sourcing more profitable products.
Another thing you have to worry about is your EORI (Economic Operator Registration and Identification scheme) number. Which is a number supplied by the HMRC (Her Majesty’s Revenue and Customs). You can’t apply for one unless you have a shipment coming, and you can’t get your shipment into Europe until you have it. It takes about 3 or 4 days to get it, so as soon as your supplier gives you all the detail on when the shipment is coming from, where it’s going to land, the size of it, the vessel number, take that information and you can apply for your EORI number online.
Small samples should be ok, your couriers can take care of it. Once you start getting bigger shipments coming in, you’ll want to get your own number. It simply for statistical purposes of what come in and goes out of Europe.
On a side not, outsourcing is vital! It’s a waste of time trying to do everything yourself. Some of the simpler tasks, or task that need expertise can be outsourced freeing you up to focus on growing your business. Here is just one example:
This is a 15×15 grid of everything that needs to be done with products. This is why you shouldn’t order 15 different things from AliExpress and why you need help with prep.
For more ambitious sellers what are the biggest challenges when trying to scale up?
What about people who want to import a lot of one product?
Factoring time scales. If your coming by air now, you’re looking at 7-10 days from China to yours or your prep company’s hands. As you scale up you’ll have to start coming by sea which is about 35 days from China to the UK. Then the ship has to be unpacked which is another 5 days. It’s about 40 days from the time the supplier delivers it to the time you take delivery. Obviously, this is something you have to consider. If you’re doing you analysis to determine when you will need more product, you’ll have to add another 30-40 days onto that or risk running out by the time the ship arrives.
If you’re used to doing your own prep, as you scale up the deliveries will get bigger. You’ll start getting them in pallets rather than loose boxes. If you plan on continuing to do it at home, you have to consider how you’re going to offload the truck. It’s no longer going to be a van or small truck, it’ll be coming in artics so access becomes an issue. Also, you have to request a truck with a taillift if you don’t have a forklift. That will cost another £40.
What about those who want to go from a few SKUs to say 10 or 20 but not a huge quantity of each one?
This is common with things like pencils. Where you have one type of product, but 5 or 10 variations. i.e. different colors which Amazon treats as completely different products. Having the product description on the boxes is a huge help. That way if there is a problem with a particular SKU, it’s easier to identify which ones they are without having to open every box.
Whether you’re ordering 500 unit of one product, or 50 units of 10, the challenges are the same. Where the challenges would come and the cost would rise, is if your importing products from different suppliers. Now, there are services that will consolidate for you. You can have four or five different suppliers send everything to these consolidation warehouses. They will consolidate those and export them as one shipment saving you money.
What do you see coming up in the Prep side of Amazon as a problem?
Amazon will start requesting detailed contents of boxes. You can do it now, as an option, and in the US they have started requiring it. Usually if it happens in the US it will happen in the UK. So you will have to communicate that with your supplies to be more clear about what’s in each box especially of you ship directly. They will also requiring packing notes, so when they open the box, they know what’s in it to speed things up on their end.
Brexit will likely have an impact on shipping in Europe.
Amazon announce recently that they will have an air fleet of about 40 planes to ship products themselves. It’s unknown if freight will change much since it’s a fairly stable and established system. However, Amazon will likely try to takeover that.
How can people get hold of you?
Q. 1 UPC Code – Stuart.
OK, so you may have seen some talk recently about Amazon cracking down on non GS1 barcodes in the US.
I’m just wondering what people’s thoughts are on how to handle this.
When I first setup my private label products, I used a third party barcode company, that were significantly cheaper than the official GS1 barcodes. At that stage I wasn’t too worried, as I was just starting out and money was tight, and hey, it’s not as if I needed to be able to print barcodes onto my packaging to sell in retail shops.
The issue, now arises, that I am in a position were I could afford to use official barcodes, and indeed, I would want to, so that Amazon don’t kick me off. The problem is that even though I am happy to acquire them, I can’t change them on my ASIN’s.
Anyone any ideas how to go about this?
Tahir Same here. My plan is to create a new child with the new barcode and list it under the actual product which will become a parent listing. Then just delete the old child which is obsolete. So if that idea would work we could keep the reviews. Anyone already did this?
Brian: I bought my barcodes from a site who, when I asked about this, said they purchased them originally before 2002 when the new policy was put in place, so they’re legally permitted to resell them. But when I search my UPCs in the online database, my business name isn’t attached to them which is I think what Amazon will be checking for. So I don’t know what this means….
Tahir Michael Stuart: So just wanted to let you know that my plan didnt work out as planned. When the old child is OOS or deleted the parent listing doesnt show the reviews of it anymore. Also changing EAN code in edit mode changes the ASIN of the listing and reviews + rankings will be gone.. So seems like there is no other option unless Amazon can fuse 2 listings into 1 without losing review & rankings
Brian Cook FYI, here’s info from SS themselves from someone in another group:
“This is Tamara, the Catalog Specialist you spoke to about your inquiries regarding UPCs.
We verify the authenticity of product UPCs by checking the GS1 database. When you purchase UPCs from resellers, many times they do not update the information with the GS1 database, and it will appear as belonging to a different company. This is why we recommend obtaining your UPCs directly from GS1 (and not from other third parties selling UPC licenses) to ensure the appropriate information is reflected in the GS1 database.
This recommendation does not mean that Amazon is going to take actions against products that have UPCs purchased from other companies. It does not mean that sellers need to go in and change all their UPCs for new ones purchased from GS1. We do not want you to delete your listings and create new ones with new UPCs. That would not be in your best interest or ours. Also, the system will not allow you to modify the UPC for a product that already has an ASIN linked to it.
Generally, using UPCs purchased from different companies should not give you any problems. However, an issue could arise if someone else tried to list a product using one of these UPCs. We handle these issues on a case by case basis. It might be necessary if that happened to get a new UPC and create a new ASIN or modify it for the existing one (which only we can do), but we would need to analyze the specific case.
Once again, let me assure you do not need to go into your inventory and switch all of your UPCs. In fact, the system would not allow you to do so and it could create other issues with your listings. My recommendation is to leave your existing listings as they are and get UPCs from GS1 when you want to add new products.
I hope this information helps to clear up your inquiry. Below is a short yes or no survey to rate the service I provided for you today. I would really appreciate it if you could fill it out as we take our seller’s feedback very seriously.
If you have any other questions, please do not hesitate to contact us. We’re here to help.”
MichaelThanks, Tahir and Brian, very good to have clarification around that.
Sounds like generally
1. We don’t need to panic about existing listings
2. Going forward however it’s wise to use proper GS1 UPC codes to avoid future issues.
Tahir Ballikaya not sure about point 1. Did you read this article about this issue already: http://www.webretailer.com/lean…/amazons-new-upc-policy/ so it really depends on Amazon how they are going to approach this.
One thing is for sure. If Amazon decides to delete all this listings with invalid UPC codes many listings will be gone, imagine all the fba courses that taught people to buy cheap upc codes all those years + I guess most of Chinese listings..
point 2: definitely, I believe Kevin King in your podcast said that as well
Q. 2 SALES TAX
Hi Guys, As UK / international sellers on Amazon US, do we have an obligation to collect and remit Sales Tax? It seems to be a very murky topic with no clear and definitive answer. There are companies like TaxJar and Avalara who make a very convincing case that international sellers do have to collect Sales Tax, but they have a vested interest in telling people that. In reality I wonder how many international sellers actually collect and remit sales tax.
Are there any unbiased official guidelines for international sellers regarding sales tax?
Also, this is to international sellers: do you collect sales tax? And if not, why not? I’d be very interested to hear your thoughts.
I’m just trying to gain some clarity on this topic so I can take the appropriate action. Thanks
Michael Veazey Hi Kris. I don’t have the definitive answer. Possibly because there isn’t one! However I do have Mark from Avalava lined up to be interviewed so he should be able to shed some expert light on it. True he has a vested interest but at least he is a specialist in the field so it’s not just rumour and speculation.
I’ll let you know when he’s going to be on the show and let you ask questions to put to him.
I’m in Canada and spoke to an accountant here. He said according to the letter of the law we’re supposed to register for income & sales tax in every state where we sell our product. But he didn’t advise I worry about doing this yet because it’s so complicated and can possibly create rather than solve more problems when trying to do it. It’s also very unlikely that the IRS will come after me at this point as an international seller. We could also argue, in his opinion, that I don’t really have nexus in the US given that it’s a 3rd party that houses my inventory and I don’t have an official US business location. His advice was to wait until the business is at a much higher level and then work with an expert to bring the business more into compliance with US tax laws.
#52 Q and A Tuesday no. 5
Q1 : ANILA: For products coming from China to UK, how do you work out the duty value to put on the boxes to estimate for the taxes? Not a VATable product
MICHAEL: Basis for duty is Commercial invoice value = Manufacture cost plus freight (if your supplier is handling freight, it will probably be on the same document). AKA Total Landed Cost (TLC). Then put that value into the dutycalculator website.
Any freight experts here, please feel free to correct and or refine this statement.
If you are using a Freight Forwarder or even just a Customs broker, obviously ask them how it works and check any nuances for your own product.
Q2: BEN: Hi gang! Thanks for your help with my previous question. Here’s another one. I’ll shortly be sending my first delivery to Amazon. I haven’t finished the ‘send/replenish inventory’ section on seller central yet (as I’m not ready to send yet), but when i am, I presume I’ll end up on a page that tells me how to organise delivery with one of Amazon’s preferred carriers?
Otherwise…the Amazon help pages aren’t very helpful in detailing how I actually get my stuff from my house to their warehouse! I understand that amazon’s preferred carriers offer discounts for going to amazon…which I presume I book through seller central, rather than parceforce.com, for example.
MICHAEL: Yes that’s right. Amazon’s preferred carrier is just the one, UPS. They give Amazon amazing shipping rates. Something like £1 a kg or less. Get a quote at the Post office or from a courier yourself and you’ll realise how cheap they are.
STUART: Unless, I have missed something but my experience of using Amazon’s preffered carrier, UPS, only applies when shipping from within a particular country.
For example, rates are fantastic when shipping from UK to FBA in the UK. However, when shipping from UK to FBA in the US, there are no special rates. I have found using Transglobalexpress to be very competitive, and they use UPS as well as other carriers.
MICHAEL: Thanks for the hint, Stuart. May I ask why you’re shipping UK to US in the first place? Is it sending stock from UK you already have here in order to test the market for that product in the US?
STUART: That’s correct. I merchant fulfill in UK, and have sent stock to US FBA to test market.
Q. 3 BEN: Guys, I’d be interested in your take on this idea. Especially MICHAEL: after the last two podcasts… I have heard some stories of people sending off their branding to suppliers to get branded samples, and then when they choose another supplier, the un successful suppliers have gone and made stuff with heir branding and sold it on to other people, or just gone ahead and stuck it on Amazon themselves.
What are your thoughts on getting samples made with ‘test’ branding. e.g. my branding with watermarks over the top. That way I can still see the quality of the printing/branding process and can still see roughly what my branding looks like, but I’m protected…
MICHAEL: thanks for raising this point. A few thoughts:
yes that is a danger. It does happen.
Firstly, short-term, nobody really cares about your brand yet. So I wouldn’t over worry about it yet.
However, I like your idea in that you are testing the quality of printing but protecting your brand.
For that matter, if all you want to see is the quality of printing, you could use a different brand altogether!
But The only thing I would say is that by doing this, if you decide to go ahead with a supplier, you probably should get another sample done with your actual logo. Which will delay the process.
You could just trust them to do it well and get it done, I guess.
Overall, I’m basically in favour of your approach.
However, I would say this: I’m not sure how much back and forth you’re doing with Suppliers with samples. But it is really important in the PL market now it’s so crowded to move fast when you spot an opportunity in the market.
SO for speed, I would get my 2-3 samples from suppliers upfront without worrying about branding. Just check out the quality of the product. That should take max 7 days from order to having it in your hand.
Then choose a supplier on the back of that.
If you want to then check the quality of the printing of logos etc from your chosen supplier at THAT point, I would then order a proper sample with your real logo. Unless they really mess that up, I’m going to place an order. If there are minor defects, I’ll have them correct it and then send me photos of the corrected sample.
Then get the order placed and in manufacture
Please understand: There is nearly ALWAYS a trade off between speed and quality.
Yes, it’s good to have a professional process in place and yes you should protect your brand (reputation) and IP (Intellectual Property).
However, if it takes you 6 months to get to market with a good, but not amazing product, which is frankly pretty much the same as everyone else’s, the competition will often have killed off the profit in that market.
You’re better off getting your good but not great product to market, learn about the realities of trying to sell, listing optimization, handling Adwords etc etc and get some feedback from customers.
You may then simply choose
3, or if quality and sales and profit are all good, just go back and reorder!
Either way, you get MOMENTUM. Do not underestimate the importance of this.
“Money Loves Speed”. Quality, sadly, does not.
An eternal conundrum. My advice (as a perfectionist): “The Perfect is the Enemy of the Good”
Good luck .
Thanks for the excellent and in depth response – it really is appreciated.
I have decided that this week I’ll be sending a ‘test’ version of my branding to three suppliers for samples. I expect to get them in 7-10 days, and then I’ll trust the best one to go ahead with the first full order using the real branding.
My ‘test’ version is close enough to my ‘real’ version that I’ll know what it looks like from the sample (it’s basically my branding with a ‘test’ watermark over the top, but in such a way that they can’t remove it’.
MICHAEL: Sounds perfect, good process. I like the thinking.
BEN: Only issue now is finding the guy who is going to design my packaging…wink emoticon
MICHAEL: By the way, don’t assume that the Chinese will care about the watermark. If they spot a product that will sell, they will be interested. Period. Part of doing business in China. Yes protect your IP to a degree, plus make it clear in your paperwork that they are not allowed to use it. But then you’ve done what you can in practice. Then move on!
Also don’t spend much money on design before you know if the products are worth selling.
First check the sample quality before you invest time money or energy in it.
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#44 Q & A Tuesday 3
Q1: As UK / international sellers on Amazon US, do we have an obligation to collect and remit Sales Tax? It seems to be a very murky topic with no clear and definitive answer. There are companies like TaxJar and Avalara who make a very convincing case that international sellers do have to collect Sales Tax, but they have a vested interest in telling people that. In reality I wonder how many international sellers actually collect and remit sales tax.
Are there any unbiased official guidelines for international sellers regarding sales tax? Also, this is to international sellers: do you collect sales tax? And if not, why not?
There’s seems not to be enough clarity among the US Tax authorities. This is a new situation for State tax authorities- Tax Nexus is hard to determine because often the inventory is stored in an Amazon warehouse in one state but the customer is in another.
A lot of UK based ecommerce or online sellers are not too worried. Mark from Avalavara wil be on the podcast soon.
A halfway house is to set up on Amazon that you will collect sales tax. This will either increase your price a bit or decrease your profits so plan for this.
Hello. We are pretty much ready to roll with our first product which is a baby product for the US. It is very simple and made of silicone, but I have become worried about making sure that our product and its labelling conforms to US safety standards. I have been doing some Google research this morning but does anyone have any advice about this? Have any of you launched a children’s product before?