Let’s talk about Value Added Tax (VAT) as it relates to selling on Amazon.
Recently, there has been a storm forming around this subject, especially after the infamous Amazon invalid VAT number email that I covered in last week’s post. I have received tons of emails from my blog readers asking one simple question: DO I HAVE TO REGISTER FOR VAT?
Since I am often responding to each individual with the same answers and information over and over again, I’ve decided to create a blog post that answers this question in as much detail as possible. I will cover as many scenarios as I can think of, so that after reading this post, it is 100% clear whether you, in your specific case, have to register for VAT to sell on Amazon or not. With that, let’s get started!
The Basics of VAT
VAT is something we all hear about and experience on a daily basis, whether it’s through business transactions, Amazon forums, retail shops, or invoices and receipts. VAT (Value Added Tax), as the name suggests, is a consumption tax based on the value of goods and services. This tax is used in all European Union countries, as well as many other countries. In Canada, for example, it is called GST (Goods and Services Tax), but the principle remains the same.
The VAT rate varies from country to country, but in Europe, it is usually around 20%. Here are a few examples of current EU VAT rates for 2018:
Belgium – 21%
Austria – 20%
Denmark – 25%
France – 20%
Germany – 19%
Ireland – 23%
Italy – 22%
Poland – 23%
Sweden – 25%
In the UK, the rate is set at 20%, which actually puts us amongst the countries with lowest VAT rate. In the past, it has been even lower; prior to 4th of January of 2011, the VAT rate in the UK was just 17.5%, and there was once a temporary period where VAT was only 15%.
The VAT rate we are talking about here is the STANDARD VAT rate, which is the rate used on most everyday goods like:
DIY & tools
Clothing & shoes
Basically, most everyday products that you see on Amazon or in your local Tesco will have the standard VAT rate of 20% applied to them. It is the rate you are most likely to encounter on a daily basis. (more…)
Yes, I have managed to sort out my businesses, the Amazon Sharks program, so that I now have a few extra hours each week. This means I can spend more time on the blog again and that weekly blog posts will resume starting from NOW! When it comes to selling on Amazon, there are so many topics I want to cover, and more importantly, I want to share my own day-to-day operations, ideas I’m testing and mistakes with you too!
So, I will try to publish a new post every Thursday from now on. If you have opted in for my FREE Amazon video, you will receive an email reminder each week when a new post goes live. If you haven’t signed up, you can easily do it from any page of this blog. If you’re on a mobile device, simply sign up from the homepage:
Besides weekly blog posts, starting from next week, I will also post more regularly on my Facebook page. These will be small but important Amazon updates, as well as new tips and tricks I discover on a daily basis. So, if you’re interested in all of that and more, head over to Facebook and Like my page to receive updates on those posts.
Things move fast in the world of Amazon selling. I have noticed that many of the articles regarding product sourcing, importing from China, branding and other topics covered on this blog already need an update, so I will also try to re-write/update the most important archive posts to make sure you’ve got the most relevant and updated information for 2018! (more…)
I hope everyone has survived the weather change and has gotten back on track!
In today’s post, I want to share my latest update on how my Amazon FBA business has done in February 2018! If you haven’t seen my January 2018 Profit Update post, make sure to start with that. In that post, you’ll find an introduction and some background information about this business operation.
In February, my sales slowed down. I made £15,316.28, selling a total of 1535 units:
My profit from that was: 1535 x £4 = £6,140
This is my profit after paying Amazon seller fees, FBA fees and VAT. (more…)
It’s been almost two months since my last blog post. I wish I could be more active on the blog right now, but the reality is that I kicked off 2018 with a really hard push in all my businesses. Right now, I simply don’t have enough hours and energy in a day to give much time to the blog.
The Amazon Sharks program started with a boom and sold out within few hours of opening. I’m still adding and tweaking final material for the course, so that is obviously occupying a lot of my time, not to mention answering questions that my new program members send me every day.
As a side note: if you missed the launch and did not get into the first group, Amazon Sharks will reopen on 22nd March and there are currently 30+ places available! To avoid any disappointment, you can now book your place in advance by signing up and paying a £99 deposit. This GUARANTEES you a place in the program when doors reopen in March.
Due to many requests, I will also be introducing a new payment option on March 22nd that allows joining members the option to pay in full and gain access to ALL program videos from day one, meaning you don’t have to wait for each new module on a weekly basis. The weekly payment plan will still be available, so you have the choice of the payment and pace that suits you.
My plan is to publish a monthly update on how this business is doing. This will help keep me accountable to my goal of reaching £30k+ per month with this business by the end of 2018. I also think it would be interesting and valuable for others to be able to follow my progress and see how I am doing.
Seeing the January sales numbers, I may need to re-evaluate my plan!
I might actually need to increase that target to keep this race competitive enough:
In January 2018, I did £24,119.08 in sales—which is AMAZING!
I was actually very surprised that this business did so well in January! The beginning of the year (January/February) is usually the slowest time for eCommerce businesses, and my other businesses are proof of that—sales there are quite slow in January. (more…)
We’re just days away from Christmas and I’m sure many of you are already in a festive mood and don’t want to think much about business right now. But it’s also the end of the year very soon and from my experience, I know that lots of people will have set themselves a goal of starting an online business in 2018 so I think it’s the perfect time to give you more information on my up-coming Amazon Sharks course which will be released in January, so you know exactly what to expect from it.
But I want to start off with an update on my latest Amazon venture which I started earlier this year, in September to be precise. I already covered the first month’s results in a separate video where I also shared some very valuable information on how to start a profitable Amazon private label business.
If you haven’t seen that video yet, please go to my blog – AndrewMinalto.com and sign-up for free & you’ll be given instant access. This will also subscribe you to my blog’s newsletter so you don’t miss out on any future posts and videos.
OK, going back to my new business – in short – it’s been an impressive start! I’m very happy with the results I have achieved so far and very excited to see what 2018 will bring as I’ve really only scratched the surface with this so far.
Let’s log in to my Amazon account and check some sales numbers – as you can see – I started selling on 8th September, there are no sales prior to that as this is a brand new account and business.
There’s a steady growth in sales month over month but last month has been exceptionally impressive! Mainly due to Christmas shopping of course, as I do sell a product which is in high demand during the holiday season. There will be a drop in sales for sure once Christmas shopping ends OR when I run out of stock – whichever comes first! 🙂 (more…)
The story is about a seasonal product I launched for this year’s Halloween. Usually I’m very sceptical about seasonal products as they are risky to deal with – especially if the product only sells for a few weeks or one month max every year – like with Halloween, Christmas, Easter and similar occasions. The reason why such products are so risky is simple – you can never really accurately predict how much inventory you need as you don’t know how many units you’ll sell in that short period of time.
If you under-stock, you’ll run out of stock way too early and miss out on profit and when you over-stock and can’t sell everything, you freeze your money in dead stock for a whole year, until you can sell the item again next season.
Knowing all this, I still wanted to give it a try, mainly because I saw that there’s basically no competition for that product on Amazon – so I thought – easy money, right!?
No one sells that product on Amazon and in my opinion, the product is great and should be quite popular.
But it’s that demand analysis that let me down. As I did not have any Jungle Scout data for the previous year, I had to guess the potential demand. I did check sales on eBay via Terapeak for last season but the specific product type doesn’t really sell on eBay that much and sales data was very low and not reliable (I compared it to similar products).
Obviously I did check Google Trends and as you can see from the graphic below – it seemed like a no brainer! Massive demand in November every year. Well, at least search numbers were good but as it turned out, that doesn’t always correlate directly with sales.
Taking all this into consideration, I decided to “bet” a £1000 – getting 500 units into Amazon FBA, costing me just under £2 each. My net profit after VAT and Amazon fees was planned at around £5, selling the product for £11.99.
So not bad at all! If I sold all 500 units, I would make £2500 NET profit – so I decided it was a risk well worth taking. Plan B was if I “only” sold 300 units, that would still cover the cost of all units (£1000) and leave me with a profit of £500 PLUS 200 more units I could sell next year. (more…)
Here’s an incredibly simple trick on how to save hundreds of pounds when you start selling on Amazon – DO NOT BUY Amazon marketed software and tools! Simple. End of post.
No, seriously – this is something I want to talk about in more detail, as I know there are many people out there who struggle with this and I want to save you time and money on tools and services that you don’t actually need.
So here’s the classic story of how it goes – and this is something I went through few years ago too, when I was starting out with my first Amazon FBA business. What you do is you start watching how to videos on YouTube, you start following blogs and Facebook groups – you probably buy a course or two and just learn, learn & learn! You’re in the research stage and want to find out as much as possible about how selling on Amazon works, how to avoid common pitfalls and so on.
That’s all good! You’re even reading this post because you want to learn more about this whole Amazon business, right?
The problem starts when you see one software being recommended in one YouTube video, then – something else in another video. Then you read on a blog that you definitely need to use this tool for doing X thing. Then you dig deeper and find out that you also need these two services and so on!!!!
There are hundreds of tools and services out there targeting Amazon sellers that “help” with various tasks like:
Sponsored Product Ads (PPC)
And when you’re in that research phase you think that you need to use ALL of them to even have a chance of making money on Amazon! (more…)
When you launch a new product on Amazon, you have to have a plan in place for how you’re going to promote it. It’s usually not enough to just create a listing, unless the competition is very small, so you need to drive traffic to your listing on your own, to get those first sales & reviews in.
The fastest and easiest way to do this is via Amazon’s own Pay Per Click advertising system – called Sponsored Product Ads, where you can quickly create paid advertising campaigns and start driving highly targeted traffic to your listing.
Some people recommend that you don’t do sponsored ads from day one and that you should first get at least 3-5 product reviews in. I can only partially agree to that as from my experience, you can successfully run ads, make sales and even make ad campaigns PROFITABLE with a brand new listing, with no reviews in place.
It will depend on the product’s price though as if you sell something more expensive, you can expect to have very low conversion rates if you run ads to a listing with no reviews. But if your item sells for less than £20-£30, you should definitely start running sponsored product ads from day one! As with such cheap items, basically impulse purchases, people are obviously more open to making that purchase compared to products that cost say £100+.
Here’s the thing – you have to accept that your ads most likely won’t be profitable for at least the first few weeks as it takes time for Amazon’s system to optimise your auto ad campaigns and it will take time for you to optimise manual campaigns too.
If your listing/product is really good and the conversion rate is high, you can aim to break even! If you can break even on ad spend in the first week or two (meaning you don’t make any profit nor loses), CONGRATS! This means that when you optimise your ads, you will be in for a healthy profit.
But you can do even more! Here’s one little trick that I used to save almost 50% in sponsored product ad costs when I recently launched a new product…
So I launched a product and created both Auto and Manual campaigns (for the most obvious keywords), just like I usually do. Then of course, as with any new product, I constantly checked sales throughout the day as well as the ad spend to see how it was performing. (more…)
This week I want to show you one simple but really effective trick that increased my Amazon sales by 30% – yes, 30%! And it didn’t cost me a penny!
I know that I haven’t covered any of the basics of selling on Amazon on my blog yet but I really needed to get this out so people who already sell on Amazon can implement it asap.
It’s all about your main product image– the one that shows up in search results. Usually I will use square images for my Amazon products as that is really the format most places go for now – like eBay, Instagram or even Facebook. Square format for images (and even videos on Facebook) is the new default standard.
But the problem was that my product is not actually square, but more “tall”, so with this format it looked very small in the search results on mobile devices and even on the desktop version. I sort of saw it from day one but didn’t think of it as a big problem.
However, I knew that I had to at least try it out to see whether it would make any difference or not. So, what I did is create a new MAIN image for my product with a size of 1500 pixels in height and 1000 pixels in width and zoomed in to the product so it takes as much of the space as possible:
Now, if you ask me – from a photographer’s perspective it did not look very good BUT that doesn’t matter! What matters is that my product is now shown MUCH bigger in search results on both mobile and desktop devices.
And this essentially increased the click through rate from search results to my listing by 30%+ as more people noticed my product and clicked on the listing. As a result, I now get all those extra sales.
And this doesn’t only apply to search results of course as products are also featured in many other places on Amazon – on competitor’s listings, cross-selling blocks and other places. (more…)
So the question is really simple – how much money do you need to invest in stock to start an Amazon FBA business?
The short answer is £1000.
The longer answer – it depends…
Let me cover the budget issue in detail in this blog post so you know for sure whether or not your situation is suitable for the Amazon business model.
First of all – when I talk about starting an Amazon FBA business, I’m referring to private label products, imported from China (in most cases). This means that you create your own brand, source products from China, brand them, import them into the UK (or whatever country you’re in), send your stock to Amazon’s warehouse, and start selling. This is what I have always been doing and in my opinion it is the BEST way to build a profitable business on Amazon.
But obviously there are other models, like:
Retail arbitrage – where you look for heavily discounted items online/offline from popular retailers with the aim to buy and then flip them on Amazon for a profit.
Wholesale – where you buy from local, UK based wholesale companies, like Pound line wholesalers and others.
Liquidation & Clearance – where you buy liquidated/clearance stock from specialist companies. This can also include tested or untested customer returns.
With these models you can start selling on Amazon for as little as £50 or even less! As all it takes is for you to find good deals on products already selling on Amazon, then you can buy them in small quantities (retailers don’t have an MOQ!) and start selling!
The problem with these models is that they’re not real businesses in my mind – they are more like a hobby type of business or second income business as you will find it very hard to constantly look for good deals and at the end of the day it still all comes down to who can offer the lowest price on Amazon for that particular item.
This can be a good training model though for people who don’t have enough money to start importing – to get used to Amazon’s platform, Seller Central, rules, how it all works etc. But to be perfectly honest, even with a £100 budget you can actually start importing from China and that’s the way I would recommend people go, even with super small budgets.
Going back to the main private label products model – the question really is not that much about how much money you have to invest but what product you’re trying to source with the money you have! I have talked about this a lot on my blog and I usually refer to it as the BUYING POWER you have. (more…)