As I covered in my previous Amazon UK FBA business update post for May, I have finally started selling my products on Amazon.com too, which is by far the world’s biggest Amazon marketplace! Many of you asked me afterwards for more details about how exactly to start selling in the United States because, while there are many online guides covering this topic, none of them truly give a complete and thorough overview of every step of the process from a seller’s perspective.
And that’s where I come in, right?! Today I want to give you a step-by-step walkthrough of how to start selling on Amazon.com using FBA! The principles will be applicable to sellers who already sell on Amazon UK (or any other Amazon European marketplace), but the same rules and steps will also apply to sellers who are just starting out. In this post, I will assume that you already have a product to sell and understand the basics of how Amazon FBA works.
Also, as you saw in my previous post, my US launch was actually much smaller than the UK launch I did in Autumn 2017. By that I mean, in my first month on Amazon UK, I broke £12k in sales. In my first month on the US platform, I made just $3k or so in sales.
This is quite important to understand: while Amazon.com is a much bigger marketplace with much greater demand in most product groups, it also has much more competition. You’re competing against much bigger players with a lot more resources!
So, unlike the UK platform where you compete with, say, 20 other sellers in your category, on the US site, you suddenly have to contend with 200 competing sellers! And it’s not easy, even for seasonal sellers like me.
I just wanted to point this out to remind you once again that my recommendation is to start with your local or CLOSEST marketplace if you’re based in the UK, Germany, Italy or other European countries. The competition in European marketplaces is much smaller, and it will be easier for you to get started, make sales and become profitable (VERY IMPORTANT!!!), so you have money to invest in your Amazon.com expansion.
With this business that I’m covering in my monthly blog post updates, I won’t be expanding to European marketplaces simply because the product itself has an English language element to it, which means it just won’t sell in other countries in Europe outside of the UK. I do plan—or at least hope—that the business takes off in the US, and maybe I will even expand to Canada and Australia later on if that is the case. If and when that happens, I will make sure to inform you about it on my blog! 🙂
Ok, I got side-tracked a bit, but you know that all my comments and recommendations are made on purpose because I want you to have all the information, so you can do the right thing. Let’s get started on the actual process of how to start selling on the Amazon.com (US) website using FBA!
Business Registration & Bank Account
First things first, you need to register a business in the United States to sell on Amazon.com, right? WRONG!
There’s no point in doing that! Amazon does not require us to have a US-based business presence, and it would only complicate the whole set-up process, and I’m not even talking about doing taxes in the US, etc.
If you have a Ltd. company registered in the UK (or any other European country), you can use that to sell on Amazon.com. The same applies for sole traders—you can sell as a UK-registered sole trader on the US website with no problems.
Bank account. I don’t know where this misleading information comes from on the Internet, but a lot of people suggest that you need to open a US bank account to sell on Amazon.com, but it’s simply not true! You can use your current bank account—any European IBAN bank account number—to receive payments from Amazon US, just like you would in Europe. So again, there’s no NEED or BENEFIT to opening a US-based bank account.
However, you may want to do it for practical reasons, like to get paid in USD and not GBP or EUR as you would with your current bank account. This is especially important if you import products from China and pay in USD (which is most of us) as it allows you to avoid going through a currency conversion TWO times and losing out through the unfair exchange rates that banks or Amazon offer. Instead, I recommend you open a Transferwise Borderless account.
For those of you who are not familiar with Transferwise—it’s essentially a service that allows us to do currency exchange at marketplace prices for very small and reasonable commissions. With the help of Transferwise, we can save tons of money on exchange rates and make quicker international money transfers too. Plus, they now offer borderless accounts, which basically means we can open virtual bank accounts around the world, not pay anything for them, and leverage currency exchange advantages.
Transferwise is a very reputable company that backed by the creators of Skype and other large investors, and it has maintained near-perfect reviews on Trustpilot.
Yes, same Trustpilot where PayPal gets rated 1.3 stars, lol!!!
Anyway, this step is optional, and you can do it any time you want. That said, I do recommend that you start with your own real/local bank account until your account gets verified since you will need to verify your bank account and I’m not sure how that works with Transferwise accounts. However, once your account is verified, you can then switch your bank account details to your Transferwise account, and you won’t have to verify it again.
If you don’t want to overcomplicate things, you can simply use your current bank account to sell on Amazon.com—that’s perfectly fine.
Amazon.com Seller Account
If you are already selling on Amazon UK or Amazon’s other European marketplaces, you will know that we have ONE account for selling in all European marketplaces. That means one account to sell on:
- Amazon UK
- Amazon DE
- Amazon FR
- Amazon IT
- Amazon ES
For selling on Amazon.com, you will have to open a new account because North American marketplaces are separate.
It’s not like this will be a totally new/unique account as it will still be linked to your current account, but still, we need to create a new account for N. America, which will cover these three regions:
- Amazon USA
- Amazon Canada
- Amazon Mexico
I hope that at some point in the future, Amazon will UNIFY the whole system (including Australia, for which you need another account), but for now, it is what it is. The main downsides of separate accounts for sellers are:
- We have to pay another monthly fee for a N. American account
- We have to go through the verification process again
The current Amazon.com account fee is $39.99 per month. Obviously, for any serious seller, this doesn’t make a difference as you will spend hundreds and thousands of $$$ every month on Sponsored Product ads, for example. But still, it is weird that we have to pay for the privilege to sell on Amazon and pay TWICE if we want to sell on the UK and US platforms.
Verification—we all hate verifications, right?! There’s always something that does not match up or a document that has expired two days ago or a scan that is not in pristine condition and so on! Much of the verification process comes down to LUCK and the individual who is reviewing your documents.
The good news is that if you’re already selling on Amazon UK and have verified profile, there’s an option on your Amazon.com seller profile to provide information on that account. Basically, you link your UK account, the verification process will go through much faster. I did this, and even though I had to provide some proof of ID and my company registration certificate, the whole process took just a few days. Then they did not ask for any further information from me. I guess they just looked at my UK account data and basically verified it based on that (which makes sense).
But even if that doesn’t work for you OR Amazon.com is the first platform you’re selling on, make sure you’re providing them with ACCURATE and UP-TO-DATE information! Do not try to hide anything or use information that is not legitimate. If you play by the book, you will always be able to get any extra documents they are asking for.
You will have to open/apply for a Brand Registry account on Amazon.com separately! As I explained on my blog, you DON’T need to register a trademark in the US to do this! No, Amazon accepts your UK trademark and it’s actually very easy to open a Brand Registry account on the US site. You just provide your logo image, product images, trademark information, and your account will be opened within just a few days.
It gets even easier if you already have a Brand Registry account in the UK! In that case, you simply add the US account as an additional user to your existing account! No need to open a new Brand Registry account in the US! You can find more information on this process in my blog post here.
Once your Amazon seller account is opened in the US, you can create your product listings just like you would on the UK platform. The interface is very similar and, basically, it’s exactly the same features and options apart from a few extras that only US sellers get (like the Early Reviews Program, for example, which we’ll cover separately in future blog posts).
Amazon also offers a feature that allows us to IMPORT our UK listings automatically. I tried to use that feature, but, for some reason, it didn’t work for me. Some kind of error came up every time I tried the importing wizard.
As I only had five product variations to create and images/texts ready to copy, I just created these listings from scratch. It took me less than an hour, so if you have only one or two products to sell, you can definitely do it manually! Another advantage of doing it manually is that you can review descriptions and features to make sure they’re optimised for the US marketplace (for example, if you have sizes mentioned, then change them from centimetres to inches and so on).
But even if you do create your listings from scratch, Amazon still offers to link them with your UK listings and, specifically, they offer to link the price of the item! In the beginning, I did not realise what was happening as, each day, my price on the .com platform changed based on the currency exchange rates. Obviously, I did not want this because I need a fixed and specific price for my Amazon US listings, so I disabled this function. However, I’m just mentioning it so that you know there’s an option to automatically change prices on Amazon.com based on the currency exchange rate and prices you set in your Amazon UK account.
Once you have created your first listing on Amazon.com, you can arrange to send your stock to Amazon warehouse! And this is the part of the process that confuses most people.
Sending stock to Amazon FBA in the US!
How can you send goods to the Amazon warehouse in the United States? Is it possible to simply send stock directly from China to Amazon? What is the easiest way to handle this whole process?
First things first, you CAN’T simply send the stock to Amazon US warehouses from outside the US! Amazon can’t and WON’T act as an importer.
They won’t do customs clearance for you in the US, just like they won’t do it in the UK or any other EU country. (Note: This could change in future, though, as Amazon could start offering some kind of service for this process. That said, it comes with lots of legal aspects/problems, so this is probably not something Amazon is working on right now.)
So, what you need to do is use a third-party service/company that can handle the whole shipping process, including the customs clearance process in the US and delivering goods to Amazon’s warehouse. It is basically the same thing as importing from China directly to Amazon UK, so most freight forwarders will be able to help you out with this process, including the company I have been recommending for years, Woodland Group.
Many other shipping companies can also do this for you; you just have to ask them! Personally, I use DHL for sending stock to Amazon US as I needed a fast Air Express service (not sea freight) and, after getting some quotes (from DHL, TNT, UPS, etc.), DHL came out cheapest—after some negotiating.
They offered me full-service on DDP terms (Delivered Duty Paid) and what I liked most is that they took care of everything, including my registration for Importer of Record in the US. All I had to do is send them a Power of Attorney, so they can take care of everything on my behalf.
You can, of course, find information online on how to get that Importer of Record number on your own, but I just thought “why complicate things when the shipping company can take care of everything?”
Keep things simple!
You can organise this shipping process from the UK or directly from China. If you do it directly from China, make sure you do a full pre-shipment inspection, so you’re 100% confident in the quality of the goods you’re sending to Amazon. Make sure your supplier also properly labels the pallets for Amazon OR you can ask the shipping company/freight forwarder to do this for you. However, you will probably already know how best to handle this since you are already selling on Amazon UK or other European marketplaces.
All in all, there’s nothing too complicated in this process!
Cost-wise, it often costs about the same to send goods from China to the US as it costs to send them to the UK. It can be even cheaper sometimes, depending on which Amazon warehouse your goods need to be delivered to.
There’s no VAT to be paid on imports in the US, which is a huge advantage!
There’s no such thing as VAT in the US! You only pay Import Duty, which varies based on the goods but is generally around the 3% mark. You can look up for these tariffs online or use this calculator.
Your shipping company will typically inform you about any duties you need to pay and simply invoice you for them.
The second biggest problem/fear that people face when thinking about expanding to Amazon US is TAXES! How do we handle the tax situation in the US? Let’s find out!
The good news is that the UK (and other European countries) and the US have an agreement in place for double-taxation, which means that we DON’T have to pay any income tax in the US!
When setting up an Amazon US account, Amazon will ask you to fill out a quick interview/questionnaire for a W-8 form, which basically means that you will state that you have no active presence in the US and you will instead be taxed in your country of residence.
To put it simply, you don’t have to worry about paying income tax in the US on US sales. You will pay the normal UK taxes, just like you would do on the UK sales.
There’s one big BUT, though: Sales Tax.
I already said that there’s no VAT in the US, but what they do have is something similar: sales tax, which is paid on the value of the goods. The rates vary based on the STATE and can be as low as 0% in some states and as high as 9% and more in others:
So, the rate for each state in the US is different.
Wait! It gets even more “funny”. You charge the sales tax on your sale of goods for the state your CUSTOMER lives in—but not always. Some states ask you to charge your local state sales tax instead. So, the rules you follow vary depending on where you’re based and where your target customer is based.
Want some more? 🙂
As we’re using Amazon FBA and Amazon warehouses, we don’t know where exactly our goods are stored (in which state), and with Amazon having dozens of warehouses across the US and since they move goods freely at any given time across those warehouses, we have to register for sales tax in every state.
You read that right—we have to register for sales tax in every single state!
What it means in real-world terms is the situation is totally f***ed up! There’s no way a small seller can fully comply with these regulations. You have to understand that each and every state in the US is like a separate country. You would have to register for a sales tax number in each state and then do tax returns to each state separately and pay them too!
Lucky for us, there’s a company that helps with this process, and they do have lots of valuable content/material on their blog about this problem: Taxjar.com
However, they are more geared towards people who are already living in the US and businesses that sell via their own online shops (where they know they have stock located in one place/state at all times). But they do offer support for Amazon FBA sellers too, so if you want to stay 100% fully tax compliant, using Taxjar is probably the only way to can do it right now.
And it actually gets even more complicated than this! There is currently a massive debate going about whether we, as Amazon Marketplace sellers, are responsible for charging sales tax OR if Amazon is responsible for this. There are no clear answers to this as of yet, so many people will just wait out and see how it all progresses.
The main discussion/question is whether stock being held in an Amazon warehouse triggers NEXUS in a state or not! Nexus simply means that there are enough grounds for you to be legally responsible for paying sales tax in that state. There’s no definite answer to this right now. There have been some court cases related to this, but they are all currently still in process.
And don’t think that this problem is only affecting sellers based outside the US! Far from it! In fact, I don’t think that the IRS actively looks at the foreign seller problem at all yet because, right now, they need to focus on fixing the domestic issue with this. By that, I mean that the vast majority of US-based sellers/companies are NOT paying sales tax in every state. Most pay it in just one state—usually their home state—and many don’t pay anything at all. So, it’s a massive issue and something that will keep the pressure on Amazon until a solution is found.
My own prediction is that Amazon will have to sort this mess out and will have to take care of charging sales tax on our behalf.
They actually ALREADY do it for two states:
For these two states, Amazon charges sales tax on our behalf since January 2018, and I can’t see any reason why they could not do the same thing for the rest of the states. I really hope they will introduce this by the end of 2018 or in sometime in 2019 at the latest because, right now, there is simply no way for small-time sellers to stay on top of this issue and register for sales tax and do tax returns/payments in dozens of states at once.
OK, that’s about it! I have tried to cover the most important information on how you can expand your Amazon business to the US! There’s nothing too complicated about this process until we hit that sales tax issue. Obviously, I can’t recommend anything other than to be fully compliant, but the reality is that 99% of sellers are simply waiting it out to see how it will develop.
Another strategy would be to register for sales tax in at least in one state and simply pay the tax based on that state’s rules. This way, you’re at least doing something and paying this tax per the laws of one state (that one state could be the one you send your stock to, or at least the address of the warehouse that Amazon gives you).
I will continue providing information and updates on this process. As soon as there are some major developments, I will inform you on my Facebook page! I really hope Amazon rolls out other states in 2018 and starts charging the sales tax on our behalf, so this issue is fixed once and for all!
If you have any questions about this process or if you would like to share your story/experience with selling on Amazon US, please leave your comments below the post! I’m always happy to hear from my blog readers and I personally reply to all comments within 24 hours, Mon-Fri.