US Sales tax, Prep Centres
#339 How to launch on Amazon USA (Sales Tax, prep centre, launch method) (Q & A Tuesday)

How to Launch on Amazon USA for UK Amazon sellers

“I am planning to launch my product on Amazon.com in the coming months, in connection with this I have a few queries…”

Answers by Ashley Pearce (10K Collective mastermind member and $1 million per year Amazon sellers) and Michael Veazey, host of Amazing FBA podcast.

1. Is there a sales tax levied once turnover reaches a certain level etc on sales made on Amazon.com?, I have read this is charged on a state by state basis, therefore I assume Amazon calculates this for sellers (who use FBA) and sends an invoice each month? 

Ashley

Answer: oh by gosh no. Mixed answers on how to deal with this one. Be prepared to accept you’re going to take on some level of financial liability and account for it. Listen out also to Michael Veazey’s new podcast – the 10k collective podcast, he’s got some guests coming up who give you the 411

Michael Veazey

 You’re lucky Dan to be getting a nice long reply from a 7-figure Amazon seller who is also a very sharp cookie…so I have a few things to add

For what it’s worth: 

Sales tax is an enormously disputed area right now. It is nothing like as simple as your Q implies, I’m afraid. 

However, We do indeed have new 10K Collective podcast episodes coming out on this topic, starting on 30 July with Paul Rafelson (who was in house counsel on tax for Microsoft and GE among others, ie a VERY big hitter in tax law in America). 

Paul’s view is very clear CAVEAT: I am clearly not a lawyer and this can only be the most general advice. It is not a substitute for individual legal advice. 

Broadly speaking: do not register for sales tax as an individual seller or as a small business. Period.

Amazon is already being required to collect and remit sales tax by some states (eg NY) and is going to be made to do so by other major states by the autumn of 2019 (eg CA). To get the detail, listen to the upcoming podcast and/or read the show notes:  10kcollective.com.

US Prep centres for Amazon sellers

2. Can anyone recommend any US based prep centres who can receive my shipments and forward onto Amazon? Is there certain states which are more favourable to choose for a prep centre to be located in?

Ashley

Are you looking for a prep centre or a forwarder?

I send direct from China, through a US provider who then just forwards to Amazon directly – Flexport.

They also have a great onboarding process which will help you make sure you get reasonable warehouse locations for your deliveries by playing a sensible game when setting up shipments. Saving you $thousands

Michael

Flexport is indeed wonderful but they generally deal in serious volumes ie several pallets up to containers. 
If you’re looking to send say 20-25 cartons (so not yet at the palletized level), you might be looking for something as simple as FBA Inspection.

I’ve used them several times and they generally know their business. Not absolutely perfect (eg they have a facility quite a distance from LAX airport/Port of LA) but at least it’s near to the main port that most goods from China come into – either by air or sea. Just google them.

EZPrep is also similar – possibly a bit pricier but maybe better located relative to LAX/Port of LA.  I’ve not used them personally, but have heard from seller friends that they are good. 

Launching on Amazon.com

3. Has anyone recently launched a product on Amazon.com and would be willing to share their launch method (e.g. for generating the 1st few reviews, what launch service (if any) they used etc?

Ashley

Early reviewer programme

Use the built-in “Amazon giveaways” function – direct people to a YouTube video – just needs to be a slideshow of your product and its features and benefits, no longer than 45-60 seconds. Can make one in Canva or another free slideshow maker.

Be prepared to go low on price

Use Amazon coupons

Hit up your email list

Use organic traffic (this is my team’s bag at futurestatemedia.com)

I might also suggest reaching out to bloggers (not influencers 🙈) in the space and asking them if they would like to purchase your product and you’ll give them a refund of the full price if they write a review on their blog (typically they’ll also write a review on Amazon) – just direct message on Instagram, Facebook, twitter, YouTube, Pinterest

Coupon promo

I’d also run a coupon code distribution promo – using my Website and AMZ Coupon Server – but you need to hook that up to a traffic source. FB Ads are too expensive, so again, I’d rely on Organic Traffic – if you haven’t got any you’ll probably need to go the more expensive route – FB Ads

Jumpsend

Jumpsend is now “launch” inside junglescout – that’s worked ok recently, but just be wary of resellers.

Spend on PPC

But most of all – spend a tonne on PPC, budget for somewhere between$2-4 a unit and don’t be shy in the early days – it’ll probably be north of $5 a unit for the first 30 days at least (tanking generally – I don’t know your niche. Amazon.com can be even more ruthless than that)

Lots of info there – but abbreviated. So feel free to ask questions!

Michael

 I think Ashley has given you a ton of options there and solid basics too. 

The only thing I’d clarify is: As well as spending a ton on PPC initially to get traction, two things:

Choose Winnable Keywords

A. REALLY niche down to get winnable keywords. If the main competitors for a keyword are ranked say #6 and are doing 1000 units a month, DON’T target that keyword unless you can shift more units. (Which will cost you a ton when you’re launching). 

Remember: The total size of a (keyword) market is unimportant; what matters is the market YOU can WIN!

Price REALLY Low to Launch

B. REALLY reduce your price before you have any reviews or have a significant number of reviews.

The latter is relative to your market and can be as low as 20 reviews (in America – less in UK, Germany, say 5-10 reviews). More important in my experience is the average rating – so work HARD to avoid 1-star reviews.

There is little point spending a ton on PPC eg $2 a click if you destroy your conversion rate by over-optimistic pricing. If you are spending $2 a click on PPC for example (and let’s assume to simplify things that you’re in the early stages of a launch and are making 50% of your sales via PPC), let’s assume your breakeven is $15 (without advertising costs) Just remember that the ENTIRE point of the launch is to boost keyword rank for the target keywords. 

Compare and contrast: 

In both scenarios, we’ll assume that 

i)PPC cost =$2/click

ii)conversion rate is constant between PPC and organic

iii)50% of sales are organic, 50% PPC driven. 

So observe…

Scenario A: 

Price $15 (breakeven), conversion rate 10%

Ad spend per PPC sale: $2×10=$20

Average ad spend per sale overall=$10.

Loss per sale=$10. 

Ranking boost – LOW (this is the most critical component at the launch stage since the ENTIRE point of the launch is to boost keyword rank for the target keywords). 

Scenario B: 

Price $7, conversion rate 33%

Ad spend per PPC sale: $2×3=$6

Average ad spend per sale overall=$3.

Loss per sale=$10

Ranking boost – HIGH because of all the sales. 

Conclusions

Sure in the latter scenario you’d spend money quicker – but overall on the same amount of stock, you’ll spend the same money – but in the former scenario, you’ll have rubbish ranking to show for it. 

DO your sums, set the budget, then launch aggressively – and if you can’t afford to do so; stay out of that market!

Half measures won’t do anything except losing you money.

Remember: it’s not the size of the market that counts, it’s what you can WIN!

And to win against competition means FOCUS, picking your fights and going HARD. That’s particularly true in the USA.