Another month has passed, and it’s time for my monthly business update post. In these posts, I share results from my own Amazon FBA business and update you on the latest Amazon FBA news.
September has been a very busy month. Sales have increased since August, which is always good to see! Also, at the end of September, I started to see more and more sales of Christmas-themed items, which officially means that THIS YEAR, Christmas sales have started at least one month sooner than usual (end of October).
There has also been a lot of Amazon-related news. Here’s a summary of what we’ll be covering today:
- My Amazon business results, and how to make £8,227.30 NET profit doing NOTHING!
- Prime Day is here! What is my strategy to maximise profits?!
- Brand-new Sponsored Brands video ads!
- New Amazon FBA warehouse in Switzerland—another VAT trap?
- FBA inbound shipment problem—do you need to worry?
- Latest BREXIT news—split inventory pools confirmed by Amazon!
- Amazon Netherlands and Sweden—time to create your listings!
- Amazon’s brand-new freight service?!
- Jungle Scout’s new review automation feature!
As you can see, there are LOTS of things we need to go through, so, without further ado, let’s get started!
How to make £8,227.30 in PROFIT
with Amazon FBA in ONE month!
If this is the first time you are reading my monthly income posts, here’s a quick overview of my business:
- I sell one product with 22 variations on Amazon UK, DE, FR, IT and ES
- I started this business at the end of 2017
- My goal is to reach £100k in net profit in 2020
When calculating net profit, I take into account the product cost (delivered in FBA), FBA fees and seller fees.
I don’t take into account returns and monthly storage fees because these costs are very low for me. My returns rate is lower than 1%, and I pay less than £100 per month in storage fees. This is mostly due to the simplicity and small physical size of my product, as well as the low price point (people are not that fussy about an £8 purchase).
Speaking of the price point, here’s my current pricing strategy:
- Amazon UK: £7.99
- Amazon DE: €9.99
- Amazon FR: €9.99
- Amazon IT: €9.99
- Amazon ES: €9.99
My profit numbers are also different from country to country because FBA fees are NOT the same across all Amazon platforms!
For my product, Italy and France are the worst countries as I’m paying 50% of my sales in FBA fees. I could, of course, increase the price, which would offset some of this cost, but I really like the position I’m in right now with the €9.99 price point. So, for now, I will leave it as it is.
Here’s the net profit per item sold in each country:
- Amazon UK: £2.5
- Amazon DE: £3.3
- Amazon FR: £2
- Amazon IT: £2
- Amazon ES: £2.5
Yes, the profit itself is very low, but keep in mind that I don’t have to spend any money on PPC ads because I have already established my rankings and have accumulated thousands of reviews across my listings. When I was in the launch phase, I set my prices higher so that I would have more room for advertising costs.
Ok, with all that explained, we can take a look at the results my business achieved in September 2020:
1805 units sold, resulting in total sales worth £14,236.92
Net profit = 1805 x £2.5 = £4,512.5
536 units sold, resulting in total sales worth €5,317.04
Net profit = 536 x £3.3 = £1,768.8
494 units sold, resulting in total sales worth €4,914.38
Net profit = 494 x £2 = £988
319 units sold, resulting in total sales worth €3,163.41
Net profit = 319 x £2 = £638
Spain units sold, resulting in total sales worth €1,232.42
Net profit = 128 x £2.5 = £320
Total units sold across all marketplaces: 3282
Total sales: £14,236.92 + €14,627.25 (£13,224.68) = £27,461.60
Total net profit: £8,227.30
LOL. I hope that’s not information overload! 🙂 Lots of numbers, but if you did follow them, well done! What really matters is the net profit, of course, and I’m super happy with the £8,227.30 I made in the month of September. October should be even better because of the increased number of Christmas sales and Prime Day, of course.
As you can see, almost half of my sales come from the European marketplaces, and as I have said many times before, once you have established your business in the UK, you should definitely expand to other EU marketplaces.
This expansion has allowed me to double my business, and I believe that in the future, the EU part of my sales will grow even further!
The total size of the EU market is more than 300 million people, which is a LOT more than the UK alone. Besides, in many countries, eCommerce is still not as advanced as in the UK, which means there’s lots of room for growth.
If we look at individual countries, I’m very happy with the sales in Germany and France, but I’m disappointed with Spain, which only accounted for 128 units sold in September. Italy was much better than usual, though, with 319 units sold, which shows that there is potential for my Christmas-themed variations to do well in that particular market.
To sum it up, yet another month of excellent results! In terms of time invested, it’s the same old story: I basically spent two or three hours on this business in September, and that time was spent preparing two pallets to be sent to the FBA warehouse. I will spend more time on the business in October, though, as I want to expand my sales to Amazon Netherlands and Sweden. More on that later.
Now, let’s take a closer look at the latest Amazon FBA news!
Prime Day is HERE!
The exact date of Prime Day was kept secret for a very long time—even sellers were not informed about when it would be. All we received were emails from Amazon informing us about the need to create special offers/deals/coupons for Prime Day, but WITHOUT telling us exactly when it would happen.
Now, it’s official! Prime Day 2020 happens NEXT WEEK, on the 13th and 14th of October.
What’s my personal plan for attracting buyers on Prime Day? Vouchers, sales, daily deals?
None of that. I will not run any deals or promotions for Prime Day.
I did try some of these sales/discount strategies in the past, but for my product, and for my price point, it really didn’t make much financial sense. Yes, I can get higher sales numbers this way, but what truly matters is the NET profit, not how many units I have sold.
What I have found is that people naturally shop/search a lot more on Amazon on Prime Day (and same applies for Black Friday and Cyber Monday), so even without doing any discounts or special deals, I get two to three times more sales than on regular days. So, my strategy is simply to ride the Prime Day wave and make as much profit as possible from the organic traffic.
This doesn’t mean that you have to follow my strategy—not at all! If your items sell for higher prices and you have more room in your margin, you should definitely create a sale or voucher targeting Prime Day buyers.
Or, if you have recently launched a product on Amazon and need sales/reviews, Prime Day is a great way to achieve that! Create the best possible sale you can afford. You could go as low as the breakeven point or even slightly negative to create an amazing price offer that shoppers simply can’t refuse. Then, combined with targeted PPC ads for your best-converting keywords, you can turbo-boost your sales and quickly improve your organic rankings. Plus, you will get reviews and ratings as a result of doing this, which will further improve your organic rankings.
Just make sure your stock/inventory levels are high enough and you don’t sell out of stock too quickly. You need to have stock for the Black Friday weekend and the Christmas sales in early December. There’s no point in having a super successful Prime Day and then running out of stock just a few days later.
On a more personal level, I will do a lot of shopping on Prime Day! 🙂 I have been saving my purchases for the last few weeks (some are quite expensive) and waited patiently for Prime Day when many of the items in my cart will have a discount.
Brands VIDEO ads!
There’s now another good reason why you should get into Amazon’s Brand Registry: a new VIDEO ad format.
If you regularly browse the Amazon website, you have probably already noticed these video ads. They really do stand out in the search results as people are not used to seeing videos on Amazon’s search results pages. For some time, this new ad format was in a limited Beta phase, but now they have started to roll it out on a much bigger scale.
I do have this feature available in my account, but if you don’t have it, try sending an email to: firstname.lastname@example.org to see if your account can be included in the current Beta phase.
I won’t go into the details of how these video ads work, how to create them, etc., as it’s a massive topic, but you can get the most important information on the Amazon website. Just like with Product Collection ads (formerly Headline Search ads), these new video ads will go through a manual approval process, so make sure you fully understand the rules before you submit your video.
All in all, it’s a great new feature that will dramatically change the way search pages look on Amazon. Even though I don’t actively use PPC for my business, I will try these video ads out for my Christmas-themed variations and see what kind of results it yields. I will update you on my results in upcoming monthly blog posts, so please make sure you have signed up for my newsletter here if you don’t want to miss out on any new content I publish in the future.
Amazon launches in Switzerland!
Yet another new Amazon marketplace? No, not really.
Amazon is launching an FBA warehouse in Switzerland, which, from what I understand, will be used for fulfilling orders for customers living in Switzerland. What’s interesting is that Amazon will enrol all Pan-EU sellers in this new country by default. Then, if we want to, we can remove Switzerland from our FBA export eligible countries.
When I saw this, my first thought was “Not another VAT registration!” But Switzerland, of course, is not part of the EU, so different VAT laws apply there. This is the information Amazon has shared:
Please note that the new Swiss VAT law (effective as of January 1st, 2019) mandates sellers to register for VAT in Switzerland and collect Swiss VAT on all sales of low value imported goods (‘LVIG’)* into Switzerland, where the seller has exceeded a cumulative annual threshold of CHF 100,000 of LVIG sales to Swiss customers, and become Importers of Record once they become VAT liable.
The CHF 100,000 annual threshold applies to a seller’s cumulative sales to Switzerland from low-value goods through all sales channels. Please make sure to review your sales and VAT compliance in Switzerland, in relation to the applicable requirements.
My understanding is that we don’t have to register for VAT in Switzerland until our annual sales to Swiss customers reach 100k CHF, which is approximately £84k.
You do have to count ALL sales channels to Swiss customers together, but still, £84k is a pretty large number and most Amazon sellers won’t even come close to that for this one small country.
So, personally, I will leave this country enabled with the hope that faster and cheaper delivery to Swiss customers will increase my overall sales in this region.
How to FIX FBA inbound
A very quick tip for sellers who are facing FBA inbound shipment problems involving incorrect product quantities: From time to time, you may get a message from Amazon telling you that there’s a problem with your inbound shipment and that the quantity of products received is not the same as what is listed in your shipment plan.
For example, in my shipment plan, I have stated that I have sent 2400 units, but Amazon says that they have only received 2399 units. For my business, usually, it’s a difference of just one or two units (when this sort of thing happens).
Now, for the record, I know that Amazon is actually making a mistake here. I know that my products can only be packed only in a certain way, with 40 units per box, and I simply could not miss a product in a box. Or sometimes Amazon says that they have received one extra unit, which is also TOTALLY IMPOSSIBLE! I know for sure that there’s no way to get 41 units inside the box as the box is simply too small.
What should you do in these situations?
You have to keep in mind that FBA issues like these are directly tied to your Inbound Performance Index, which can’t go above a specific percentage of your overall units. There are tons of rules you need to follow for this, and if you want to entertain such a read, you can check it out here.
Basically, if you’re informed about a random missing item or surplus item (in Amazon’s eyes), the simplest thing you can do is to simply click on the ACKNOWLEDGE button, which means that you’re admitting your fault (even if it’s not your fault) and promising that you won’t do it again. I have done it this way three or four times out of the last thirty or so shipments and it hasn’t affected my Inbound Performance Index in any way. It constantly stays at 0%.
If valuable goods are involved or it’s more than just a few items missing, you will want to challenge Amazon on this issue and ask for a recount or a more detailed investigation. These options will be available on the same page as the ACKNOWLEDGE button. If you don’t see it, contact seller support and DO NOT click on that ACKNOWLEDGE button. If you do, there’s no going back later.
Brexit News: Split Inventory
The closer we get to the 1st of January 2021, the more Amazon is publishing Brexit-related news and changes. As I predicted in my Brexit post in the summer, Amazon has now officially confirmed that there will be TWO inventory pools after 18th December 2020: the UK inventory pool and the EU inventory pool.
Here are the official dates/deadlines:
Saturday 14 November: Inventory removal orders for cross-border inventory will stop i.e. removing inventory from UK fulfillment centers to EU addresses and from EU fulfillment centers to UK addresses. Any removal orders created before this date will continue to be processed until 31 December 2020. Local removal requests will continue to be accepted as usual (i.e. within the UK or within the EU region).
Friday 18 December: Pan-European FBA inventory transfers will stop between the UK and EU. From this point forward, you will need to send inventory to fulfillment centers in the UK and the EU in order to maintain your stock levels (refer to our Brexit help page for information on how to do this). Pan-European FBA inventory already placed in the EU before Friday 18 December will continue to be used to fulfill EU orders and Pan-European FBA inventory in the UK will continue to fulfill UK orders. Pan-European FBA inventory transfers will continue as usual within the EU region.
Monday 21 December: Cross-Border Fulfillment via EFN and Pan-European FBA will start winding down, stopping in full on Monday 28 December. To maintain your European sales, you will need to send products to fulfillment centers in the UK and the EU. More details can be found on our Brexit Help Page.
What about returns? As expected, returns will stay in local FBA warehouses. Amazon won’t send returns back to the UK. Sellers will only be able to create LOCAL removal orders, send goods to a charity or destroy them. I predict increasing opportunities for local FBA prep-centers, but we’ll have to wait and see how it all pans out next year.
Amazon Netherlands and Sweden.
Be ready for Christmas!
At the beginning of this post, I mentioned that I only worked for a few hours on my business in September. October will be different as I want to prepare my listings for Amazon Netherlands, which is already LIVE, and Amazon Sweden, which may or may not launch this year. I haven’t seen any concrete dates yet. Maybe Amazon will do it on Black Friday? Just like it did in Australia back in 2017! 🙂
Anyway, even though I don’t have high hopes for these two marketplaces (based on my sales levels in Spain and Italy), I still want to have my listings up and running for the Christmas sales.
Now, don’t think I’m lazy! For Amazon Netherlands, I already tried to create my listings in September using the Build International Listings (BIL) tool, but it didn’t work out. I could not export any listings from the UK to the Netherlands.
I did it all in exactly the same way as I did when I expanded into Germany, France, Italy and Spain, but this time, it just didn’t work. After going back and forth with seller support, the issue was identified: it turned out that the BIL tool ONLY works if the target marketplace already has active listings with the same SKUs! Only then does it “connect” and send the information over.
This is something new to me, and it means I will have to manually create 22 listings in Amazon Sweden and the Netherlands and then use the BIL tool to transfer the listing information, images, etc. There is an option to use an “upload file” function, but I don’t really trust that method, so I will be doing this process manually. Hopefully, everything will work out and I will be able to make my first sales on Amazon Netherlands later this month!
Amazon has quietly launched a brand-new freight service called Amazon’s Global Shipping Services. You can find this by clicking on Programmes (in the main menu), then Fulfilment Programmes, and then Global Shipping Service Freight.
There’s LOTS of information about it on this page.
Basically, it’s a freight service where sellers can ship goods directly from China to Amazon’s fulfilment centres in the US and Europe. Both air and sea freight options are available, and full price tables are presented on the same page.
I haven’t done full research on the pricing aspect yet, but at first glance, it looks quite expensive. For example, a 20ft container from Ningbo to the UK costs more than £3000, which is expensive. And I believe that this price does not include all the fees. Airfreight prices do look better, though, and this could be a cost-effective way of getting smaller shipments directly from China to Amazon’s warehouse (think more about shipments in the 50kg to 200kg range).
Again, there’s lots of information to go through, including all the associated costs, Customs clearance fees and everything else, so if you do plan on using this service, make sure you read the small print, too.
Still, I do think that this new service could become quite popular if the service quality is there. If not, bad reviews will spread quickly—just like with Amazon’s external VAT service providers—and people won’t use it. More competition is always great and should bring down the prices for the end-user—us, the Amazon seller!
Jungle Scout’s NEW review
I have saved the best news for last! 🙂
No more running the JS Chrome tool on the Orders page or clicking on that Request for a Review button! It’s all automated now!
All you have to do is enable this new feature in your Jungle Scout account! Go to Marketing > Review Automation and simply turn the feature on. Jungle Scout will automatically send out these requests, so we don’t need to do anything extra anymore:
At the moment, there are no additional settings available, but hopefully, they will be introduced soon. The most important feature would be the ability to set the number of days that need to pass after an order is delivered before the review request is sent.
I know that Amazon has published guidelines on when it is best to send this request, and Jungle Scout is using that, but it would be great to have the option to override this based on the product you sell (more complex/expensive items may require more time before a person is ready to leave a review).
Anyway, this is an AWESOME new feature. I always forget to carry out this task using the old/manual method, and now it will all work on autopilot, 24/7!
Ok, that’s all for today. If you have reached the end of this post: thank you! You’re a very patient human being! 🙂
In this day and age when most people are watching YouTube videos and blogs are declining in popularity, it’s nice to see people still reading long-form content. Hopefully, I have brought some value to you and your business.
If you have any questions or comments about the topics covered in today’s post, please leave them below. Yes, even if you don’t agree with me or if I have published something that is incorrect, please do let me know. I’m only human and can overlook things, too, especially when there is so much news coming from Amazon every week.
If you’re looking to start an Amazon FBA business but don’t know how to do it, check out my Amazon Sharks course. In more than 20 hours of video lessons, I will show you exactly how I built my business and teach you how to build your own successful Amazon business from scratch. Plus, you will get direct access to my personal advice and support!
Again, thanks for reading this, and if you’re selling on Amazon already, good luck with the Prime Day sales!