How to Compete with Listings with 100s of Reviews? How to Compete as a New Amazon Seller in 2021?

You may wonder, “Is Amazon FBA business profitable?” Well, let’s look at the numbers. 2020 was a phenomenal year for my Amazon FBA business. In November alone I hit just under £200,000 in sales with a NET PROFIT of £57,020.50 – without spending a penny on PPC! I did a full blog post going over exactly how I achieved this, including how I actually left a lot of money on the table by not being optimistic enough with my inventory planning, which you can read here.

And many of my Amazon Sharks members have been setting their own sales records throughout 2020 as well as I describe here.

Now I’m not saying this to brag but to illustrate the huge growth that e-commerce and Amazon FBA in particular have seen in the last year or so. 

This, coupled with the fact that many people have seen first hand how risky it is to rely completely on one source of income, has led to huge interest and an influx of people looking to start their own online business. 

But this growth also brings a big question, and it’s something I’ve been asked countless times already this year – “can I still compete on Amazon as a new seller or am I too late?” 

Too Many Amazon Reviews Does not Mean too Late

Here’s a recent email I received about getting started with Amazon FBA:

Hello, I purchased the secret fba products course way back in September! I have been looking at the products and have decided I’d like to pursue the [EDITED] – I have done the product research etc that you suggest. My only problem is I’m worried about the amount of reviews the rival products have 3 or 4 have 400 plus reviews. Would I be able to compete with them? Thanks! Peter

And my honest answer is – absolutely you can compete as a new seller! BUT only if you do things the right way. 

I’ve always prided myself on being honest and upfront with my blog readers, so much so that I started warning people when I thought eBay was dying as a platform for UK sellers, even though my whole business was built around it. 

I’m not one of those fake online gurus posing next to a rented Lamborghini with their photoshopped screenshots, telling you how if you follow these 5 simple steps you’ll be an Amazon FBA millionaire overnight. 

I wish it were that easy but nope, it’s not. You do have to set yourself apart from the other sellers, many of which are much bigger than you or are even Chinese companies cutting out the middleman and selling directly on Amazon.  

If you’re expecting to just go onto Alibaba, click on the top ranking list, order £1,000 worth of stock and then sit back and watch the money roll in, well then I’m sorry to say you’re in for a rough surprise.  

Let’s take a second to think about it logically. 

Say you’ve found a product you want to sell on Amazon. And it really doesn’t matter what this is – we’ll just call it widget X for our example. 

Now widget X sells for £14.99 on average on Amazon with a Referral fee of £2.25 and an FBA fee of £2.57, leaving you with a net sale price of £10.17. 

After checking on Alibaba and speaking to a few suppliers you can get it for £3.50 with a MOQ (minimum order quantity) of 500 pieces. 

So £3.50 x 500 = £1,750. Shipping is £500. So, all in = £2,250. And then finally 25% in import tax (VAT + import duty), which gives you a final landed cost of £2,812.50 and a per unit price of £5.63 

For simplicity’s sake we’ll ignore any shipping costs to get your products to Amazon’s fulfilment centres, which means:

Sale Price – £14.99 

Amazon Fees – £4.82

Product Cost – £5.63

NET PROFIT – £4.54

So you’re left with just over £4.50 profit for every unit sold, giving you a good net margin of 30%. 

Not bad at all right? 

But not so fast… 

What happens when another company finds the same product on Amazon, goes to Alibaba and finds the same supplier just like you did. But instead of ordering 500 pieces they order 5,000 and get a reduced price of £2.75

And then even though they’re ordering 10x more, for shipping they only pay double what you did, so £1,000. Add on the 25% import tax (as that doesn’t change) and they get a final landed cost of £18,437.50 and a per unit price of £3.69

At the same sale price as you, that leaves them with: 

Sale Price – £14.99 

Amazon Fees – £4.82

Product Cost – £3.69

NET PROFIT – £6.48

That £6.48 profit per unit sold is a huge £1.94 more than you. And this is why I always stress how important buying power is! Even though initially the difference didn’t seem huge – you were getting £3.50 vs their £2.75 – and you might think ah that’s just 20% it’s not that big a deal…

But as you can see in the end it meant a 43% higher net profit! 

And it doesn’t stop there! The real problem comes when seller B decides that they can reduce their price down to £11.99, cutting their net profit per unit to £3.93, which still gives them a respectable 33% net margin. 

But what does that mean for you? 

With a £11.99 selling price your figures now look like this:

Sale Price – £11.99 

Amazon Fees – £4.37

Product Cost – £5.63

NET PROFIT – £1.99

Reducing your price to compete with seller B has cut your net profit in half, leaving you with a tiny and unworkable 17% margin. 

Now this part is very important as I don’t want you to take away the wrong message from this example. A lot of people who hear this automatically think it means you need a huge starting budget to compete – but that’s completely wrong!

The key point wasn’t seller B coming in and undercutting your price, it was the fact that you had to match them. And why was that? Because you were both selling the exact same product which you found from the same supplier on Alibaba! 

And this is the whole key to success on Amazon and in e-commerce in general. You have to differentiate and improve the product you’re selling. 

I can’t stress enough how important this is – it’s the key to my entire model for creating a successful Amazon FBA business and exactly what I teach in my Amazon Sharks course. 

If you’re selling a product which you have a personal interest / knowledge in then the improvement process is very intuitive and straightforward. 

For example let’s say you’re a big golfer and the product you’re interested in selling is golf club head covers:

Then maybe you know that people want longer covers, or covers made from a different material, or they’re bored of the usual black and blue and want something more fun and colourful. 

There are many different ways to improve and differentiate a product and this is something I personally love. It’s safe to say I have the “tetris effect” hard when it comes to selling on Amazon! Basically every item I buy I check the Jungle Scout data and start thinking about how I can improve the product and compete with the current listings. 

This is one of the reasons I always suggest selling products in a niche you’re personally interested in as it just makes both product research and product improvement so much easier. 

But if not and you’re selling a product that you don’t personally use, that’s not a problem at all. It’s 2021 and you have access to more market data than you could ever need… 

Forums, Twitter, Facebook, Amazon itself – everything you need to know about a product is there. What people like about it, what they don’t like, what can be improved. 

Say you’re interested in selling dog beds and you notice a lot of people saying they wish the cover was removable and washable – there you go! A simple improvement you can make. 

Or you’re selling paper like iPad screen protectors and a lot of reviews on Amazon mention it was hard to install – so you can create an installation guide to be sent with every product. 

There’s really no excuses here. Take any product there is and within one hour of research you should have a list of ideas on how to improve it – setting you apart from the competition on Amazon and allowing you to charge higher prices. 

And what I love about Amazon is that it’s the perfect platform to be able to do this. 

Good products are rewarded and quality is emphasised. This isn’t eBay where it’s a race to the bottom and all about the lowest price wins. 

Having a better product with better reviews is what matters on Amazon. 

Do Listings With More Reviews Get More Sales?

I know that’s what you’re thinking. But, no! There are so many factors and for me the number of reviews just isn’t as important as people think. There are countless listings on Amazon pulling in thousands and thousands in sales every month with no reviews! 

Would they sell more with more reviews? Yes of course… 

Reviews are important, especially those first few when you’re just starting out. It goes without saying that the difference between having 0 reviews and 1 review is a thousand times more important than having 99 or a 100. 

But there are a few different highly effective methods to getting those crucial first reviews in, which I’m planning to cover in detail in a future blog post. 

Just remember that while reviews are important, they’re far from the be all and end all, and in fact there are other factors that are way more important. When I’m doing product research the number of reviews is only the 3^rd or 4^th most important piece of data for me.

I know I’m repeating myself now but this is so important to understand. 

The Amazing Amazon FBA Cycle of Profit

Create a better product = your listing converts better = you get more sales = your listing gets better search ranking = you get more sales! 

It really is an amazing cycle of profit when you get this right.

Take the time to create a better product – outdo your competition where it matters and you can easily compete with established listings on Amazon and get your share of the growing Amazon sales pie! 

And on that note we’ll end today’s post. 

However there is another part to this amazing business model. Not only do you have to improve the product but you also have to show customers that it’s better, which you do with branding! And this includes your packaging, product photography, listing and more – all of which will be covered in detail in future blog posts.

Until next time!

All the best,

Andrew.

It does shock me how many Amazon FBA sellers let their account status get jeopardised from not following the simplest of rules and making sure they maintain their metrics.

Now with something like the Inventory Performance Index, I can at least see why there could be problems. But with the upcoming Invoice Defect Rate there are absolutely no excuses!

There really is so little for us to do…

That’s one of the beauties of being an Amazon FBA seller and probably the main reason I switched over from eBay all those years ago — a decision I haven’t regretted at all! Amazon literally takes care of most of the work and it really is hard to fall on the wrong side of their metrics and performance indicators.

So please, I don’t want to get any emails from people saying help me my account is in trouble because of this. You’ve been forewarned!

Now, rant over. Let’s quickly go over:

What is Amazon’s new Invoice Defect Rate?

It was first introduced on Amazon.co.uk last summer because “Amazon Business customers require timely invoices for tax and accounting purposes” and Amazon wants to make sure you “deliver the invoicing experience this fast growing segment of customers expects”.

And I have to say that personally I am surprised by the amount of orders where the customers request an invoice / VAT receipt – especially as the product I’m selling isn’t something you would necessarily think of business customers for.

So I do believe it when Amazon says this is a growing segment, after all they usually know what they’re talking about with this kind of thing. And I for one definitely won’t say no to some additional sales!

Since Amazon introduced this new metric they’ve been recommending Amazon FBA sellers maintain it under 5%. But from April 5th 2021 this becomes part of the Amazon invoice requirements to sell on Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.it, and Amazon.es.“

Failure to comply with this upcoming performance requirement may result in account deactivation.”

How is the Invoice Defect Rate calculated?

It’s the percentage of orders for which you didn’t upload an invoice by midnight on the first working day following the day of confirmed dispatch.

For example if an order has confirmed dispatch on a Monday, you need to upload an invoice by 23:59 on Tuesday. For orders that are confirmed dispatched on a Friday, you’ll have until 23:59 Monday the following week to upload an invoice as it only takes into account working days.

You can check your current Invoice Defect Rate by going to Seller Central > Account Health > Customer Service Performance. At the moment it only calculates it based on the last 7 days of orders (if it shows N/A that just means you didn’t have any orders from Amazon Business customers in the last 7 days) but presumably this will change by April…

Now to the main point:

How do you reduce your Invoice Defect Rate?

Well there’s a number of different options depending on your VAT status and if you decide to use Amazon’s VAT calculation service. Let’s quickly go through them one by one:

1. Enroll in Amazon’s VAT Calculation Service and let Amazon create invoices on your behalf automatically. IDR is 0% when Amazon’s VAT Calculation Service generates an invoice on your behalf.
   
2. Enroll in Amazon’s VAT Calculation Service and choose the settings to upload your own invoices via your solution provider.
   
3. Upload your invoices via your solution provider without enrolling in Amazon’s VAT Calculation Service.
   
4. Upload your own invoices manually from the Manage Orders or Order Details page.
   
5. If you are exempt from VAT registration in both the EU and the UK, declare your VAT exemption status and let Amazon issue receipts on your behalf automatically.

If you want to use options 2 or 3 there are a number of different third party options but personally I recommend option 1 – that way Amazon automatically both calculate the tax for you and also generate the invoice.

There are a couple of other smaller benefits such as VAT-exclusive prices being displayed on your listings and the fact that business customers can filter their search results to only show listings for which invoices are automatically generated.

To enroll in Amazon’s VAT Calculation service go to Seller Central and complete your VAT registration details then click on Activate Amazon’s VAT calculation service.

And there you go – it’s all taken care of for you and you have nothing to worry about.

If you’re VAT registered then then I really don’t see any benefit to going with option 4, the manual method.

If however you’re not VAT registered then you’ll have to create and upload your own receipts.

This is not complicated at all and I’ll show you a very easy process to take care of it but it’s very important to get it right as you can’t provide VAT invoices when you’re not a VAT registered business.

So on the receipt you either need to state that you’re not VAT registered or better yet you should have “VAT – NA” as part of the receipt.

You can either make a stock template in excel and just edit it for each order or simply use a free online invoice generator.

They’re all basically the same so just choose whichever one you like.

Let’s quickly run through an example so you can see how simple it is to create an invoice. I’ll use invoice-generator.com, here’s the starting template:

And here are the steps you need to follow:

1. Add your logo and business details under “who is this invoice from”
2. Add your customer details under “bill to”
3. Change “invoice” in the top right hand side to receipt
4. Add an invoice no. (you can simply use the amazon order no.)
5. Add the order date
6. Leave “payment terms” and “due date” blank
7. Change the currency to GBP
8. Fill in the product details under “item description”
9. Put the sale price under “rate”
10. Put the sale price under “amount paid”
11. In “notes” add VAT – NA as not VAT registered

And that’s it. Here’s the final PDF which you can simply save and then upload via Amazon:

And that just leaves those of you who are exempt from VAT registration in both the UK and EU. 

Again, this is a very simple process. You simply go here and declare your VAT registration exemption and you’ll be enrolled in Amazon’s automated receipt generation.

This is very important. Even if you’re not required to apply VAT on your sales, that doesn’t mean you don’t have to do anything (as I’ve seen a lot of people on Amazon’s seller forums saying!). You’re still required to provide a receipt for each order from an Amazon business customer, so please make sure you enroll.

And finally for anyone wondering, you also can’t send invoices or receipts by email. These won’t be considered and will count as missing towards your Invoice Defect Rate.

So there you have it. One new performance metric for us to monitor but once it’s all set up there’s really nothing to worry about. Of course we’ll see in practice what other problems pop up which will all be covered here and on our Amazon Sharks Facebook group.

As always if you have any questions post them below and I’ll personally get back to you.

Otherwise, until next time!

All the best,

Andrew.

If you’ve been selling on Amazon and have found yourself frustrated or confused with the metrics that you are getting from Amazon Seller Central, you are not alone!

So how do you get over the headaches involved with Amazon Seller Central? For many people, (Including myself) we turn to third-party Amazon profit dashboards for easier to consume insights and trends into our sales performance.

Some of you may have heard of or are familiar with tools such as CashCow or Sellics for Amazon profit reporting, but recently I’ve found a new tool that I wanted to let you know about.

Introducing ShopKeeper….The tool right now that I’ve been using for my business and recently partnered up with is ShopKeeper. This tool has quickly become one of my go-to tools for reporting on the profitability of my products, trends in sales and monitoring inventory. 

The best part? The intuitive dashboard and easy to understand charts and graphs to display information has made it an absolute necessity for me to get the insights I need outside of Amazon Seller Central. So let’s dive into ShopKeeper and what they’re all about.

What is ShopKeeper?

ShopKeeper prides itself on compiling all of the information that is frequently compiled into spreadsheets from Amazon Seller Central and displaying them to you in real time so you can access that data easier. In short, ShopKeeper directly integrates with your Amazon seller account and does the boring part of aggregating all of that data for you, and displays them in easy to read dashboards. 

What Can I Do With ShopKeeper?

Did you know that Amazon has over 70 types of fees that go into selling your products? ShopKeeper will calculate all of those fees for you so you don’t have to worry about compiling metrics to make sure you are profitable. When you start your ShopKeeper trial, the first step is to connect your Amazon seller account and then the magic happens. Once your account is connected ShopKeeper will automatically pull in your sales, profits and inventory so you can be up to date and make decisions to keep your products profitable.

Here are a few of my favorite features inside ShopKeeper…

Sales Dashboard

From the sales dashboard you can easily view all of your Amazon products and how they are performing. ShopKeeper will show you how many products you’ve sold, the total revenue that you’ve earned, the profit margin, ROI and even your ACOS if you’re running PPC ads for your listings. The best part? Metrics like ROI and ACOS are calculated for you on each individual product so you don’t have to do the calculations manually. With a tool like ShopKeeper, Amazon sellers can be data-driven sellers that only sell the most profitable products!

In addition to these metrics, ShopKeeper also does a great job of displaying different trends associated with your products. On the homepage of ShopKeeper, you’re immediately shown important metrics at a glance from one screen.

As you can see, immediately after logging into ShopKeeper you are shown your sales trends over the last 7 days, 6 months and 12 months as well as the value of the inventory that you currently have.

Scroll down even further and you’re shown graphs for items such as PPC spend, profit margin, top sellers and even current stock levels for your products so you know when to re-order!

Profit and Loss Reporting

Whether it’s Amazon related or you’re selling lemonade on the street, one of the most important metrics to measure for any business is profits and loss or PnL. Using Amazon Seller Central, it can be difficult to calculate all of the different costs associated with selling via Amazon. Amazon SnL fees, referral fees and import taxes are just three of the many fees that can be costing you and your business profitability.

With ShopKeeper, I can easily view my profit and loss with one click and easily make decisions on which products to keep, and which products I need to take off the shelf. ShopKeeper breaks down all of these fees for me based on data they receive from Amazon, and displays it in a balance sheet type of format so you can view all the hidden fees and how profitable your products really are.  

Inventory

Another key aspect of selling on Amazon is monitoring inventory. You can’t make sales if the inventory isn’t there right? ShopKeeper also does a great job of making this easier for Amazon sellers by tracking inventory of all your products. Not only does it tell you the inventory that you have available, it will also let you know information about when to re-order, how long current inventory will last based on your trends, and other metrics to help you decide when you need to re-order certain items.

Now you might be wondering why ShopKeeper is different from other Amazon profit dashboards and the answer might be different for many people. For me, I trust the data that I get with ShopKeeper and I personally like how it’s displayed in comparison to many other dashboards out there. 

Many dashboards that I’ve used simply display too much information, it’s hard to digest all of the different metrics that I am getting and to be completely honest, it seems like I’m just staring at another spreadsheet! I love how ShopKeeper displays the information visually, as opposed to just dumping the same data from Amazon Seller Central onto a different screen. To keep up with the day-to-day metrics that I need to make the best decisions for my business ShopKeeper does it on one screen.

See what I mean? ShopKeeper does a great job of displaying your key Amazon seller metrics visually. Not only that, but ShopKeeper enables you to link your Amazon accounts for more than 20 different markets, which I’ve found to be a limitation of some of the other profit dashboards out there.

Special Offer to Try ShopKeeper

If you are interested in checking out ShopKeeper for yourself I’ve teamed up with them to offer my blog readers a special, limited time discount. If you sign up for ShopKeeper today you will get a risk-free trial for 30 days to see how you like it. 

With the sign up process and connecting your Amazon account taking less than 10 minutes, you can be sure to take full advantage of the trial to see if it’s a fit for you and your business before paying anything.

If at the end of your trial you like the product, ShopKeeper offers simple pricing plans for as little as $20 per month to get started.

Have you personally used ShopKeeper for your business? Or have other products for Amazon sellers that you’d like me to write a review on? Drop a comment below and let me know your thoughts!

Andrew Minalto

Up To £10 Million Finance Available for UK Amazon Sellers

While some businesses have seen exponential growth during the last year of covid and lockdowns, with ecommerce and Amazon FBA in particular seeing huge increases in demand and sales, others have really struggled through the uncertainty and repeated lockdowns.

The government has had a number of schemes designed to support businesses, large and small, with the Bounce Back Loan scheme alone providing loans for over 1.5 million businesses. 

Of course it goes without saying that not all businesses who took advantage of these loans really needed them, but the 100% government backed loans with no interest or repayments for the first 12 months were of course very enticing for businesses and sole traders and too hard to turn down. 

While that scheme closed at the end of March, so you can no longer apply for it, the government has introduced a new Recovery Loan Scheme to replace it.  

So Who’s Eligible for the Recovery Loan Scheme? 

There are only a few very simple eligibility requirements. You can apply for the RLS if:

• Your business is trading in the UK
• Your business is viable / would be viable if not for COVID-19
• Your business is not in collective insolvency proceedings

There are a few industries which are automatically ineligible for the Recovery Loan Scheme and these are:

• Banks, building societies, insurers, and reinsurers
• Public sector bodies
• State funded primary and secondary schools

And that’s it. As long as you meet these requirements you can apply for the loan and use it as an Amazon Loan for your business. And surprisingly even if you’re received a government loan from any of the previous schemes, you can still apply for this on top.

How Much Can You Get from the Recover Loan? 

A business can receive up to £10 million through the Recovery Loan Scheme, though the amount depends on the type of finance being offered, with 4 different options:

• Term loans
• Overdrafts
• Invoice finance
• Asset finance

Term loans and overdrafts can be offered above £25,000 and up to £10 million while invoice or asset finance can be offered between £1,000 and £10 million.

And the length of the loan will also depend on what type of finance is used, with up to 3 years for overdrafts and invoice finance and up to 6 years for loans and asset finance.

But please bear in mind that being eligible doesn’t mean you’ll automatically get a loan! Any loans made in the Recovery Loan Scheme are guaranteed by the government up to 80%, so the lender is still liable for the remaining 20% and ultimately, it’s down to them to make the final decision on your application.

How to Apply for the Recovery Loan Scheme? 

The RLS is managed by the British Business Bank, similar to how the Bounce Back Loans worked, and they have a list of accredited lenders on their website. There are currently 18 lenders offering Recovery Loans, including the big high street banks such as Barclays, HSBC, Lloyds, Natwest, Santander, RBS and a number of others.

 At the moment “online banks” such as Revolut, Starling etc. aren’t on the list of accredited lenders and that’s unlikely to change. Worse access to finance is one of the downsides to using these newer banks vs the traditional high street options, something I went over in our recent comparison: Best Bank Accounts for Amazon FBA Sellers

But back to the RLS and you can find the full up to date list of lenders here:

Now the application and process can differ between each lender, so let’s quickly run through a couple of exams to see how it works. 

Lloyds Bank 

Starting with Lloyds, you have to have been an existing customer of theirs for a minimum of 12 months to apply but this doesn’t necessarily have to have been a business account. You can still apply even if you’re a personal Lloyds bank customer.

And for anyone dreaming of getting a nice £1,000,000 loan for their Amazon FBA business, there are of course restrictions on the loan amount and according to Lloyds, your loan should be:

1. Less than twice your annual wage bill for 2019 or the last available year
2. Less than a quarter of your 2019 total turnover
3. Less than you’d need to cover your regular expenses over the next 18 months

And they want you to cover all of these criteria, not just one! So say for example your 2019 turnover was £350,000, meaning on point 2 you could get a loan of up to £87,500 BUT your annual wage bill for 2019 was £35,000, meaning on point 1 you could get a loan of up to £60,000, the lower amount will override the higher… so in this case your maximum loan would be £60,000 rather than £87,500.

I hope that makes sense!

Lloyds don’t currently offer the ability to make your application online if you don’t already have a business account with them, but after completing a few questions they give you contact details to call and speak to someone about a loan. Pretty simple, as shown below:

HSBC 

Unlike Lloyds, HSBC is currently only accepting applications from current business customers but there’s no minimum time requirement for that so you can register for an account with them and then immediately apply for the Recovery Loan Scheme. 

With HSBC you can apply online through their dedicated RLS application portal. 

And to complete the application you’ll need the following info ready: 

• Current company information
• Loan amount
• Details of the impact of Covid-19 to your business
• Annual accounts (where applicable) for 2019, 2020
• 12 months forecast turnover

Again these loans are still assessed by the bank in their normal way, following all their usual procedures, so it’s not just a formality. 

You’ll have to self-certify that your business has been adversely affected by covid and you’ll also have to be able to show that your business will be able to generate sufficient profit to be able to pay the loan back every month. 

And on this point HSBC have also given info on the interest rate that will be applied to loans.
For loans between £25,000 and £300,000 there’s a 4.49% interest rate for loans up to 3 years and 4.99% for loans up to 6 years.

I’m quite surprised to see HSBC say that these rates will apply to all loans as I would’ve expected it to change based on the individual business and each application, as these rates are actually very reasonable.

Taking a £25,000 loan over 6 years as an example, that 4.99% will mean monthly repayments of just over £400.

Most other banks also have the ability to apply online so take a look at whoever you’re with to see what the process is.

And that’s about it for today’s post. Just one last friendly reminder that these are loans – not gifts or grants, and you will have to pay them back, plus interest.

So please don’t just blindly apply for the sake of it.

However I know how badly the repeated lockdowns have affected many businesses here in the UK, so it’s a good scheme to take advantage of if it’ll help you and your business.

As the Recovery Loan Scheme only launched April 6th, it’s still very early days, so we’ll see how things progress and how the process works out in real life and as always I’ll be here to help and update you as we learn more.

Otherwise, until next time!

All the best,
Andrew

Amazon Lost Thousands of Pounds of Stock! How/Why does Amazon Lose your Inventory?

I’ve always said that the worst thing you can do when you’re looking to start an Amazon FBA business is read the Amazon seller forums – it seems that only unhappy sellers go there as it’s full of negativity and horror stories! 

Which makes sense, after all most of us are too busy selling and making money to post about it on the seller forums. And that’s just how it is with online reviews a lot of the time. Just take a look at PayPal’s Trustpilot score for evidence of that. 

So that’s why I always recommend steering clear of those forums as they can be very off-putting and most of all misleading. 

Now one of the more common horror stories you see on there is about lost inventory and that can be very scary for new sellers. After all, we’re sending stock into Amazon to sell it and make money, not for them to lose it!

So in today’s post let’s cover how and why Amazon loses stock and what you can do about it. 

Amazon Lost Inventory: How Does it Happen?

Obviously, this problem only occurs with FBA inventory as that’s sent to Amazon to store and fulfill, unlike if you’re fulfilling orders FBM which Amazon never handles. 

FBA Stock can be lost by Amazon at 4 different times: 

When you initially ship it to them and it’s checked in 

This is usually an incorrect quantity, such as you sending 100 units in a box and Amazon checking in 90. Or it could be part of the fba inventory missing, such as you sending in 3 boxes of 30 units each and 1 box going missing. 

During fulfilment centre operations

When it’s being stored or transferred between fulfilment centres. You’ll be informed of any inventory damaged or missing in this way via the Inventory Adjustments Report. 

From customer returns 

When Amazon refunds a customer or replaces an item before receiving the return. 

During removals 

When you request a removal of stock from Amazon back to you and it’s either lost or damaged during shipping. 

What to do if Amazon loses Amazon Seller’s inventory? 

If you’re in the unlucky and rare position of Amazon losing your inventory, then you have to make a claim to them for reimbursement. 

“If an item you send to us as part of the Fulfillment by Amazon (FBA) service is lost or damaged at a facility or by a carrier operated by Amazon or on behalf of Amazon, we will replace that item with a new item of the same FNSKU or we will reimburse you for it.”

Now immediately this rings alarm bells as how much does Amazon reimburse you? What value do they place on your inventory? 

Because if it’s your cost price then of course that means you’re losing money, at least potential money, from the sale. 

But thankfully that’s not the case and Amazon says they will “reimburse you for the estimated proceeds of a sale of that item” for a shipment to Amazon or a fulfilment centre operations claim.  

What exactly does estimated proceeds mean? Well put simply it’s the net amount you would’ve received had you sold the item on Amazon. So:

Sale Price – (Referral Fee + Fulfilment Fee) = Estimated Proceeds 

You’ll actually be slightly better off as Amazon doesn’t charge VAT on top of the fees BUT they also apply some of their own calculations to the sale price and it might not be exactly what you’re expecting. 

From my experience for private label products it’s a lot more consistent as there’s normally just one seller and a fairly constant price. For other branded products with multiple sellers then Amazon takes a few factors into account to work out a fair selling price. 

These include: 

• Your current list price for the item on Amazon
• The average price at which you have sold the item on Amazon over the past 90 days
• The average current list price for same item by other sellers on Amazon
• The average price at which other sellers have sold the same item over the past 365 days

If there’s not enough data for these 4 points then Amazon will instead estimate a sale price using a “comparable product”. 

Of course this sale price reimbursement only applies to inventory lost when Amazon are checking it in, while it’s being held in their fulfilment centres, or for a removal order where the inventory was in perfect sellable condition. If you were removing inventory due to faults or damage of some kind (not through Amazon’s fault) then Amazon will apply a discounted sale price. 

If you ask me that’s all fair enough and to be expected. If for whatever reason you don’t agree with Amazon’s valuation amount, you can file a claim to dispute it within 90 days. 

And that brings us to an important point: 

When can an Amazon Seller make a reimbursement claim? And what’s the process? 

The exact process and timeframes for making a claim to Amazon for lost inventory depends on which one of the 4 options it falls under. We’ll quickly run through them one by one. 

1. Shipment to Amazon claims 

You can only make a claim once your shipment is eligible for investigation, which generally will be at least 30 days after it’s received (as Amazon asks for time to be able to locate all inventory). You can check this by going to your shipment summary and checking the reconcile tab.

You also can’t make a claim after 6 months from the date your shipment is received, but I don’t think anyone is going to wait that long to get their money! 

So to sum it up, for shipment to Amazon claims the claim window is after 1 month but before 6. 

2. Fulfilment centre operations claims 

There’s a very simple claim window for any items reported lost or damaged by Amazon. You can submit a claim from 30 days to 18 months after it’s reported in your inventory adjustment report. 

3. Customer return claims 

You can make a claim for a refund or replacement that Amazon issued on your behalf 45 days after the refund / replacement, up to 18 months after. Of course this only applies if the item is never returned to your inventory. 

Lastly we have: 

4. Removals claims 

For inventory lost during transit, i.e. after it’s left Amazon’s fulfilment centre but before reaching your return address, you can make a claim 14 days after the last confirmed movement of your removal shipment, which basically means 14 days with no update to the tracking / shipment at all. 

For inventory that you receive damaged, you can and should make a claim immediately. 

Again, the upper limit is 18 months for removals claims. 

So there you have it. A fairly simple and straightforward process in theory but of course we all know it can turn into a big headache in practice, as is sadly the case with a lot of times where we have to contact Amazon seller support. 

However despite what the seller forums will make you believe this is still a very rare occurrence and I personally haven’t had any problems at all after sending in and selling thousands upon thousands of units. 

But is there anything an Amazon Seller can do to prevent it happening in the first place?  

Sadly no, these types of things do happen in fulfillment and there’s not a lot you can do to avoid it. It occurs more commonly in Q4, which is obvious, as that’s the busiest season with longer wait times to check-in inventory, and maybe anecdotal but I also suspect it happens more commonly when you ask Amazon to prep and label your inventory. 

I don’t have any hard data to back this up, only what I’ve seen from my blog readers. I do always suggest labelling yourself anyway as it’s not worth the fee Amazon charges, especially when you can usually always get this done via your supplier for free! 

I’ll end today’s post with one final warning – always put the correct weight and units for any shipment to Amazon’s FBA centres. 

I see people saying “oh they never check that anyway” so often, but why risk it? If you do have to make a claim and any such info is incorrect, Amazon can use that to dispute your claim. They’re very much like an insurance company with this – anything wrong with the details you’ve given them, even if it seems completely unrelated to stock going missing, and they can refuse to pay out. 

So please make sure you enter everything correctly when creating a shipment to Amazon and save yourself possible headaches in case something goes wrong. 

As always, if you have any questions or comments then get in touch with me at EMAIL and I’ll personally get back to you. 

Otherwise, until next time! 

All the best,

Andrew

Sole Trader vs Limited Company for New Amazon Sellers in 2021

I often get asked what’s the main thing that holds people back from starting a successful business and for me the answer is very easy – fear of failure and information paralysis. 

What’s information paralysis? Well put simply it’s when you’re stuck in a never ending cycle of research! 

Of course, you can’t just go diving in head first with no clue what you’re doing – that’s a sure fire way to guarantee things go wrong. But at the same time you don’t need to know absolutely everything – a lot of stuff you’ll learn and pick up as you go. 

And that’s exactly what I try to teach on this blog. I want you to have all the integral knowledge so that you’re able to start and grow your own Amazon FBA business. 

So in today’s post let’s go over what’s probably the most common first question I get from people looking to start their own online business. 

And unlike some other stuff that you can figure out as you go, this is one point that you need to think about properly as it will have a drastic effect on how much tax you pay! What am I talking about? The age-old question of should I register as a limited company or sell as a sole trader?  

Let’s get to it! 

When Amazon Sellers should register in the UK? 

It used to be that you had a 3 month grace period of being a sole trader before you had to register with HMRC as self employed, regardless of how much you were making, but the rules changed in April 2017 and you now only need to let them know if you earn more than £1,000 a year from your self employment. 

Of course, the plan is to be making many times that so once you’ve passed the £1000 trading allowance threshold, you have the choice of being a sole trader and registering for self-assessment or registering your business as an Ltd company. 

BUT for Amazon sellers, you have to make this choice straight away anyway as it’s part of the registration process. 

You’ll either have to provide Amazon with your Unique Tax Reference (UTR) which is given to you by HMRC when you register as a sole trader, or you’ll need to provide Amazon with your company registration number if you’re an Ltd company. 

Now there are a number of pros and cons to having a limited company vs selling as a sole trader, which we’ll cover a bit later, but by far the most important thing to consider is TAX, and there can be a huge difference here depending on which you go with and your own personal circumstances. 

If you have a Limited company then you’ll pay a set tax on any profits known as the Corporation Tax and this is 19% in the UK. 

If on the other hand, you’re a sole trader, all profit you make from your business is counted as income and taxed alongside all other earnings. 

This means that for HMRC it doesn’t matter if you made £20,000 from your Amazon business, £30,000 from your job and £2,000 from eBay – it all counts as one income. 

And the tax rate you pay depends on the total amount you earn. For the tax year 2021-2022 there are 3 income bands as follows: 

Tax Band	Taxable Income	Tax Rate
Basic Rate	£1 to £37,700	20%
Higher Rate	£37,701 to £150,000	40%
Additional Rate	Over £150,000	45%

But there are two important points that you have to understand. 

1. You get a set amount of income each year that’s not taxed. This is known as your Personal Allowance and for 2021-2022, it’s £12,570. The taxable income above is for income earned after this personal allowance. 

2. The tax rate only applies to amounts earned in that tax band.  

I’m really shocked by the amount of people who get this wrong! It’s something you hear so often – “if I earn £60,000 then I’ll actually take home less money because of the higher tax…”

No! That’s not how it works at all! 

Sample Tax Calculation for UK Amazon Seller

If you make £60,000 in a year, the tax you pay will be calculated like this: 

• The first £12,570 – 0% tax = £0 tax
• The next £37,700 – 20% tax = £7,540 tax
• The final £9,730 – 40% tax = £3,892 tax

So from a total income of £60,000 (£12,570 + £37,700 + £9,730) you pay £11,432 (£7,540 + £3,892) in tax which gives you an overall tax rate of 19%. 

In this case, it’s exactly the same as the corporation tax rate for Ltd businesses and really that’s a good guide point. If your total income is above £60,000 then you’ll pay less corporation tax than income tax. And vice versa – if your income is below £60,000 then you’ll likely pay less income tax than corporation tax. 

This is of course a very simple conclusion as tax rates can change based on your marital status and some other specific details, and it also doesn’t take into account national insurance. 

That’s why your personal circumstances are so important to consider when it comes to the sole trader vs Ltd company debate.

But before you get the calculator out and start making a decision based purely on your income and business goals, there are some other factors to consider as well. 

PROs of an Ltd Company for Amazon Sellers

Legally Separate Entity 

With an Ltd company your personal assets are protected and legally separate from your business, unlike when you’re operating as a sole trader where you’re personally liable. This is why I always suggest getting full liability insurance if you’re a sole trader, to protect yourself and your assets. 

Separate Banking and Credit and Access to Business Lending 

While you can open a business account as a sole trader, it’s much easier to do as an Ltd company and you can also build up your business credit rating separate from your own. This is important when it comes to business loans and financing and again, you won’t have to use your own personal assets as collateral. 

Higher Credibility 

Generally Chinese manufacturers are completely happy to sell to sole traders, it doesn’t make any difference to them at all. But there are times when having an Ltd company gives you a more professional and credible look, especially if you’re dealing with other companies in the UK or Europe. 

More Flexible Tax-Efficient Payment Options

With an Ltd company, there are a number of different ways to pay yourself – director’s salary, dividends, spouse dividends, etc. With a good accountant who knows what they’re doing, you can really maximize your take-home pay using some clever tricks. 100% legal of course and I’ve got some future in-depth guides planned on this! 

PROs of Sole Trader Tax UK for Amazon Sellers

No Cost to Get Started 

When operating as a sole trader there’s no need to register with Companies House and no incorporation fee to be paid. You simply inform HMRC, they send you your UTR and you’re good to go! 

Full Control of Profits 

As a sole trader your business money and your money are basically one and the same. You can transfer to and from your personal account and in fact you don’t even have to use a separate account for your business. As long as you complete your self assessment accurately and pay the correct tax, you can pretty much do what you want with the money. 

With an Ltd company it’s not quite as simple. You can’t transfer money around like that – this is the other side to having a legally separate entity as the company’s assets and profits legally belong to the company, not you as the owner. 

There are basically 3 ways to legally pay yourself from an Ltd company and they are 1) salary, 2) dividends and 3) director’s loans and it must always be properly recorded and accounted for. 

Which brings us perfectly to the next pro of being a sole trader vs running an-a Ltd company:

Simplified and Cheaper Paperwork and Accounting For Amazon Sellers: UK

As a sole trader your accounting requirements are incredibly simple – you keep your own records and complete a yearly self assessment and that’s pretty much it! It’s something you can easily do yourself or with the help of very basic software. 

With an Ltd company on the other hand it’s much more complex. There are specific requirements in place on how you store your accounts and the records you have to keep to complete your annual Confirmation Statement and Company Tax Return. 

While it’s technically not legally required, you’ll have to hire an accountant to handle this all for you. The cost can vary hugely but realistically you’re looking at £100 a month to get this taken care of by a professional. It’s far from a huge expense but at the same time it’s still a lot more than the £0 a year it costs to do your self-assessment and even if you’re like me and hate any form of accounting and would much rather outsource it all, there are a number of companies that offer to complete your self-assessment for £120, so about ten times less. 

And please don’t be one of those people who try and do their Ltd company accounts themselves. Trust me when I say this – it’s not worth it. Hire a professional and focus on the higher impact and higher ROI parts of your business! 

In my opinion, the accounting and paperwork requirements are the biggest negative to starting an Ltd business. 

So what’s the answer for UK Amazon Sellers?

And there you have it. There are some other pros and cons to both set-ups but they’re not really worth going over and confusing things for the sake of it. We’ve covered all the most important considerations in this article and I guess all that’s left to do is make a final recommendation (as I know I’ll still get a ton of questions about which one is best!). 

Obviously, the real answer is it depends on your personal circumstances – both your current income and future plans for your business. 

If you already have a high paying job and have hit or are close to the higher tax rate, then that means you’ll be paying 40% on all profits you make from your Amazon business. And I know I speak for everyone when I say the idea of doing all this work only to lose practically half my profit in tax just doesn’t sound very appealing. 

So it would definitely be worthwhile looking into an-a Ltd company. 

If on the other hand you don’t earn as much, or if you work part-time or even if all your income will be coming from your Amazon FBA business, then you get a lot more leeway as a sole trader before you start paying higher than the 19% corporation tax. As we saw in our earlier example it’s around the £60k profit mark which you can use as a rough guide. 

If your total income is lower than that then it’s probably simpler and financially beneficial to operate as a sole trader. 

Registering Ltd does not equal registering for VAT

One final point before we wrap up today’s post – registering an Ltd company does not mean registering for VAT. They’re completely different things and you can register for VAT as either a sole trader or Ltd company.

But as I’ve mentioned many times, there’s very few circumstances where you’d want to do this and I’d recommend holding off for as long as possible and until you reach the mandatory VAT threshold, which is currently £85,000.

You must register for VAT if any of the following apply: 

• your VAT taxable turnover exceeds the current threshold of £85,000 (for a 12-month period ending in 2020/21). 
• you expect your VAT taxable turnover to exceed £85,000 in the next 30-day period
• your business had a taxable turnover exceeding £85,000 over the last 12 months

So until you hit that point, don’t do it! 

And that brings us to the end of today’s post. 

While I’ve done my best to simplify things and give you enough info to make your own decision, I’m not an accountant or qualified tax advisor so if you need more in depth advice or if you have specific tax related questions it’s always worthwhile consulting with a professional. 

As always if you have any questions for me then send them to EMAIL and I’ll personally get back to you. 

Otherwise, until next time! 

All the best,

Andrew.  

There’s nothing worse than planning out all the details of your product launch on Amazon and then finding out that your listing has been suppressed due to one small error.

And that’s exactly what happened to a blog reader who emailed me frantically trying to find out why their listing was suppressed and if it meant disaster for their product launch!

So to save this happening to anyone else, today we’re going to go over why Amazon suppressed a listing, what it means for your business, how you can fix it, and even more importantly – avoid it completely in the first place.

Let’s get to it!

Why is my amazon listing suppressed?

Put simply, Amazon wants every listing on their website to match their high standards and they also want conformity throughout all listings. This familiarity makes it easier for buyers to search for, research, and compare products WITHOUT having to leave Amazon’s website.

In their own words: “our research shows that listings with complete product information, including images, category (item-type), price per unit (PPU) and titles (parent titles) with less than 80 characters improve the shopping experience by making it easier for customers to find, evaluate and purchase products.”

From my experience the main reasons people get their listings suppressed by Amazon are

Suppressed Amazon FBA Listings due to Image Issues

There are a lot of specific requirements when it comes to your product pictures on Amazon and this is something that a lot of new sellers make mistakes with.

Here are Amazon’s requirements for product images:

• Images must accurately represent the product that is for sale.

• Images must match the product title.

• Product must fill at least 85% of the image.

• The optimal zoom experience for detail pages requires files to be 1600px or larger on the longest side. Zoom has been shown to help enhance sales. If you are unable to meet this requirement, the smallest your file can be for zoom is 1000px, and the smallest your file can be for the site is 500px.

• Images must not exceed 10,000px on the longest side.

• Images must be JPEG (.jpg or .jpeg), TIFF (.tif), PNG(.png) or GIF (.gif) file formats. JPEG is preferred. Our servers do not support animated gifs.

• Images must not be blurry, pixelated or have jagged edges.

• Images must not contain nudity or be sexually suggestive. Kids, baby leotards, underwear and swimwear must not be shown on a human model.

• Images must not include any Amazon logos or trademarks, or variations, modifications or anything confusingly similar to Amazon’s logos and trademarks. This includes, but is not limited to, any words or logos with the terms AMAZON, PRIME, ALEXA or the Amazon Smile design.

• Images must not include any badges used on Amazon, or variations, modifications or anything confusingly similar to such badges. This includes, but is not limited to, ‘Amazon’s Choice’, ‘Premium Choice’, ‘Amazon Alexa’, ‘Works with Amazon Alexa’, ‘Best Seller’ or ‘Top Seller’.

And that’s not all. There are also further restrictions in certain categories and for the MAIN product image – the one shown in search results.

Amazon’s requirements for MAIN product images are:

• MAIN images must have a pure white background (pure white blends in with the Amazon search and product detail pages – RGB colour values of 255, 255, 255).

• MAIN images must be professional photographs of the actual product (graphics, illustrations, mock-ups or placeholders are not allowed). They must not show excluded accessories or props that might confuse the customer.

• MAIN images must not include text, logos, borders, colour blocks, watermarks or other graphics over the top of a product or in the background.

• MAIN images must not include multiple views of a single product.

• MAIN images must show the entire product that is for sale. Images must not touch or be cut off by the edge of the image frame, with exception of Jewellery (e.g. necklaces).

• MAIN images must show products outside of their packaging. Boxes, bags or cases should not appear in the image unless they are an important product feature.

• MAIN images must not show a human model that is sitting, kneeling, leaning or lying down (models must be standing).

• MAIN images of clothing accessories must not show any part of a mannequin, regardless of the mannequin’s appearance (clear, solid-colour, flesh-toned, framework or hanger).

• MAIN images for Women’s and Men’s clothing must show the product on a human model or lying flat on a surface. Invisible mannequins are acceptable as long as the product is not obscured.

• MAIN images must not show Kids & Baby clothing on a human model. They must be shown lying flat on a surface or using an invisible mannequin as long as the entire product remains visible.

• MAIN images of shoes must show a single shoe, facing left at a 45-degree angle.

Now I always suggest using a professional photographer for your Amazon product pictures. It’s just not worth trying to do it yourself… not only are there so many requirements you have to adhere to, but professional product pictures will also look 100x better and will help sell your product.

You may think you’re saving money but in the long term you’re not – you’re just losing sales.

But before I get too off track with product photography, let’s get back to suppressed listings and apart from image issues, the other most common cause is:

Suppressed Amazon FBA Listings due to Title Problems

Again, another area where a lot of new sellers make mistakes, especially if they’re coming from eBay with a love for exclamation marks and phrases like “best product” and “hot seller” in the title.

The funny thing is that Amazon’s product title requirements are exactly what I would be suggesting anyway, even if we didn’t have to follow them! And really this makes perfect sense – after all Amazon is the ecommerce king so it’s safe to say they know what they’re doing.

For example, they say that “research shows that customers scan-read results, meaning that titles don’t need to contain the exact phrase that customers are searching for in order to catch their eye. Longer titles are also harder to read than shorter titles, so the longer your title is, the more you risk losing your customer’s attention.

Think about a physical product on a supermarket shelf. Its title is simple and to the point. You only have a moment to catch the eye of a passing shopper. With online titles on Amazon, there’s no need to go on and on. Simply put, the title should reflect what is on the physical packaging of a product.”

I couldn’t have put it any better myself.

So here are the product title requirements that could cause your listing to be suppressed:

1. Titles must follow the recommended length of your product category characters, including spaces.
2. Titles must not contain promotional phrases, such as “free shipping”, “100% quality guaranteed”.
3. Titles must not contain characters for decoration, such as ~ ! * $ ? _ ~ { } # < > | * ; ^ ¬ ¦
4. Titles must contain product-identifying information, such as “hiking boots” or “umbrella”.

Amazon will only suppress your listing if it violates one of these 4 requirements BUT they also offer further tips to ensure good title quality which they “strongly encourage adherence to”.

I think it’s safe to say this could have an impact on your listing’s search results so I would definitely recommend following as many as you can:

• Titles should be concise. We recommend fewer than 80 characters.
• Don’t use ALL CAPS.
• Capitalise the first letter of each word except for prepositions (in, on, over, with), conjunctions (and, or, for), or articles (the, a, an).
• Use numerals: “2” instead of “two”.
• Don’t use non-language ASCII characters such as Æ, ©, or ®.
• Titles should contain the minimal information needed to identify the item and nothing more.
• Don’t use subjective commentary, such as “Hot Item” or “Best Seller”.
• Titles can include necessary punctuation, like hyphens (-), forward slashes (/), commas (,), ampersands (&), and full stops (.).
• Titles can abbreviate measurements, such as “cm”, “oz”, “in”, and “kg”.
• Don’t include your merchant name in titles.
• Size and colour variations should be included in titles for child ASINs, not the main title.

90% of suppressed listings cases that I’ve come across have been due to image or title issues so if you follow these guides, you’ll save yourself any unnecessary headache (and lost sales!).

If however you’re finding this post because your listing is already suppressed then not to worry – here’s what to do:

From Amazon Seller Central click the Inventory tab and then Manage Inventory.

Then from the horizontal menu select Suppressed (you won’t see this option if you don’t have any suppressed listings).

From there you’ll see the suppressed listing with a Reason and Missing Attribute Column. Forgive the poor screenshot from my phone of a screen but it’s been quite a while since I’ve had a suppressed listing so I had to go digging through old pics to find one to show you.

Once you know the problem then click Edit and go to the Edit Product Info page where the missing details will be highlighted.

If it’s a missing info problem, enter the correct details and click Save and Finish.

If it’s an image issue, then re-upload valid product images.

If for whatever reason you can see that your listing is suppressed but it’s not clear specifically why then open a Case with Amazon support and they’ll let you know exactly what the problem is.

Any changes you make will have to be checked by Amazon so your listing won’t immediately be un-suppressed, but it’s usually a very quick process.

And that’s all there is to it!

As far as I know and from my real-life experience on Amazon, there’s no continued negative effect once your listing is un-suppressed such as lower search results or anything like that, so you’re good to go.

But just so it’s clear, because some people seem to take suppressed to mean lowered, while your listing is suppressed it won’t show up in search results AT ALL, so you won’t be making any sales in that time.

One final note to end off today’s post – I’ve seen a few companies online selling suppressed listing scanning software to let you know immediately if your listing is suppressed but I really don’t see the point… after all you should be keeping an eye on your listings yourself anyway and will notice immediately if this happens from the drop in sales.

There’s definitely much better software that I would rather spend £20-£30 a month on!

And that’s it for today.

Until next time!

All the best,
Andrew

What’s the Better Amazon E-commerce model in 2021: Private Label or Arbitrage?

The last year has been a real struggle for many but has also been a blessing in disguise for a lot of people.

One thing it’s shown everyone is how perilous having one income stream is – no matter how many times they say “you’re part of the family” a company won’t hesitate to get rid of you if and when they need to.

Job losses and increasing job insecurity have created a real back-against-the-wall moment and pushed so many to finally start that online business they’ve been thinking about for years.

Does that mean you should be handing in your notice ASAP? No, far from it! In fact I always suggest the opposite – build up your business alongside your 9-5 as that way there’s so much less pressure and risk for you. Only quit when the time is right.

Probably the first question you’ll face in your online selling journey is which business model to go for? There really are countless opportunities online but I’ll stick to the main 2 which both involve buying and reselling products – private label and flipping.

Let’s cover what they are, the differences between them, and which one I recommend for you in 2021!

What’s Private Label on Amazon?

Private labelling is buying unbranded products from a manufacturer, adding your own brand and then selling them under that brand name.

It usually involves everyday products that you typically find on Amazon. A couple of random examples would be baby toothbrushes or dog bandanas:

Now there’s a lot more to it, especially at the adding your own brand part, but that’s the basic model.

Private labelling does NOT include buying and selling generic unbranded products. The key to private label and what makes it such an amazing business model is that you customise and improve the product – which is exactly what I teach in my Amazon Sharks course.

Please don’t be one of those lazy sellers who just slap their own brand on a product and sell exactly what everyone else is! You won’t last long doing that.

What’s flipping (arbitrage)?

Also known as arbitrage, flipping is when you buy products from retail or online stores and resell them on Amazon, eBay, or other marketplaces.

For example LEGO is a very popular product for flippers. You buy them on discount or when a set is going to be retired and re-sell it for a profit.

Unlike private label, flipping usually involves branded products that everybody knows and it can be split into two main types: Retail Arbitrage and Online Arbitrage.

Exactly as the names suggest, retail is when you buy from physical stores to resell and online is, you guessed it, when you buy your stock online.

There are advantages and disadvantages to both, which we’ll go over in more detail.

But let’s start off with the pros and cons of private label vs flipping.

Advantages of Selling Private Label on Amazon

• Scalability and Potential: With a private label FBA business there’s a clear path to growing your business and the potential really is almost limitless.

Amazon UK > Amazon EU > Ecommerce > Retail… you really can take your business as far as you want when it comes to building your own brand and products.

The same just can’t be said for flipping.

Maybe I find an amazing deal at my local Tesco – they have a popular Lego set (or another toy or a PlayStation game or anything, it doesn’t matter!) for 50% off which I know I can immediately sell on Amazon for more than double the price – leaving me with a 100% ROI after fees.

Sounds amazing right? Well yes it does, but how many of those sets are available? 5? 10 max?

It’s not as if you can order 1,000 sets from Tesco and that for me is one of the big limitations of flipping vs private label.

And the limited scalability also means limited potential.

With Amazon FBA and your own brand the sky really is the limit – I personally hit £50,000 in sales and over £15,000 net profit in my first 3 months on Amazon and I’ve seen those results achieved many times by my own Amazon Sharks members. And in some cases they’ve even beaten my start by a fair bit – making £14,000 PROFIT in one month!

• Building an Asset: With a private label business you’re not only making profit you’re also building a valuable business and brand, which can be sold in the future. Now maybe you don’t ever want to sell and instead you want to grow your FBA business and hand it down to your kids. But maybe you want to sell in 3 years and retire to Hawaii!

Whatever your plans are, with private label you have the choice whereas with flipping you’re selling other brands and products, so it’s not something you can sell on.

• Time: One of the main benefits of private label combined with Amazon FBA is how little time you need to maintain and grow your business once it’s up and running.

Initially yes there’s a lot of work to do and I won’t pretend otherwise. You have to do market research, source products and suppliers, arrange samples, arrange your first order, design packaging etc. etc.

But 6 months later once you’ve got everything up and running your business consists of:

1. Maintaining inventory and arranging re-stocks when needed
2. Monitoring and optimising your PPC campaigns on Amazon
3. Searching for new products to add / launch

And that’s really it! Amazon takes care of pretty much everything else for you when you use FBA, including picking and packing orders, customer service, returns etc.

It’s no exaggeration to say you can easily maintain your business working a few hours a week.

Of course with flipping you do get all the same FBA benefits if you’re fulfilling your products via Amazon but the product sourcing by itself can be a huge time constraint – especially if you’re relying on retail arbitrage.

Now I know it sounds like I’m trashing on flipping and making it sound like a bad business but in reality it’s really not. There are in fact a lot of benefits to flipping, so let’s go through them:

Advantages of Flipping or Arbitrage on Amazon

• Investment Amount and Risk: One thing I’ve always hated is when people keep saying you can start an online business for “nothing!” because in 99% of cases it’s just not true. Of course the investment needed is much less than if starting an offline retail store but it’s still definitely not £100 if you want to do things right.

In fact I personally suggest having at least £3,000-£5,000 to start an Amazon FBA business and even that won’t be enough for all products and niches.

But with flipping you really can start with any amount and build up from there. Only have £100 to start? That’s fine – you can buy five £20 items and turn that £100 into £150.

In fact you can even take it one step further and start a flipping business completely risk free! How? By buying items and then listing them and if they don’t sell within the returns period you take them back. You really can’t get any safer than that! So this is one area where the win has to go to flipping.

• Immediate Returns: When you invest in a private label Amazon FBA business your initial investment is tied up for a certain amount of time.

You normally have to pay 50% upfront to the manufacturer before production, which can take a few weeks or longer, then there’s shipping and customs clearance and prepping everything for FBA.

Overall you’re realistically looking at a few months at least before you start to see a return on your money.

But with flipping the turnaround is much faster.

Yes if you sell via Amazon your money will be held for a few weeks but if you sell locally on Gumtree or Facebook marketplace for example you can buy and sell a product within days or even hours!

Not only does this give you an immediate return it can also lead to huge ROIs if you use the power of compounding.

Say for example you get a 20% return on investment (ROI) on average for your flips after all fees and shipping costs.

If you start with £1,000 and flip that amount once a month, after one year you’ll have £8,916…

And what about if you flip it within 2 weeks every time instead? Well after 12 months that £1,000 would be almost £79,500!

Now I’m certainly not saying that’s feasible or looking too deeply into the numbers and timeframes, I just want to illustrate what a huge difference it makes to your overall ROI and profit how long it takes you to flip your items.

Conclusion: Flipping is great, but Private Label is Better

In conclusion I think flipping is a great business model when you’re just starting out selling online or only have limited funds initially, but later on it suffers from a big problem which I call having an “online job” where your earnings are almost directly correlated to the amount of hours you work.

If you’re sick or take time off to go on holiday your profit will suffer as a result.

On the other hand private label is to me the perfect business model. I’ve been selling private label products for more than 15 years now (before Amazon or even eBay were popular marketplaces) and I’ve taught thousands of people how to create their own successful business in the same way.

For scalability and potential – it just can’t be beaten.

If you want to learn more about how you can get involved in the Amazon FBA goldmine, then take a look at my course Amazon Sharks which covers everything you need to know to build your own Amazon empire.

If on the other hand you’ve decided that flipping is right for you, then not to worry! If there’s enough interest then I’ll be posting some more in depth guides on my blog over the coming months, including:

• Flipping groups – are they worth the money?

• What products to flip?

• How to automate your flipping business and increase your profit!

So stay tuned!

Also, check out my Amazon FBA course, AmazonSharks.com, which you can try out for free for a week.

Until next time!

All the best,

Andrew.

A Complete Guide to EU Exports for Amazon FBA Sellers. Keep the Brexit Nightmare at Bay!

Well exactly as many of us feared, Brexit has caused a lot of problems for us UK-based FBA sellers and the horror stories have been pouring in all year…

Multiple fines, shipments delayed, and even sent back completely – I’ve heard it all in the last few months.

It’s safe to say it’s been a real nightmare for Amazon sellers in particular, with couriers being completely confused themselves and giving out wrong information. (Even UPS and Amazon stopped their partnered carrier option for shipments to the EU).

Well to help put a stop to this Brexit madness for Amazon FBA sellers, I’ve put together a complete guide to exporting to the EU post-Brexit.

Let’s get straight to it!

Exporting to EU: An FBA Refresher

First things first – there are 4 main “terms” when exporting goods to the EU and which one you use will have a big effect on the shipping process. They are:

• DDU (Delivered Duty Unpaid) Terms

You’re sending the shipment to the buyer’s door, and they will be responsible for any import duty/taxes.

• DAP (Delivered At Place) Terms

You’re sending the shipment to a named place but again, the buyer is responsible for any import duty/taxes.

• EXW (Ex Works) Terms

You’re leaving the entire shipping and customs process up to the buyer. You simply make the order available for collection and they take care of the rest. Obviously, this would only be feasible and applicable for B2B sales.

• DDP (Delivered Duty Paid) Terms

You’re completely responsible for the shipment and customs clearance process at its destination, including all import duty and taxes.

DDP Terms are the hardest to comply with as they carry the most requirements but unfortunately, when you’re shipping to Amazon FBA centers it is always DDP. This is because you’re acting as the importer when you ship goods to Amazon.

Amazon is very clear about this, stating:

“It is important to note that Amazon, including the fulfilment centres, will not serve as the importer of record for any delivery of FBA inventory. Any FBA inventory delivery attempting to make entry with Amazon as the IOR will be refused and returned at the deliverer’s expense – no exceptions.”

But amazingly a lot of people still get this wrong, including some courier companies who have told Amazon Sharks members that Amazon is the importer!

It really is black and white. There shouldn’t be any confusion here. Shipments to Amazon FBA centers have to be sent DDP, so that’s what we’re going to focus on in today’s guide.

UK Sellers Shipping to the EU: What do I need to do?

So what exactly do you need to send shipments into the EU as an Amazon seller?

• UK EORI number (https://www.gov.uk/eori)

• EU EORI number

• EU Entity / Fiscal Representative

You need a representative in the EU to act as your Importer of Record – i.e. the business that you’re sending the goods to / transferring the stock to. And this Importer of Record cannot be your same UK business – you can’t send the stock to “yourself” in this way. It has to be either a separate EU business which you’ve set up and registered or a fiscal representative acting on your behalf.

A fiscal representative is a type of VAT agent for foreign businesses with VAT registration in the EU. They become responsible for the VAT calculations and reporting of their client (i.e. you) and are the designated point of contact for local customs in case of any issues, questions, or even audits.

For the vast majority of people, hiring a fiscal representative is the easier and more cost effective option, vs setting up a designated separate EU entity, and there are a number of companies that will provide this service.

• VAT numbers

• Commercial Invoice (for customs clearance)

The invoice needs to be completed by your UK business, showing your UK EORI against your registered address, and invoiced to your EU business or fiscal representative, showing your EU EORI and VAT number.

Your freight forwarder will use this commercial invoice for both the export declaration and import declaration at the destination country, and it will also be used to calculate applicable import duty and taxes.

If shipping multiple SKUs then the invoice must show the full HS Commodity codes with the value of each individual product, and then the total value as well. And it also needs to show the country of origin for all products.

This is important because if your goods are manufactured in the UK or Europe then there’ll be no import duty to pay. However, for the vast majority of Amazon FBA sellers, this won’t be the case and your products will be manufactured in China, other Asian countries, the US, etc.

VAT is of course payable regardless of the country of manufacture.

So there you have it! The 5 requirements to export your goods to the EU post-Brexit.

Now before somebody points out that you don’t need to be VAT registered to export your goods, that is technically true. But practically speaking that won’t work out as it’ll mean paying VAT on the original shipment into the UK and then paying it AGAIN as you import into the EU, so 40% in VAT… Not efficient to say the least!

Plus you will need to be VAT registered to store your stock in Amazon’s EU FBA centers anyway.

How does this all differ if you’re sending straight to your end customers in the EU rather than to Amazon…from a Shopify store for example?

Well in that case we go back to the different shipping terms which we covered earlier on but long story short is that you’ll most likely be sending items DDU – Delivered Duty Unpaid, which essentially means that the customer is taking on the responsibility of the import, including the customs clearance and any import duty and taxes.

Which means you DON’T need an EU EORI, VAT number, EU entity, or fiscal representative.

Of course, they’re not going to be dealing with that themselves and the courier company will clear the shipment and then bill them for it (with their added fee of course).

So just make sure your customers are fully aware of this before they place any orders.

Now I know what some of you may be thinking, and this is something that a lot of people have emailed me – “it’s just not worth the hassle!”

And I completely understand that it seems needlessly difficult BUT it really isn’t. The process itself is actually fairly simple but a lack of knowledge and expertise is exacerbating every problem.

This brings me back to a point which I’ve been screaming about for years now. Get a good freight forwarder!

The role of a Freight Forwarder for Amazon FBA sellers

Seriously I can’t emphasize this enough. So many problems and headaches are taken away when you use a good freight forwarder who knows exactly what they’re doing.

Now I’ve been recommending Woodland Global for years on my blog and nothing has changed there but today I’m happy to include another recommendation for you, one of our Amazon Sharks FB Group members – Westbound Global.

Ryan Clark, the Co-Owner and Director, is often seen on the Amazon Sharks Facebook group offering helpful advice to fellow members and he actually contributed a ton of information to help me put this entire guide together.

His knowledge is really second to none and it’s no exaggeration when they claim a “personalised” logistics service as Westbound Global really does take the time to look at your individual business and guide you through the entire import/export process.

I look forward to testing them fully soon with a full order but for now I’m more than happy to give my recommendation to Ryan and the team at Westbound. As well as all the info and requirements we’ve covered so far, Ryan has also offered some further insider tips and advice to ensure everything goes smoothly:

• We strongly advise to forward all paperwork to your forwarder to ask for a pre-check, including at destination customs partners to ensure no ad hoc problems arise whilst the goods are sitting there on a trailer in Calais incurring waiting time charges. Whilst it seems frustrating and ‘you just want to get the goods on their way’, don’t send them without getting everything approved. It could cost you thousands if not.
• On your commercial invoices, detail as much info as possible to make it easy for the destination Customs Broker. If you send a long invoice with multiple HS codes, and multiple manufacturing origins, they will simply look at it and put it at the bottom of the pile or worse still, refuse to handle it. It’s like chucking an empty quality street jar of coins at your local Tesco checkout saying you’d like to pay for your £150 weekly shop.
  a. Sub categorize by: HS code + Country of Origin = Value. Then a new HS code + Country of Origin = Value. Then Sub Total each Origin batch to EU/UK and Non EU/UK. This will show the workings quickly and easily to the customs broker so they know what value to use for the Zero rated Trade deal products, and what value to use for the non-qualifying trade deal products.
• Customs Problems – We mentioned above that you need a Fiscal Rep or EU Entity. The two options are different but do have a different approach to how the European Forwarder or Customs broker acts in regards to customs clearance.

This is very different to the UK so it’s important advice. In the UK, we clear on behalf of an entity or person no matter where they reside or are registered as a business and this is called Direct Representation. It’s the importers responsibility to declare correct values, HS codes and info.

In Europe, the customs brokers can be an easy target by the local Customs authorities ‘if’ any of the information provided by you is incorrect, even at a later date.

If you were an EU entity, they would seek corrections, fines or repayments directly from you. If you are a UK business or other non EU entity, they will seek the customs broker for representing you, which could lead to fines/costs to them.

This means customs brokers in the EU are refusing to perform customs clearances for UK businesses unless they are actually set up as an EU business/entity and having a Fiscal Representation does not give you a real entity for customs to approach. This is why many are having problems right now where brokers are, behind the scenes, refusing to clear goods due to this EU customs stance towards them. It is worth considering whether you should seek to set up an EU company rather than use a Fiscal Rep.

Extra info

After Brexit, there are no more UK to EU pallet network operators due to severe customs problems. Imagine one customer not getting one part of the above correct, it would hold up the entire truckload.

Before Brexit, there were pallet operators (Pallex/Palletways/Palletline and many more) offering something like £170 per pallet to Europe. It’s unbelievable to understand that actually, in Europe they DO NOT have a pallet network at all. This was previously subsidized from the UK to Europe on backload trucks which cost (in the old days) not a lot. The real bulk of that cost (£170) was a prorated figure from the local destination depot to the door delivery place.

The costs now for getting stock to Europe is much more than £170 a pallet due to the lack of drivers willing to come here (because they are scared, that they will get stuck – Covid tests/isolation possibilities, and their own customs procedures heading back) and also, the EU have introduced a permit requirement for UK Truckers to enter Europe, but only issued an initial 2,500 of them. There were near 12,000+ trucks previously heading into Europe + Republic of Ireland truckers, who now cannot due to a lack of permits. This has all driven the price high along with problems being caused in customs.

The method we are using to ease congestion is to avoid Calais and Rotterdam clearances at port, but to Transit Bond the goods to a nearby partner depot and customs clearing there. As long as the paperwork is correct, this is relatively straightforward although it does add another £75 fee (approximately) for the T1 bond document. Distribution is then carried out from the local depot or, Amazon SPD in Europe actually offers collections for LTL and FTL unlike UK or USA. Here, it’s just UPS pick ups for cartons where SPD is used but in Europe, it’s actually a good idea to utilize SPD from our destination depots in a way which we are used to releasing UPS cartons.

I hope you now really understand why I stress using a good freight forwarder. Just look at what a difference it makes!

Will Brexit affect Amazon in the UK? I think it already has and will continue to. Check back for tips on Amazon: UK after Brexit thoughts and tips/

And that’s pretty much it for today’s guide. I hope you’ve found it useful and it will help avoid some of the problems people have been having. It’s been a tough time for shipping with COVID-19 and then Brexit but hopefully everything will slowly get back to normal this year.

Once again, a big thank you to Ryan and the team at Westbound Global. Keep an eye on their website for any upcoming shipping changes and news.

As always if you have any questions get in touch with me and I’ll personally get back to you.

Otherwise, until next time!

All the best,
Andrew

I have something a little bit different and very exciting to share with you today! I’m very proud to release this interview with someone who took my online FBA course, Amazon Sharks, launched his product on Amazon late November last year, and achieved some phenomenal results.

I won’t yet reveal exactly how well they did, you’ll have to read the interview to find that out!

Without any further ado, let’s get to the interview.

Why take an Amazon FBA Course?

Hi Matt, firstly thank you for taking the time to answer these questions for our blog readers. Before we get into your Amazon journey – how did you first become interested in online selling?

I’ve always been really interested in the concept of owning my own business. At first, I merely wanted to test the waters (so-to-speak) and make a bit of money on the side selling on Ebay; I wasn’t bothered about making a full-time wage. Whilst I didn’t make much money, it did introduce me to the world of online selling and I think it gave me the motivation to be more ambitious and seek more lucrative opportunities online.

How did you find my blog & Amazon Sharks?

I was browsing the internet for information on how to improve any Ebay sales. I came across many of Andrew’s old blogs on Ebay selling and noticed that he had, more recently, moved over to selling on Amazon. All of his blogs were always very informative and full of great content, so I started following his blog more closely. I noticed his Amazon Sharks programme and thought it looked amazing value for what you get, and unlike other so-called Amazon gurus out there at the moment, Andrew has never promised that you are guaranteed to get rich quickly. Instead, it’s all about building a good and sustainable business where you are your own boss!

Why not simply “go it alone”?

I needed to develop my knowledge of how to sell on Amazon, source products from China and how to expand any opportunities both nationally and internationally. With the Amazon Sharks course, you go through absolutely everything, from how to decide what to sell, how the Amazon FBA programme works to how to send a pallet to Amazon or expand into other Amazon platforms. Best of all, you also get Andrew’s expert knowledge and you can ask him anything along the way.

How did Amazon Sharks meet your expectations?

The course contains many hours of detailed content. To be honest, I would say that it definitely covers everything you’ll ever need to know. The great thing is that if you can think of a question that isn’t covered, Andrew is only too happy to help with any queries. The quality of the course seems vastly superior to any other content or other courses I have encountered online.

How much did you invest in your Amazon FBA business?

Initially I ordered 2,000 units from the manufacturer at a landed cost of £5.63 per unit.

In total I invested about £13,000 for my first order. That covered everything – from product purchase, VAT, import duty to photography etc. etc.

How did you find your first Amazon FBA product?

This is something that a lot of new Amazon business owners really struggle with. I used the research tool, JungleScout. After many hours of research I knew that this product was a clear favourite. As an extra plus, I knew that if it went well it would provide me with many other opportunities to do other, related, products under the same brand.

What are your FBA results so far?

I started selling the product late last year. My first order arrived just before Christmas (for 2,000 units) and I sold out much quicker than anticipated – within just a matter of weeks! I was shocked at how well things went. I made a net profit of around £14,000 on my first order which was a very nice and unexpected surprise to say the least!

(So, there you go. Simply amazing! £14,000 NET PROFIT. That means Matt more than doubled his initial investment on his first order. And that’s not a one off – the beauty of selling online and in particular on Amazon is that you can keep repeating the process again and again!)

What’s the biggest surprise of your Amazon FBA journey?

How easy it is to use Amazon’s seller interface after a bit of practice. At first, it sounds/seems so complicated, but everything soon becomes second nature. Same goes with other tasks, such as importing goods from China. It’s all really simple once you have done it a few times.

What’s the no.1 tip you would give to new FBA sellers?

Do the Amazon Sharks course! At £990 it really is amazing value. You will make that money back many times over. Also, don’t cut back on expenses. Get the best you can possibly afford – go for a more expensive photographer, designer etc.

What’s your long term goal for your FBA business?

In the short-term, I want to ensure that I have enough stock to meet any demand over the next 6 months or so. Longer-term, I want to expand into many other products and to start selling across Europe.

…And there you have it! A very big thank you to Matt for taking the time to answer these questions and I look forward to hearing more success stories from him and other Amazon Sharks members!

I really hope that you can use this story as inspiration for your own business. A lot of people don’t like hearing this but it really does all depend on you! As long as you have the right plan and guidance and you TAKE ACTION – you can’t fail.

Here’s a quote from Matt from an email he sent me last year as he was planning his upcoming product launch and wanted some final guidance on pricing.

“It’s the kind of brand/product that could lead to a whole business, if successful. The great thing is that I can already think of 100+ products that would fit perfectly under this brand. I just hope it all goes to plan, but I will keep toiling away anyway!”

He wasn’t going to try one product and then give up if it wasn’t a huge success right away (although in his case it was!). And that’s the problem so many wannabe Amazon sellers have… they want instant success.

But all real successful businessmen and women know that failures can and will happen – the difference is they use it to learn and become better and come back stronger.

And that’s exactly the mentality that Matt showed and what allowed him to be so successful early on.

Well that’s it for today.

If you’re an Amazon Sharks member who’d like to share their story then get in touch with me via the contact form on this site. If there’s enough interest we can turn this into an ongoing series for the blog.

Until next time!

All the best,

Andrew.