It’s September. The children are back in school, the heatwave is gone, and we can all start to prepare ourselves for the autumn depression. Add the COVID pandemic on top of that and you have a lovely-jubbly outlook for the remaining part of the year.
But is it all that bad? Of course it’s not!
I’m just messing around here! 🙂
I almost never look at life in such a gloomy way, and I actually like this part of the year because:
1) I have two kids, and for their own sake, they need to go back to school and start socialising again. I really hope that the schools here will stay open and there won’t be another lockdown. I’ve seen for myself just how traumatic that experience can be, especially for my son who is only seven years old.
2) It’s hard to work in an office in the summertime. I still managed to do quite a lot this summer, but still, it is hard to be super productive and sit in front of the computer all day long when there are so many things you can do outside with your friends and family.
3) The fourth quarter is just around the corner! Obviously. I wouldn’t be totally honest with you if I left out this part of the equation. I like making money, and that’s why I’m in this business. Every year, my excitement goes up tenfold when Q4 approaches, and this year, it will be like nothing we have ever seen before! EXCITING TIMES!
So, I’m feeling very good at the moment, both physically and mentally. I’m sticking with my modified 4 a.m./5 a.m. morning routine, I’m exercising regularly, and I’m spending my days very productively.
In today’s post, we have a lot to cover! I will continue the post structure I started last month and begin with my income update for the last month, followed by various Amazon/eCommerce news. So, here’s the list of topics covered in today’s post:
- My August 2020 Amazon FBA profit update
- Amazon launches in Sweden
- News regarding Christmas stock limits
- Amazon fees increase
- New feature: products in stock soon!
- Brexit update
- Q4 sales predictions
Without further ado, let’s get straight into it!
My Amazon FBA
August 2020 Results: £25,209.56
After achieving record sales in July, when I did more than £30k in sales and made almost £9k in NET profit, August was a much slower month, with sales of £25,209.56 and a NET profit of £6,945.30.
Let’s call it £7k profit for the month. That is still amazing considering it is AUGUST, which has historically been the slowest month of the year for my business. Many people go away on holidays in August and generally spend a lot of time outdoors instead of shopping online.
This year is different, of course. Due to the pandemic, very few people went abroad for their holidays, and that could be one of the reasons why sales for my business in August were not as bad as expected.
In fact, my sales could have beat my July record if not for the heatwave in the first part of August! You can clearly see in the sales graph that there is a period of roughly 10 days when my sales were down:
This is because sales always drop dramatically when the weather outside is so good. We can’t do anything about it except join the crowds and enjoy the sun, right?! 🙂
I have been selling online for more than 15 years now, so it’s very clear to me that weather plays a HUGE role in eCommerce sales.
In general, the better the weather, the less money you will make.
Luckily, in the UK, good weather is not that common, so it’s often just a few weeks a year when sales are seriously affected by this.
But still, even in the winter months, you can clearly see a drop in my sales when there is suddenly very good weather outside.
Holidays also impact sales, just like the day of the week! I can clearly see a drop in my sales over the weekends. It has been that way for many years and this has been true in many of the businesses that I own.
It looks something like this:
- Sales start to drop on Friday afternoon/evening.
- Saturday is very slow—usually the worst day of the week in terms of sales.
- Sunday morning is super slow, then sales start to pick up on Sunday evening.
- On Monday, things are back to normal and often reaching new records.
- Tuesday/Wednesday/Thursday is plus or minus the same.
Obviously, you may see different results based on the niches you work in, but for most people, the above results will be very typical.
If you’re selling on Amazon, you should fully understand how your daily sales fluctuate during the week and especially on weekends. If not, you may be wasting tons of money on PPC ads that give you a negative ROI. Please check out my Amazon PPC scheduling post for more information.
There was another “accident” that affected my sales this month in a negative way. Out of nowhere, three of my product variations went under the Hazmat Review.
The official reason:
Your product XXXXXXXXX could not be classified as it has been flagged as possibly containing batteries and lacks detailed battery information. It is therefore currently blocked from sale and inbound shipments.
LOL! Battery information! My product has nothing to do with batteries and it does not contain any electronics, so it’s ridiculous that Amazon flagged it that way. It could be that there was some kind of glitch in the system in August as several of my Amazon Sharks students also reported similar incidents.
Luckily, this situation is very easy to resolve. All you need to do is fill out a super simple Battery Exemption Sheet and upload it to Amazon. Within five days, my listing was re-instated.
It was not a huge issue, but still, I lost seven days’ worth of sales for those three variations because of this system error.
But that’s part of the game. I totally understand it. You have to be ready for unexpected situations, and when they happen, you just need to LOOK for SOLUTIONS! Focus on the issue and try to resolve it as quickly as possible.
Don’t be that person who goes onto forums and spends days blaming Amazon, whining and crying about how bad Amazon is, etc.
Who cares? It won’t help you! Just work on the issue and fix it. Then, move on.
And that’s it for my August sales update. In total, I sold just over 3000 units, and I’m super happy with the £7k NET profit I made in the year’s slowest month. Now I’m much closer to reaching my £100k-a-year profit goal for 2020.
For now, let’s take a look at some other Amazon news!
Amazon expands to Sweden!
Now, for me, this came out of nowhere! A few days ago, I received an email from Amazon announcing the launch of Amazon in Sweden! Nice! I know that there have been rumours for years now that Amazon will move into the Scandinavian countries, but there was never any concrete information on when it would happen. And now, with the COVID pandemic, I really didn’t expect Amazon to launch new countries this year.
They haven’t launched the Amazon.se site just yet. At the moment, it redirects to Amazon.de, and I haven’t seen any information on the exact launch date. But what is clear is that Amazon will launch a full physical products eCommerce site in Sweden, not just digital products.
Anyways, in the email, Amazon announced that Amazon Sweden has been added to our Seller Central accounts and we can start working on our listings to be 100% ready when the marketplace goes live. This means we can already build listings using the Build International Listings (BIL) tool and translate them into the Swedish language.
For translations, we can use Amazon’s built-in automated translation tool OR hire someone to do manual/professional translations.
I personally would recommend doing manual translations, especially if you don’t have that many listings. Go to Fiverr.com and look for English to Swedish translation services. I’m sure that very soon, there will be tons of gigs that specifically focus on the creation and translation of Amazon listings in Swedish.
If you don’t see Amazon Sweden in your list of marketplaces in your Seller Central account, you need to follow the instructions in that email to submit your Merchant Token. This is actually what happened to me, so I’m still waiting for Amazon to unlock the Swedish marketplace for me.
Even though Sweden’s population is only 10 million, I do believe that it’s great news that Amazon is expanding to other countries in Europe! After Sweden, they will probably add Norway, Finland, Denmark and other countries in the coming years until the whole of Europe is covered. And we’re talking about very wealthy countries here with tons of eCommerce growth potential and spending power.
Which is AWESOME! Imagine the market size of that? The EU countries alone consist of 446 million people, which is greater than the population of the United States (328 million).
What’s even more important to understand is that eCommerce in the EU (not counting the UK) is at least five years behind the US, so there’s still plenty of growth that will happen over the next decade.
With Amazon expanding into more and more regions, the sales volume will be spectacular. Imagine if you currently sell, say, 30 units a day in the UK alone. In five years, you could be selling 200 units a day across all of the Amazon marketplaces. That’s the massive, MASSIVE growth potential we’re looking at here!
This is not just a theory. I’ve seen this firsthand in my own business already. Currently, my Amazon European marketplace sales have already surpassed my UK sales. Participating in the Pan-EU programme was the best decision I could have made for my business. I would never have reached £30k in sales per month with just one product if I had stuck to the UK marketplace alone. Never.
Lastly, just like with Amazon Netherlands, there is no news yet on Amazon opening warehouses in Sweden, which means that we don’t have to register for VAT in Sweden unless we reach the distance selling threshold, which at the moment stands at €34,000 per year.
I highly recommend that people who are already using the Pan-EU programme begin to prepare their listings for the Amazon.se launch. Yes, the demand will be very low in the beginning, just like on Amazon.nl, but you have to look at it from a long-term perspective.
You need to consider how it will develop over the coming years. There’s always that first-mover advantage, especially when it comes to organic rankings on Amazon, so don’t delay this process. Be the first seller in your niche to start selling on the Swedish platform.
The same goes for Amazon Netherlands. If you haven’t already started selling there, now is the perfect time to do so as you’ll be ready for the Christmas shopping madness!
Christmas is NOT
cancelled after all!
In my July income update post, I talked about the recently introduced 200-unit limit for sending brand-new items to the Amazon warehouse. Ok, that’s fair enough for brand-new items with no sales history, but I was worried about my seasonal stock—particularly, my Christmas-themed variations.
As these items don’t sell throughout the year, they don’t have a recent sales history. Amazon was putting a maximum limit on how many of these “brand-new” items I could send to their warehouse: just 200 units. Which is nonsense! We all know how busy it gets in Q4, so we have to be able to send in lots of stock in advance!
I even sent an email to Amazon asking about this, but they couldn’t explain how it will work for Christmas stock. I probably wasn’t the only one who enquired about this as, just this week, they changed the system and increased the limit to 1000+ for my Christmas variations!
I don’t know how exactly they calculated this and 1000 is still not enough for me—I would like to send in 2000 to 3000 units—but at least it is a good start!
I have already packed up two pallets with 4000 units, and I’m sending them off to Amazon straight away because I’m already seeing Christmas items start to sell, which is crazy! More on that in a minute.
Now, let’s take a look at some other Amazon-related news.
Increase in Amazon UK fees!
Unfortunately, it’s true. The 2% Digital Services Tax that the UK government is implementing from the 1st of September will fall on the seller’s shoulders (thanks, Boris!).
Facebook and Google have followed the same strategy and simply “transferred” this tax onto their customers: the advertisers.
This will apply to both referral fees and FBA fees. Nothing has been said about the monthly professional account subscription fee, so I guess that stays intact.
Now, 2% may sound like a lot, but in reality, it’s not that bad:
For example, on an item for which the referral fee on amazon.co.uk is currently 15.0%, you will pay a fee of 15.3%, and for a parcel with a current UK rate of £2.27 (standard parcel ≤0.5kg), you will pay a fee of £2.32.
Still, it is an increase in fees, and like always, what I do when things like this occur is I look for ways to either increase the price or cut my costs. I don’t want to touch my product prices right now as they are ranking so well in the organic search, so the only option for me is to look for ways to cut costs. And I did it!
I simply contacted my suppliers and asked them what it would take to cut our current costs by 5%! They informed me that I will have to increase my MOQs by 20% and it’s sorted.
And that’s exactly what I will do. I will increase my order size, which gives me better prices, plus I will save even more on my shipping costs. In the end, I will actually make even more profit now than I did before this new 2% tax was introduced.
And this is how it almost always plays out. Until something happens to prompt us to take action, we don’t do anything. People, in general, are lazy (and I’m no exception). We need motivation, some kind of stimulus to change things up!
It is what it is—business as usual. Problems are there for us to fix them. That’s it.
NEW FBA Feature:
In-Stock Head Start
This is a new feature that is being rolled out by Amazon to all sellers after a successful pilot trial with selected sellers.
I was actually part of that test group during the summer, and I really liked this new feature.
Basically, how it works is: when your products are out of stock but you have created a new shipment plan and dispatched items to the Amazon warehouse, on your product page, Amazon will show the estimated date for when the item will be back in stock.
In-Stock Head Start has a number of potential benefits:
- Discoverability: Items that are on their way to the fulfilment centre “can” appear in the search results, giving customers a wider selection and helping to increase traffic to your product detail pages.
- Sales: Customers can buy temporarily out-of-stock items, which can result in improved sales.
- Inventory productivity: Taking customer orders while your products are on their way to the fulfilment centre can reduce the time between shipment and sale.
Previously, when your product went out of stock, it generally disappeared from the search results. Even if people did find your listing, they couldn’t buy from you. Now, with the introduction of this new feature, people will be able to find your listing in the search results AND even place an order! When FBA receives your new stock, customer orders will be fulfilled. So, it pretty much works like a pre-ordering system.
By default, all sellers have this new feature ENABLED for their account, but you can check the status of your account on this page.
This setting applies to all Amazon European marketplaces, and there’s also an option to PAUSE this feature. I don’t know why anyone would want to do that, though. I think it will only help with sales, and possibly even rankings, so I can’t see any downsides just yet.
If you can think of any negatives or problems with this new feature, please leave your thoughts in the comments box below this post.
I recommend that everyone reads through the help pages there, especially people who currently sell on the EU marketplaces using the Pan-EU or other FBA programmes.
Obviously, until we know for sure that a trade agreement won’t be reached by the end of this year, there will be a level of uncertainty in the air. But Amazon is taking a very pragmatic approach to this. They are assuming that there won’t be any trade agreements in place and that from the 1st of January of 2021, there will be a hard customs border between the UK and the EU.
I’m also taking the same approach. I’m starting to increase my stock levels in my own warehouse so that I can maintain two inventory pools from next year onwards.
I will continue to update my blog readers about this if/when there is more news available. To ensure you don’t miss out on any of my future posts, make sure you’re subscribed to my email list. The simplest way to do this is to sign up for my newsletter on the homepage of my website here.
Ok, with all the serious stuff covered, it’s finally time for dessert! 🙂
Q4 sales predictions
Everyone in the eCommerce space is talking about this, and industry experts are trying to come up with a reasonable prediction of the increase in Q4 sales compared to the same period last year. I have heard that this year’s Q4 sales online will be DOUBLE that of last year, which sounds unbelievable. Even a 50% increase would be nothing short of amazing.
There is not much UK data we can look at, but in the US, Q2 sales this year were up by 44% compared to the same period last year. Even though more and more retail shops are open again, it seems likely that people will simply continue to shop online. And for good reason, of course! It’s convenient, it’s fast and it’s fun! With most large online retailers now offering free delivery and free returns, there are no more excuses to NOT shop online!
I totally agree when experts say that the future of commerce is online, and the future is closer than you may think. This would all have happened anyways, just over a longer period of time. However, this pandemic cut ten or so years off that timeline. For online business owners like us, that’s all good news! The more people shop online, the more customers we can reach via the Amazon platform.
Going back to the Q4 sales projections. I’m already seeing some irregularities in my sales. Usually, the Christmas variations/stock start to slowly pick up sales at the end of September or early October. But now, Christmas sales are already beginning to trickle in.
Yesterday, I sold 11 units of my Christmas variation, and it’s only the beginning of September!
To be perfectly honest, I’m having doubts about my inventory levels. I should have prepared better for this, and my stock levels should be higher for the Christmas variations. I will do my best to get some more product in, but chances are that I will run out of stock this year—maybe, even before December! That would be funny, lol! To run out of Christmas stock before Christmas shipping has even begun.
Anyways, I really hope that you’re taking this very seriously and carefully planning your stock levels. Don’t leave everything to the last minute in November or December when there are always massive delays at the fulfilment centres. Yes, due to the new maximum FBA limits, we will still have to send in stock later in the Q4 than usual, but at least make sure you have that stock ready to go in your local warehouse or an FBA prep centre.
And that’s it for today! I really hope some of this information was valuable to you. I will continue to document my Amazon FBA journey and keep you updated via regular blog posts.
If you would like to learn more about my Amazon FBA business, how I created it, and how you can copy the same system to start your own Amazon business, check out my Amazon Sharks programme here.
If you have any questions about Amazon, eCommerce or importing, feel free to leave them in the comments section below this post. I will personally answer all of them within 24 hours, Monday to Friday.