Long time blog readers will know that I’ve always preached outsourcing and utilising software and tools as much as possible in your online business. After all you don’t want it to turn into an online job as I call it, where you spend the majority of your day doing menial, repetitive tasks.
No! That’s not the idea at all and in fact you should be doing the opposite and trying to maximise the time you spend on high level tasks and decisions that can make a real difference to your business.
But I will warn that there’s a limit to this. Don’t be one of those people searching for the best software for every little part of your business, when 90% of it isn’t needed!
I’ve seen this happen many times, where a newbie starts an online business, be it Amazon FBA, Shopify or anything else, and immediately they start searching for that must have software. Before you know it they’re paying hundreds of pounds a month in subscription fees before they’ve even started selling!
I know what you’re now thinking – make up your mind Andrew do I need software or I don’t need it!?
Well my answer is… YES! 100% you do. But focus on the few vital tools that will make running your business significantly easier or quicker.
And that’s exactly what today’s post is all about. I’m going to go through what I consider must have software for creating a successful arbitrage selling business on Amazon UK.
I’ve spoken before about the best tools for a private label business on Amazon but these are quite different to what you use in a flipping business
So let’s get to it.
Sourcing and purchasing products is really the crux of a successful flipping business and this is just common sense.
Say you had a business selling £10k a month on Amazon with 25% margins. That means a gross profit of £2,500. To make the calculations very simple let’s pretend that all products are sold for 2x the purchase price and that gives you a 25% margin.
Now the absolute easiest way to increase that monthly profit is by spending more! For example it would be extremely difficult (almost impossible) to increase your margins from 25% to 37.5%, thereby increasing your monthly profit to £3,750.
But on the other hand it’s very achievable to increase your spending by £2,500, up to £7,500, giving you that same £3,750 a month in profit.
And there’s one tool that is king when it comes to sourcing for your Amazon flipping business:
For once a company’s tagline is 100% accurate as SellerAmp really does simplify your sourcing analysis.
As we spoke about in a recent blog post covering the results of one year of flipping on Amazon UK, there are many different sourcing methods available but they can be broadly split into OA (online arbitrage) and RA (retail arbitrage).
And SellerAmp covers them both.
They have a Chrome extension which can be used to analyse a product on any website which will immediately tell you if it’s a profitable flip or not.
So from any product page you simply click the extension and you’ll get this pop-up window:
As you can see it immediately shows you the profit and return based on the current Amazon selling price as well as how many units are sold each month for this product.
It also shows you the dimensions and has one click links to take you straight to the product page on Amazon or to search google for that product.
As well as the Quick Info there’s multiple other tabs, such as:
Ranks and Prices
As you can see SellerAmp provides a ton of information and tells you pretty much everything you need to know to be able to make a buying decision.
And for retail arbitrage their mobile app gives you all the same information as the web app.
So when you’re out and about and see a deal on a product, you can immediately find out if it’s profitable to sell on Amazon.
You don’t even have to search for the product and can simply scan the barcode to make sure you get a perfect match.
So what does all this functionality cost you?
Well, SellerAmp has two plans – Getting Started and Getting Serious:
The only real difference is multiple installs and active sessions, which isn’t really needed unless you have business partners and other people sourcing for you.
And at £11.95 + VAT a month, which you can bring down to £9.95 + VAT paying yearly, I think SellerAmp is amazing value and a priceless addition to any flipping business.
For this next tool, some people might say it’s not really needed when you’re just starting out and you can get by with SellerAmp alone.
And while this may be true, I think that for anyone serious about their flipping business, you want to learn to use this tool as soon as you can – otherwise you’re simply leaving money on the table.
I won’t actually go into too much detail now as there’s already a ton of great resources out there on Keepa and it would require its own dedicated blog post to even start to cover it.
But put simply, Keepa is the next step up when it comes to product sourcing and it can drastically increase your profits by allowing you to use historical Amazon data to time your sales and purchases.
At a certain point it’s not enough to just look at a deal and the current Amazon price and then decide whether it’s a good purchase or not as there are multiple other factors you have to look at.
Often Amazon will price match other offers, so their current price may be short lived.
It may be a seasonal item that has lulls and then peaks of demand where the price shoots up.
There may be an influx of sellers, causing the price to crash temporarily.
And with Keepa you can see all of this!
As well as this sourcing information, it also shows you variation sales, allows you to track products on Amazon and get price alerts, and even has its own Product Finder tool which you can use to find profitable products to flip.
All in all, I think Keepa, in conjunction with SellerAmp, is a must have tool for any serious flipping business.
Once again Keepa is also great value, with a free and paid option, which costs just €19 a month.
You can see the full difference between the two options here:
P/L Tracker and Sales Dashboard
In my opinion this is the final must have tool for any serious Amazon arbitrage seller. Some people may argue that you don’t need this straight away but you’re just giving yourself more admin work to take care of that way and starting out right off the bat with a P/L tracker saves you so much time and makes your accounting much more straightforward.
Now there are a ton of options in this space but the vast majority of them are geared heavily towards private label sellers on Amazon and lack a lot of the needed features for flipping.
For this reason, like a lot of UK based resellers, I started off using an app called Seller Toolkit, which is a lot more flipping focused.
This costs £32.99 a month on the Level 1 plan (up to 3,000 orders a month) and £53.99 for Level 2 (up to 6,000 orders a month).
And while I didn’t have any major issues with the software, I did always find it a little bit clunky and slow.
Seller Toolkit vs Shopkeeper
I recently had the chance to try Shopkeeper specifically for my flipping business and have loved it!
Right away I preferred the look and feel of Shopkeeper as it’s a lot more premium and responsive vs what I was used to with Seller Toolkit.
It also has some integral features that I really needed, such as the ability to add different costs for the same product.
Previously I would have to create multiple SKUs for the same product or manually calculate my average purchase price and then apply it over all orders, which was of course a very clunky and inaccurate way of recording sales and profit!
For example say I had an item that I bought for £25 and sold for £50, making a 50% ROI after fees, and I bought and sold 100 of them.
Fast forward a few months and the price is now £30. If I updated my COG for this product on Seller ToolKit it would apply to all previous orders as well and skew my past P/L! The other “solution” was creating a different SKU for every shipment of the same ASIN and then having to re-enter the COG every time, even if it’s the same.
Shopkeeper solves this problem completely with their Cost Period tool that allows you to add multiple costs for the same product, set over any custom period of time.
So for this one product I can set an unlimited amount of cost periods and accurately track my changing profit over time.
This feature alone was enough to make me switch over to Shopkeeper completely!
And the whole switchover process was extremely simple and painless. For one Shopkeeper offer unlimited back data from Amazon for free (most other software, including Seller Toolkit, charge you an additional fee for this) and they also have a great tool to upload all your COGS quickly and easily.
You simply go to Settings > Products – Bulk Upload:
And from there you can tell Shopkeeper how to pull data from an existing spreadsheet and automatically apply it to all your products!
So all you have to do is download your COGS from Seller Toolkit (or whatever software you currently use) and upload it to Shopkeeper and your COGS will be updated – as simple as that and the whole process takes literally minutes!
There are loads of other little tools and features in Shopkeeper that I love, including their Presentation mode, which allows you to hide all identifying product information (after all who doesn’t love posting flex screenshots), as well as their ka-ching notification that alerts you to every new sale (the best motivation tool when spending hours product sourcing!).
On top of that they have some very interesting further upgrades coming, including a VA mode – where you can set exactly what sections of the software you want to provide access to, and also more in depth inventory management.
Shopkeeper starts at $20 a month for their Novice plan, which covers you for up to 250 orders a month.
Next up I’m also going to add in one bonus software to our list. I wouldn’t include this as it’s not at all integral, but it’s very useful and has one important feature that gets it in – it’s FREE.
Unfortunately Amazon customers very seldom leave reviews and the easiest way to increase this is simply by requesting it. This can be done manually on your order page but why not save time and use software to do this for you?
That’s exactly what FeedbackWhiz does, and most importantly it’s free for up to 150 requests a month.
There are other options available here, like Feeback Five and Sagemailer, but they all do pretty much the same thing so it’s really a matter of personal preference (or really which one offers the most free requests a month!)
So there you have it. The three must have tools for running a successful Amazon FBA flipping business
In total they will cost you less than £50 a month, which is amazing value for money, and they provide everything you need to create a 6 or even 7 figure reselling business.
While my own Amazon FBA business is still fully focused on private label products, I started a trial of flipping / arbitrage selling last year, using Imogen, an Amazon Sharks member, as our guinea pig.
So without any further ado from me, let’s get to it!
Rather than make you wait until the end to find out, let’s get straight to my final results and then I’ll work backwards and break it all down in more detail.
In total, from June 2021 to the end of May 2022 – I sold £100,520.82 with a profit of £25,755.21
Was I happy with this? Well – yes and no.
When Andrew first asked me to try flipping / arbitrage selling as a test I was fairly hesitant. I imagined it being very time intensive and something more like an online job rather than a true Amazon FBA business.
It turns out on this front I was almost completely wrong.
Yes, flipping does require a lot of upkeep compared to private label and it is very time dependant BUT there are so many different models within flipping.
You have retail arbitrage, online arbitrage, Amazon to Amazon, seasonal items, long term holds, etc!
So don’t make the mistake of thinking that flipping only means driving around tonnes of stores scanning items endlessly (not that there’s anything wrong with that sourcing model, plenty of people make good money with it).
But back to my point, and when I agreed to do this and document the results, I honestly would have been happy making £500 a month as a little extra side income.
So based on that I’m ecstatic with making over £25,000 profit! Especially when I consider how little time I really devoted to this.
But I also can’t help being a bit disappointed because I’ve seen what the potential is with flipping and I know I could have made even more, especially as it was really the golden age of flipping with lockdowns and no holidays abroad.
This can be perfectly illustrated by going through my results month by month.
The Amazon Cash Cow
As you can see I had an amazing start and in July and August, my first two full months, I made more than £4,000 profit each month!
If I had kept that going for the full 12 months I would have easily passed £50,000 profit for the year. But even at the time I knew that wouldn’t be possible.
Why? Because my sales in those months were nearly all coming from one single product…
And with flipping this will never last. Sooner or later I knew other sellers would find that product and the price and margins would come crashing down.
After all you have to remember that this isn’t like private label where you control the listing and are the only seller. With flipping you’re competing with tens and sometimes even hundreds of other sellers for any product and this invariably means that prices and margins come down over time.
Which is exactly what happened with this particular product for me and within a few months it wasn’t even worthwhile selling it anymore.
In total I sold 314 units of this product, which accounted for a huge almost 40% of my total sales for the entire year.
And that’s the main reason for the drastic drop in sales and profit in September and particularly October, where I sold a paltry 15 units, making £2760 in sales and a measly £335 profit.
Thankfully I managed to bounce back from this big setback and in fact in December I was close to matching the highs of the summer months in terms of profit. This is mainly due to the fact that I had bought and held quite a few toys from the summer onwards and tried to time selling them during the Christmas rush, which led to some good returns.
Long Term vs Short Term Holds
However I’m not 100% convinced by this long hold strategy as often it didn’t make sense from a pure ROI perspective.
If I buy a product for £100 and hold it for 4 months to get a 60% ROI, that sounds great right? It’s giving me a 3x higher return that if I sold a product for 20% ROI…
But really when you’re comparing ROI it’s much fairer to look at your annualised return. Or to put it simply, if I can buy a product and sell it for a 20% ROI but do that on a monthly basis, then after 4 months I’ll have more than doubled my money.
That 60% ROI suddenly doesn’t seem so great now does it (the power of compounding!)?
Of course to get a bit more advanced it’s not quite as simple as that either as you still have to take into account your available funding (it might not be a question of a 20% short hold vs a 60% long hold if you have the money to buy both) and also obviously your time loss from dealing with more units.
Either way ROI is integral to a flipping business as it shows you how well you’re utilising your money, so I’ll be testing and tracking these different selling methods further this year.
FBM vs FBA
Another important point is that during this transition where I had to find new products to replace my green origami duck (side note – I love this presentation feature on Shopkeeper!) I also switched over from FBM to FBA and this made a huge difference to my business!
Going from having to package and post all orders myself to Amazon taking care of nearly all the work made everything so much easier. On top of the order fulfilment I also saved a tonne of time and stress not having to deal with customer queries and no longer worrying about my seller metrics (as it’s very hard to mess these up when you’re selling via FBA).
It’s safe to say that I now truly appreciate what Andrew’s been saying all these years about the dark days of fulfilling orders yourself on eBay and I will never go back to being majority FBM.
That’s not to say I don’t sell via FBM at all as it still has its place, mainly when you’re not 100% sure about a product and want to be able to return it if needed (one of the joys of flipping vs private label!) and also when it’s just more cost effective (usually for larger items).
But as you can see these make up a small minority of my sales overall:
Increasing ROI with A2A Flips
Moving on from December and the Christmas boost and I saw an inevitable big drop in sales in January, but actually Q1 of 2022 was very consistent for me and my profit held up really well from January to March due to increasing ROI and margins.
You can see what a huge difference margin makes to your bottom line as while January’s sales fell a big 66% from December, actual profit was only just a little under 50% less.
This was achieved by focusing more on Amazon to Amazon flips which I saw a lot of success with on a few products in particular. But don’t worry, it was still a good mix of profit and not overly reliant on a single item like before.
If I could go back in time I would have bought hundreds of the top two products as they were easily selling multiple units a day with a great profit per unit and more than a 100% return on cost price!
But unfortunately at the time I didn’t quite have enough knowledge and experience to go all in with these.
Unlimited Amazon Buying Account
And sadly as Q1 drew to a close another slight reinvention became necessary as I lost my unlimited purchasing on Amazon!
As you’ve probably already seen, as a buyer most products on Amazon have order limits preventing you from buying in bulk.
For a while I didn’t have these and could pretty much order as many of each product as I wanted and this of course helped hugely when I focused on Amazon to Amazon sourcing.
But in typical inexplicable Amazon style (nobody really knows for sure why some accounts get unlimited order quantities) the order limits came back on my account. And once again the effect of this can be seen by the drop in sales and profit in April and May, ending my first full year on a slightly negative note.
Projections and Goals for the Year Ahead
However I am not deterred and after seeing the potential of flipping I am determined and quietly optimistic that I can match and surpass my first year.
Some months will be undoubtedly hard to match but I should definitely be more consistent overall.
Looking back and the most vital point for me in year 2 is to avoid the big slow downs in certain months due to my overreliance on certain products and sourcing methods.
I plan to avoid this happening again but focusing a lot more on replens (items that you can sell again and again) and crucially – sorting out my storage issues!
Space was a huge limiting factor for me as I would order products, fill up my space, and then not be able to order anything until I sent off / sold my current stock.
This of course meant pausing my spending for periods at a time and in flipping, spending = profit at the end of the day, so fixing this storage problem is my no.1 priority.
I have a few different options here:
Add storage to my house
Get a storage unit
Use a prep center
1 is obviously my preference due to it being the lowest cost overall, but it’s not that feasible living in London with a tiny garden!
That leaves options 2 & 3 which will both cut into my margins and profit. But I already made the mistake of “saving money” on this and then losing out on significantly more sales and profit by not having the space.
And a prep center will not only help with that but it will also save me time, which again is a key part of my targets for year 2.
My goal with flipping has always been to spend as little time as possible on it while maximising profit and the two key areas I can do this moving forward are:
That means a prep center and a VA (virtual assistant) are integral parts of my plans looking ahead at year 2 and I will cover the options and costs here in more detail in further dedicated blog posts.
Overall I am very pleased with my results and am extremely excited to grow this business (and yes, I can happily call flipping a business now Andrew!).
To put an exact target on year 2, as I think setting goals is always helpful, while I could pretend and say I’d still be more than happy with £1,000 a month considering the time I put into this, the truth is anything less than year 1 and I’ll be disappointed!
So there you have it! A £26,000 profit target for year 2. I don’t think it will be easy without the big summer months and lockdowns, but I’m excited to see how Imogen gets along with this.
And of course we’ll be covering it in detail on this blog and we already have loads of additional content planned around flipping, such as:
• The Best UK Flipping Groups • Must Have Flipping Software • Prep Centre Showdown • VA Service Showdown
And much more!
So stay tuned for that.
As always if you have any questions at all then leave them below.
As you will have most likely heard by now, from May 12th 2022, Amazon are adding a 4.3% fuel and inflation surcharge to FBA fulfilment fees for the UK, Germany, France, Italy, and Spain.
What has caused the fee increase?
This has mainly come about as a result of increasing oil and fuel costs:
I’ve seen a lot of reactions to this most recent fee increase announcement and they are understandably negative… after all nobody wants to pay more in fees! Especially considering that it’s on top of the small increase to fulfilment fees which already came into place on March 31st 2022.
But I’m going to go against the grain here and say that this fee increase was 100% expected and very reasonable when you consider the amount of money Amazon spent increasing their fulfilment capacity over the last few years of COVID and supply chain bottlenecks.
In fact they actually overspent here in an attempt to deal with the pandemic demand, leading to a first quarter loss for Amazon of $3.8 billion. This is the first time since 2015 that Amazon hasn’t made a profit and the news led to a 14% drop in their share price in a single day:
Overall, Amazon claim to have “more than doubled” their fulfilment capacity across Europe, which us FBA sellers noticed first hand towards the end of 2021 where we saw Amazon fulfilment centre check in times drop severely and the inventory and storage limits, which had plagued many FBA sellers, start to be lifted.
And it’s for exactly that reason that I’m more than happy to pay slightly more in fees, rather than have to deal with inventory constraints.
Now I know what many of you are thinking right now – “but Andrew 4.3% isn’t slightly more!”
But my answer is that it really is.
How much is this fee increase actually going to cost you?
Firstly let’s point out that it’s a 4.3% increase to the current fees, not a 4.3% increase in total.
So let’s say you currently pay £2.21 in fulfilment fees for an item that you sell for £20. That means that your FBA fees works out at 11% of your sale price.
From May 13th that fee isn’t going to increase to 15.3%! No, it’s going to increase from 11% to 11.47%.
And suddenly the fee surcharge seems much more reasonable when you consider it as a 0.5% loss of margin.
I know this is obvious for most of you, but you’ll be surprised at the number of people who see the headline of 4.3% fuel and inflation surcharge and immediately think they’re losing that much margin!
So as I said, I think it’s a very reasonable increase. Especially when you consider how cheap Amazon’s FBA fulfilment fees are to start with!
I showed this in black and white in our Fuflilment Centre Showdown post last year where I tested 4 different UK based fulfilment centres and compared their costs to Amazon for a theoretical product.
And the closest any of them could get was 61% MORE EXPENSIVE than Amazon (with the highest being 255% more).
I hope now you can see why I consider 4.3% to be a very small increase!
What’s the best way to deal with the fee increase?
So rather than get hysterical and start bashing greedy Amazon, let’s see what we can do, if anything, to offset this fee increase.
And really you only have two options here:
Accept a lower margin
This is really the do nothing choice, where you simply absorb the additional costs and keep your prices the same.
Increase prices to maintain your margin
The other option is to increase your prices to keep your gross margin the same.
If you’re using a sales and P/L dashboard, such as Shopkeeper, which is what I myself use and recommend, then you’ll be able to see exactly what affect this fee increase will have on your margins as they include a full fee breakdown for each product.
Should you increase your prices on Amazon?
Which option to choose really depends on your specific business and product and it’s impossible to give one blanket recommendation.
You have to consider your competitors (have they increased their prices?), where you’re positioned in terms of pricing vs other products, if you’ve already increased your prices recently (due to increased shipping costs for example) etc!
Generally speaking I would try to increase prices rather than sacrifice margin, especially if you haven’t done so recently and are presumably already absorbing recent supply cost increases. Sadly it’s the year of inflation so customers will be used to rising prices and it shouldn’t negatively affect your conversion rate and sales.
So that’s all there is to it for now! For most of us these fee increases won’t have made a significant difference.
If however you’re one of the unlucky sellers whose product has now fallen into a different size and weight tier then you may be looking at a much bigger increase in your fulfilment fees.
In that case stay tuned as I have a future blog post planned that could potentially save you a lot of money!
Product pictures can make or break your Amazon business.
Long-time blog readers will now that I’ve been stressing for years now how product photography is one of the most important aspects of selling online, and this applies more than ever with Amazon.
And don’t think I’m exaggerating here! For me product pictures and reviews are the two most important factors when it comes to being successful on Amazon. Even the listing and description, which some people agonise and spend hours over, are nowhere near as important.
Just think about it – customers can’t see or touch or test your product, so what are they relying on? Reviews and pictures!
If your product pictures are premium, then naturally buyers will assume your product itself is premium. So not only will you be able to get away with charging a higher price, you’ll also have a higher conversion rate.
And the importance of this can’t be overestimated – a high conversion rate increases the profitability of everything you do on Amazon!
For one thing it automatically means you make more sales and money off the bat as a listing with a 15% conversion rate will make 50% more sales vs a listing with an average Amazon conversion rate of 10%.
But this also has the knock-on affect of making Amazon love your product and bumping it higher and higher in the search results, meaning… more views and more sales!
And it doesn’t stop there. A high conversion rate can also be the difference between a profitable and unprofitable PPC campaign. Again, it’s all simple maths here – if you pay on average £0.10 per click for 500 clicks a day and make 50 sales from that (a 10% conversion rate) that gives you a PPC cost per sale of £1. But if you instead get 75 sales from your 500 clicks (a 15% conversion rate) that means you’ve lowered your PPC cost per sale to £0.67.
This all makes a HUGE difference when it comes to scaling your Amazon business.
So what am I getting at with all this? Well it’s simple really and the main point of today’s blog post – don’t cut corners when it comes to product photography for your Amazon FBA business – get the BEST pictures that you can.
And yes, that means NOT doing it yourself at home with a smartphone camera! The days where this was good enough are long gone and you need to use a professional for this.
How do you choose the best Amazon product photography company?
Now over my many years of ecommerce, eBay, and Amazon selling I’ve personally tried a lot of different product photography companies – ranging from big studios to small freelancers and even semi-amateurs.
And honestly I’ve had much more success with some of the “smaller” companies, especially local photographers who you can even meet with and discuss what you want to achieve with your product pictures.
For me the bigger photography agencies just don’t offer the level or service and customisation that’s needed for Amazon sellers to create a unique but premium look.
However, using local photographers and smaller freelancers, who are often one man (or woman!) bands, also has the problem of them not always being available, moving away or even stopping their business altogether.
And that’s exactly what happened to me. Margaret, of fineartimaging.com, who I had been using and recommending for years, retired and closed her business.
So last year I started searching for a new company to use for my own projects and also to recommend to my blog readers and Amazon Sharks members.
And from hours of testing and research – here are my recommendations:
This is my no.1 choice as when it comes to quality vs cost, you just can’t beat a good local photographer.
This is especially true when you have multiple products and go back to them often as once you build a good relationship and they know what kind of pictures you’re looking for, it’s plain sailing.
For me this is the main advantage of using a local photographer vs using studios where you usually need to give a lot of input in terms of ideas and copy for your pictures. Also the quality is way more consistent as it’s the same photographer every time. This was a big issue I had testing some bigger companies where the outcome was just too random.
Unfortunately the biggest downside to this option is that finding a good local photographer is sometimes easier said than done and it does require some work on your part as you have to look at local classified ads, check out forums etc. But don’t let that put you off as if you can find one you’re set and this is my no.1 recommendation for getting the best product pictures possible without breaking the bank.
Product Photography Studios
This is my second recommendation, which may be surprising after all the negatives I talked about BUT they can all be minimised by choosing smaller companies that specialise in Amazon product photography.
And this is a big point because never mind the technical requirements, the style of effective Amazon product pictures is different to even Etsy or your own ecommerce store.
Of course it’s not as simple as just searching for “best Amazon product photography companies” as you’ll be met with thousands of results – most of which are completely rubbish. Seriously, I won’t post pictures and attack businesses unnecessarily but so many of the options I looked at are just terrible. And if that’s what they choose to put in their portfolio then I’m scared to even see the normal results!
But thankfully you don’t have to go through this from scratch as I’ll start you off with a few recommendations for Amazon product photography studios in the UK:
Photography Works offer 3 different Amazon image plans, but for what we’re looking for we’re only really considering the Conversion Booster PRO as simple white background images won’t be enough to stand out against the competition.
This costs £299 and for that you get 7 branded images for your Amazon listing.
One important point to note here, you can’t have any branding on your main image and this will lead to your listing being suppressed so be careful with this. I’m sure Photography Works are well aware of this but I wanted to point it out just in case!
Overall I’m really pleased with the quality of their portfolio. That, along with some very reasonable pricing, makes them a solid recommendation.
Photograph My Product again offer 3 different packages for Amazon sellers:
And what I really like about their options is that they all include a lifestyle image! So actually in this case you could quite happily go for the Starter Pack as it includes 7 pictures in total in a variety of styles.
And for £225, considering the quality of their portfolio, it’s another a great option for your Amazon FBA product photography.
Now I wasn’t 100% sure about including this last option, for two reasons.
One, because they really specialise in clothing and jewellery, and two, because as I covered in our product photography test a while back, I find their images to be a bit too “clean” when we’re looking for something more lifestyle focused (think Instagram pictures here as that’s what really sells your product).
But there’s one thing I can’t argue with and that’s the unbeatable pricing they offer, with 3 product pictures starting at £15 + VAT and additional images only costing £2 on top!
So while it’s still not my main recommendation for all the reason written about above, 7 product pictures for your Amazon listing for £27.60 is a crazy price and a solid budget option for people that don’t have £300+ to spend here.
And there you have it!
As I talked about, I have had some great success using local photographers so I always suggest trying to go down that route initially. But if you’re having no luck there then here are some great options to consider.
As always I’d love to hear your thoughts and suggestions so if you have a product photographer that you’ve used and recommend, please feel free to share them below for other blog readers to see as well.
In today’s post I want to share a quick tip that I’m shocked the majority of Amazon sellers don’t seem to know about – how to remove negative reviews! And this is something that really does work 99% of the time.
But before you get too excited I’m talking about seller feedback here – NOT product reviews.
Product vs Seller Reviews on Amazon
For those who don’t already sell on Amazon, there are two types of reviews you can get for an order.
You can get seller feedback, where the customer rates you as a seller, and you can also get a product rating / review.
Now back in the eBay days seller feedback was so important – but on Amazon it really isn’t as unlike eBay you can’t even see the seller rating on a product page.
You have to go to the seller profile for that:
Product reviews on the other hand are to me the no.1 factor when it comes to your Amazon business. Why? Because they affect everything – starting with your conversion rate!
It’s doesn’t take a genius to figure out that if a customer is faced with two products at a similar price point, one rated 5* and one rated 4, they’re going to choose the 5* product… that’s just common sense.
And the knock on effect this has is huge!
A higher conversion rate means Amazon will improve your search ranking, leading to more traffic and more sales.
A higher conversion rate will also improve your ad performance, again leading to more traffic and more sales at a lower cost.
I can’t overestimate how important product reviews are for your Amazon business.
But that doesn’t mean seller reviews don’t matter at all and you can simply ignore them, not at all – I still suggest keeping a close eye on your seller feedback and removing any negative feedback when possible.
And it is nearly always possible when you’re using FBA to sell.
Which Reviews Can You Remove?
Though Amazon state that they do “not remove customer feedback even if it is unwarranted or the issue has been resolved” they also say “there are some situations when Amazon will remove or strike through customer feedback. In such situations, if your request is granted, the impact of the feedback will be removed from your feedback rating and Order Defect Rate (ODR).”
So let’s take a closer look at what these situations are:
• The feedback includes words commonly understood to be obscene or profane. • The feedback includes seller-specific, personally identifiable information, including email addresses, full names or telephone numbers. • The entire feedback comment is a product review. For example, “The Acme Super-Widget lacks the sharpness and speed of the Acme Ultra Widget.”
However, if the comment contains both a product review and feedback about your service, we will not remove the feedback. For example, “Seller’s delivery service was very slow, and the Acme Super-Widget lacks the sharpness and speed of the Acme Ultra Widget.”
Striking of feedback
Amazon might strike through feedback in the following cases:
• The order was fulfilled by Amazon: The entire comment relates explicitly to delivery experience for an order that was fulfilled by Amazon (FBA). In addition to the strike-through, the following statement will appear: This item was fulfilled by Amazon, and we take responsibility for this fulfilment experience.
• The order was shipped using the Buy Shipping service: The entire comment is related to a delayed or undelivered order, which you dispatched on time by using Buy Shipping services. In addition to the strike-through, this statement will appear: “The fulfilment issues associated with this order were not due to the seller”.
So there you have it, straight from Amazon themselves.
To sum it up, if your negative feedback is a product review, which is in my experience 80% of any negative feedback left for you as a seller is, Amazon will remove it.
And if your order was fulfilled by Amazon and the negative feedback is about the order fulfilment, Amazon will also remove the feedback (well in this case technically they strike-through it).
As there are practically no scenarios where negative feedback will be related to something other than the product or order fulfilment, that means it’s in fact quite easy to maintain a 100% seller feedback.
How to Remove Negative Reviews on Amazon
Just bear in mind that you need to request the removal within 90 days and it needs to be done via the Feedback Manager. Amazon are very explicit with this, even stating that contacting support teams via Contact Us to request feedback removal can result in account deactivation.
This seems extreme to me and I’ve never actually heard of that happening but better to be safe and follow Amazon’s guidelines here!
So simply head over to Feedback Manager within your Seller Central account. There you’ll see a list of all your recent feedback and beside each one there’ll be an Actions tab.
If you click on this you’ll get two choices: Post a public reply and Request removal.
And that’s all there is to it! As always when dealing with Amazon seller support they may sometimes answer saying it can’t be removed, even when it clearly should be. Simply reply politely stating that according to their own policy, which you can quote or link to, the feedback should be removed and 99% of the time it’ll be done.
So that’s it for today’s quick post and tip.
As always if you have any questions or comments I’d love to hear from you so email me at email@example.com or post below and I’ll personally get back to you.
I know the blog posts have been sporadic recently as I’ve been incredibly busy dealing with some personal issues. But I have some very big plans and ideas for this blog coming up which I’m very excited to share with you all!
This includes launching a brand new product on Amazon FBA and tracking the progress every step of the way on AndrewMinalto.com, right from the product research stage all the way to the launch and beyond.
I’m still considering whether to do it myself or possibly even select one of my Amazon Sharks members or blog readers to do it. That way it would make a perfect live case study for starting an Amazon FBA business in 2022, where you can see exactly what’s involved every step of the way.
Either way I’m very excited!
But more on that very soon as it brings me perfectly to the topic of today’s post.
How much does it cost to start an Amazon UK FBA business?
But I’m warning you in advance that the answer might not be what you want to hear! And I’ve spoken about this before, how I don’t agree with some “gurus” who claim you can start an online business with next to no investment needed.
Of course it is true that we’re in an age of opportunity for business and it’s not like the old days of bricks and mortar where you needed a lot of money to get started – for rent, staff, equipment, etc. BUT that doesn’t mean you can set up your own private label business on Amazon for £100.
Sorry, it just doesn’t work like that.
You’ll notice that I mentioned private label specifically as that’s what I’m talking about in this post. Flipping or arbitrage is a whole other matter and with that business model you CAN start with pretty much any amount (and start turning a good profit almost immediately as we showed in this blog post).
Also, if you’re not completely clear on the differences between private label and flipping then take a look at this post where I covered it all in detail.
But back to the question at hand, and rather than me just giving a blanket figure of how much you need, let’s instead go through the costs step by step as there’s of course a lot of variation depending on the product, and that way you can see where it all adds up.
Generally speaking I like to get 3 or more samples from manufacturers that pass my initial filtering system and this costs about £50-£75 each including shipping via courier. It can be a lot less and sometimes even free if you’re simply sampling one of their own products, but I want the sample to be as close to my final product as possible. That means OEM branding and custom packaging and any other changes I require.
At £75 x 3, that gives us £225 for samples.
I hope you can see why I get frustrated at the people who say you can start selling on Amazon with a few hundred pounds as we’ve just spent over £200 simply to help us choose a manufacturer!
Speaking of custom packaging, this is a must have for your Amazon business where branding is so integral to the success of your product launch. You may also need a logo and some other work done, but in total £150 for design work is enough to cover everything.
Product Inventory – Product Cost, Shipping, and Taxes
This is the big one – the cost to manufacture your product in China and get it shipped to you, including all import taxes that are due.
This can of course vary hugely but working backwards from an ideal product on Amazon can give us a pretty good idea of the initial product cost, so for example something with a £15-£20 selling price and 35% margin would like something like this:
Item cost – £5 / $6.50 x 500 = £2,500 / $3,250
Most real manufacturers will ask for a minimum order of 1,000 units but if it’s your first order with them you can easily negotiate that down to 500, so that’s what we’ll use for our order size.
Shipping – £1,000
For our shipping we’ll be using a freight forwarder as they handle everything when it comes to the import and paperwork, so you won’t be hit with any nasty extra fees.
Then there are a few other small costs that you need to get to this point and they are:
Jungle Scout Software
My long time blog readers will know I never suggest getting a ton of software when you’re just starting out as you don’t need most of it and if anything it just makes your life more complicated.
The big exception to this is Jungle Scout, which you 100% need to do proper product research and validation.
They have 3 different plans:
While you can probably get by on the Basic, it does have some limitations in terms of product tracking and searches, so I’ll use 1 month of the Suite cost instead, which is £50.
And while we’re on the topic of subscriptions that you need to sell on Amazon, a GS1 membership is a must have!
The Starter 10 plan is more than enough for most new product launches, adding another £60 on to our costs.
So we’ve now reached the point where we have our products in hand in the UK and our total cost so far sits at £4,860.
But unfortunately there’s still more to go before you’re ready to start selling on Amazon!
You need to register your Trademark to be able to apply for Amazon’s Brand Registry, and this costs £170 via the Intellectual Property Office.
It’s so often overlooked by new Amazon sellers who think they can do it themselves. After all how hard is it to take a nice picture when we all have high end smartphone cameras to hand? But product photography can make or break your Amazon product launch and even a tiny difference in your conversion rate can mean thousands and thousands of pounds in additional sales and profit.
So please don’t be penny smart pound foolish and skimp when it comes to getting professional product photography done for your Amazon business – I’m talking proper lifestyle pictures and branded infographics here!
£300+ is a good budget to set aside for this.
You’re now ready to send your product in to Amazon! And with the trademark registration and product photography on top, we’re now sitting at £5,330 spent.
And last but not least we have the product launch costs:
Amazon VINE Product Giveaways
Reviews are absolutely integral on Amazon but conversely they’re also very hard to get as Amazon customers just don’t leave reviews that often.
But we can’t simply wait for our product reviews to come in naturally as they’re a big factor in people’s buying decisions, and this is where Amazon’s Vine program comes into play.
I’ve covered this program in detail in separate blog posts but long story short is that you’ll give away up to 30 of your product in exchange for product reviews.
You can of course opt for less, but as long as the product cost isn’t prohibitive, I suggest doing the full 30. In our theoretical case that means 30 x £8.75, which is the landed cost per product, so £262.50 in product giveaways.
Amazon Sponsored Products Advertising
I considered leaving this one out as technically you can launch your product without it and wait for your sales to grow organically but the whole point of this post is to show you the true costs of a real Amazon FBA product launch and a PPC budget is vital here.
Of course the idea here in the long term is that you’ll be covering PPC costs from product sales but initially they won’t be profitable so you need to factor that into your budget. You can be more aggressive but £10 a day times 30 days will set you up nicely. So that’s £300 for advertising on Amazon.
And there you have it!
That brings us to a grand total of £5,892.50
Amazon Sponsored Products
I honestly think that’s a very realistic figure but as always I’d love to hear your thoughts. How much did it cost you to launch your first product on Amazon? Was it more or less than our £5,900 figure?
If you have any questions, or even your own cost cutting tips to share, then feel free to comment below and I’ll personally get back to you.
Manual campaigns are an important tool in your Amazon Advertising toolbox. In a recent post I covered PPC advertising on Amazon and why it’s an integral part to any successful product launch that so many people skip out on, and then wonder why they’re not getting any sales and simply can’t climb up the search rankings!
In that post we covered everything you need to know to get started with advertising on Amazon and we walked through the steps needed to create your very first Amazon sponsored products advertising campaign, so if you’re completely new to this I suggest you check that out first.
There’s a few very good reasons why I always suggest starting with an auto campaign, rather than a manual, even though the manual campaigns are more important and profitable for us in the long run.
Why do we need to start using PPC Auto Campaigns?
1. It’s the easiest and fastest way to start PPC on Amazon
With an auto campaign you really don’t have to do much to get started – simply create your campaign, set your max bid, and off you go! Amazon takes care of the rest and you don’t have to provide them with a list of keywords to target.
2. It provides valuable data to use in our manual campaigns
There’s simply no tool or software out there that will give you every possible keyword to target, it’s impossible. So no matter how meticulous you are, you’ll always miss some. And this is where the auto ad campaigns come in; you can download a special report via Amazon called a Search Term Report, which will not only show you what keywords have been used but also how many clicks and sales they generated!
This is incredibly valuable real life data that you can use when building the rest of your advertising campaigns on Amazon.
3. Auto PPC ad campaigns can still be profitable by themselves
While in most cases I would happily run my auto ad campaigns at a slight loss, purely for the data and added sales velocity, often they can still be profitable by themselves!
So it’s a definite win-win situation here.
And that’s why we always start with an auto campaign and then let it run for a while before moving on to creating a manual campaign as well.
How long should you let the auto campaign run for?
Well this really depends on your max bid and daily budget as ideally you need 100+ clicks before doing anything further.
It obviously goes without saying that you’ll get 100 clicks faster with higher bids and a higher daily budget as Amazon will show your ads more…
As covered in Part 1 of this guide, I suggest a minimum of £20+ for your daily budget and then going a few pennies above Amazon’s suggested bid amounts.
You can be confident you’ll get a good amount of clicks at those rates and it should only take a week or two for you to get enough data. Of course if you’re being more aggressive with your launch and have a bigger budget, then go for £30-£50 daily to speed up the process.
Sometimes you’re even able to do this on a smaller budget if you see that your auto ad campaign is delivering a profitable ROI by itself, then it’s safe to increase the daily budget as you’re making money on it anyway!
Alright, let’s now move on to the real action – creating your first manual ad campaign on Amazon. I already covered the process for creating an auto campaign step by step in Part 1, and they’re largely the same, so I won’t repeat it all now.
How to create a Manual Campaign?
Of course the main difference is that this is a manual campaign, so change the name to “Product – Manual” and make sure you select manual targeting as well:
And you’ll see that this brings up two more tabs that we didn’t get with our auto campaign:
We’re going with keyword targeting, which as the name suggests means our ad is shown when people search for specific keywords on Amazon.
Then in the next tab where we can add our keywords, you can see that there are three match types we can choose from:
And it’s really important that you understand the differences before we move on.
Three Different Match Types for Keywords You Must Master
1. Broad match
When you use this keyword match type, Amazon will show your ad for any search that contains your provided keyword(s), regardless of the order, if it’s plural etc. And it will also show your ad for searches of related keywords.
For example, if my keyword was “mechanical keyboard”, this would show up for searches such as:
Keyboard and mouse combo
As you can see a lot of the searches are clearly for a different product, even if they do contain the word keyboard. And this is why broad match is the cheapest keyword match type, as they’re less targeted and relevant, which means a lower conversion rate and higher ACoS.
2. Phrase match
With this keyword match type, your ad is only shown when the keyword is used in full and in the same sequence, such as:
Blue switch mechanical keyboard
Gaming mechanical keyboard
Mechanical keyboard for girls
Mini mechanical keyboard
So the search terms with phrase match are much more relevant and it removes a lot of the false positives we saw with broad match. As a result the bid prices are generally higher, but so are the conversion rates.
3. Exact Match
Lastly we have exact match, which means my ad will only show when someone searches for the exact keyword I’m targeting, so “mechanical keyboard”.
This is obviously the most relevant and targeted match type and will give the highest conversion rate. Now I know what you may be thinking – “why would we even consider using broad or phrase match? After all exact match means we won’t show up for any irrelevant searches and we’ll get the highest conversion rate…”
Well true, but you’ll miss out on loads of traffic like that!
Like I said before, it’s simply impossible to find every good keyword that people use to search for your product – there’s just too many variations and it would be a full time job constantly researching and updating your list.
Not what we want to be doing!
But with broad and phrase match we can still target these other searches and make extra sales.
Yes they will in general have lower conversion rates due to some false hits, but this is usually made up for by the fact that they have lower bid prices as well.
So long story short – we’ll be using all 3 keyword match types in our ad campaigns.
But I do still like to keep them all separate to make tracking and optimization easier, so what I do is create a new ad group for each match type.
Creating an ad group for each match type in Amazon Advertising
Again, just stick to the same simple naming we used for the ad campaign. So for my ad group name I just use “Product – Manual – Exact”:
Just to go over it again – we create 2 ad campaigns for each product. One automatic and one manual. And then under the manual campaign we create three different ad groups (one for each keyword match type). I hope that’s all clear!
After selecting the product you want to advertise, it’s then time to add keywords!
Now Amazon will give you a long list of suggested keywords, which is a perfect starting point. All you have to do is click add and they’ll be added to your keyword list:
This really depends on the product but generally I suggest using the top 5-10 suggested keywords as a starting point.
But as well as that you should also have a good-sized list of keywords of your own from your own product research as well as from the auto campaign that you’ve been running for at least a week. Can you see now why I said it’s going to come in very useful when creating our manual campaigns?
To add these keywords as well, just click on enter list and enter them one by one (one on each line):
Simply click add keywords and they’ll also be added to your list along with the suggested bid. Sometimes certain keywords won’t have a suggested bid, so just judge by other similar keywords and put something that makes sense.
Remember we want to adjust all of the bids to be a few pennies more than what Amazon suggest, so do that as well.
Lastly we have the negative keyword targeting tab, which we won’t use for our exact ad campaigns. This will be very useful later on for our broad and phrase ad groups, as we want to remove any keywords that we can see are performing very badly.
And that’s it – click launch campaign and you’re done!
Congratulations, you’ve now got both automatic and manual ad campaigns (with three different ad groups) running on Amazon.
The next step is to again let them all run for a week. And that’s where the fun starts – optimisation!
Optimisation is what separates successful Amazon ad campaigns, that become profit making machines, from failed campaigns that just burn money day after day.
So stay tuned for part 3 of this guide, where I’ll share the exact strategies I use to optimise my Amazon PPC campaigns.
Just as the summer heat was starting, Covid cases were dropping and everything was starting to look good again – Amazon threw us a real curve ball with their new inventory storage limits!
What Amazon FBA inventory limits mean
Here is a recent question on the Amazon Sharks FBA group that really nails what’s going.
Amazon Sharks FBA group sample question
Yes, Amazon have basically changed their storage limits from being ASIN based (i.e. limits for each product you hold at Amazon’s warehouse) to being storage type based! And this means that your storage limits include all ASINs within each storage type, which are split into 4 categories:
Standard size storage
Now this by itself wouldn’t be an issue IF Amazon had set reasonable limits but instead many sellers have been hit with a blanket 1,000 unit limit per storage type.
Again, 1,000 units sounds manageable for most products but don’t forget that this is for all your ASINs. As another Amazon Sharks member has said:
“I’ve had a standard reply from Amazon but no resolution. Seems to me that if we have 10 products in the same category. We have stock limit of 100 each. For me that means restocking weekly and I think Amazon don’t take into account delivery and time in the warehouse so I’m sending smaller quantities on a regular basis.”
So depending on the amount of SKUs you sell via FBA this storage limit is in effect much smaller. 10 SKUs split evenly means just 100 of each, which is tiny!
How long will the inventory reduction limit last?
Well the good news is that Amazon have assured us that these category based inventory limits will be lifted from July 1st, but only for sellers that have an Inventory Performance Index (IPI) of 500 or more:
Your Inventory Performance Index (IPI) score is 608. Because your IPI score is at or above 500, you will not be subject to storage limitations for standard-size, oversize, clothing or footwear inventory starting 01st July 2021. However, all products are subject to restock quantity limits. For more information, refer to Restock limits by storage type: Frequently asked questions.
Visit the Inventory performance dashboard today to continue improving your IPI score.
The Fulfillment by Amazon team
I’ve written about the Inventory Performance Index in detail before but long story short it’s an Amazon metric that uses multiple factors to “gauge your inventory performance over time” and give you a rating between 0 and 1,000.
To check your IPI login to Seller Central then click the Inventory tab and select Inventory Planning.
Then click on Performance and you’ll see your current IPI as well as a little graphic that shows you your “top influencing factors” and whether they’re Poor, Fair, Good, or Excellent.
Top influencing factors
And there are 4 categories here that directly affect your IPI:
90 day sell through rate
In stock inventory
But okay that’s all well and good if the limits are being lifted for July but what do we do in the meantime?
What are your options as an FBA seller hit with these reduced storage limits?
Restock your FBA Inventory Regularly
This is really the most straightforward solution. Say you normally sell 20 units a day, so 600 a month, and would usually ship Amazon 1,200+ units at a time – giving you enough stock for 2 months. Well now you might have to send only a months’ worth of stock to Amazon’s fulfilment centres and simply send them shipments more often.
But one very important point – this doesn’t mean you should be reducing your order size with your supplier!
If you normally order 2,000 units at a time, don’t cut that in half because you’re sending much less to Amazon! Even if this doesn’t increase your price per unit with the manufacturer it will definitely increase your shipping cost per unit and therefore cut into your margins.
Especially now where freight charges are still extremely high and show no signs of coming down anytime soon.
But I know what you’re now thinking, “but Andrew what am I going to do with 1,000 units of additional stock that I can’t send to Amazon?!”
Two good options for FBA Sellers
You either store it yourself temporarily, which means no additional costs, or you pay storage fees at either an Amazon prep center or better yet simply ask your freight forwarder to store it for you and ship to Amazon when needed. Most good freight forwarders will be more than happy to arrange this for you. If you need a recommendation, then speak to either Woodland Group or Westbound Global. Ryan, the director of Westbound, is an Amazon Sharks member and he has a wealth of knowledge in the fulfilment industry, so you’re in good hands!
Now of course this will mean extra storage costs but it shouldn’t contribute a lot to your overall product cost and it’s worth it to know you have stock ready to go in the UK when needed. Please don’t be penny smart pound foolish here and save a bit of money in storage fees only to run out of stock and miss out on weeks of sales!
While this may seem like an easy solution, unfortunately it won’t help in all cases.
For one thing if you sell very high quantities, say 1,000 units a week, then while in theory you could ship to Amazon weekly, 1,000 units at a time, in practice you could easily run into delays with your stock being unloaded at fulfilment centres. And there’s no easy way around this. It’s hard to guess how long it’ll take and even then it’s not as if you could time it by shipping beforehand as you won’t even be able to create the shipment!
Similarly, if you have a lot of products on Amazon then it’s going to be very hard to keep them all adequately stocked.
If you fall into one of these two situations then don’t despair – there are still a few more options that you can try.
Request an Inventory Limit Increase
You can do this via your account manager (if you have one) or simply through seller support. I’ve been told by a few people that this worked for them but honestly I’m very sceptical. Anyone who has dealt with Amazon seller support knows how inconsistent they are and unless you get very lucky I suspect any request to increase your inventory limits will be met with a generic reply about them being lifted on July 1st.
But still, you don’t really lose anything by trying so give it a go.
If it doesn’t work then one final option is:
Amazon Seller Fulfilled Prime instead of FBA
I haven’t covered this programme yet on my blog for one simple reason – I’m actually not a huge fan of it!
Honestly it reminds me too much of the dark eBay days of handling all the postage and packaging yourself. I happily pay Amazon’s FBA fee for them to take care of all of that for me.
BUT it is a worthwhile option for products that aren’t suitable for FBA – slow moving products or when you don’t have a lot of sales history and can’t send in enough stock to Amazon.
And in that way it’s a perfect temporary solution to the inventory limit problem so many sellers are now facing.
If you do go down this route then you can either fulfil the orders yourself or if you want to be completely hands-off there’s still the option of using a fulfilment centre in conjunction with SFP.
On that note I’m planning to test a few Amazon specific fulfilment centres / prep centres and I’ll have a dedicated blog post on this, as I know it’s something a lot of people are interested in.
If you’re in the very unfortunate position where shipping stock in regularly isn’t feasible and you also don’t qualify for seller fulfilled prime, then unfortunately there’s not a lot you can do.
You should of course prioritise your best selling SKUs and you’ll simply have to hope for the best when it comes to the prep centre check in times.
And it goes without saying that you shouldn’t launch any new products during this time as it’s too risky when you consider the opportunity cost of using up your storage limits.
One final tip would be to pause / lower your PPC campaigns and rely completely on organic sales. That way you can potentially avoid running out of stock and then even if you do, at least you had more sales at higher margins…
Any long time blog reader will know that I’m the biggest fan of Amazon you can find. I simply love the private label business model and switching over from eBay has been one of the best business decisions I’ve ever made. But that doesn’t mean I won’t be honest with my blog readers and I have to say that no notice being given for this was unbelievable.
There should have been at least two weeks to give sellers enough time to plan and manage their stock. The fact that people had shipments that were already on their way and were then rejected because they would’ve pushed them over their inventory limits is ridiculous.
But at the same time it’s important to always calmly assess such situations and decide the best thing to do for your business. The good news is that it should all be under control by July 01st. I know a lot of people are dubious about this but the timing fits perfectly, just after Prime Day when a lot of warehouse space will open up, so I’m optimistic.
If you have any tips or thoughts to share then feel free to comment below or email me directly on firstname.lastname@example.org and I’ll personally get back to you.
One surprising thing about selling on Amazon is that they don’t require you to have any insurance, even when you’re registered as a business seller.
At least that’s the case when it comes to selling on Amazon UK, with Amazon US on the other hand once you reach certain turnover amounts, you’re required to have insurance.
You might be thinking “great!” – after all, why spend money on insurance when you don’t even have a store or ever come face to face with customers, it’s not as if someone can slip on a wet floor and blame you for example.
While that may be true, there are still many reasons why you need insurance as an online business, as you’re liable for any damage or injury caused by any product you sell, whether that’s from your own eCommerce store or via an online marketplace like Amazon, Etsy, or eBay.
For example, if you sell phone cases, someone could claim it caused their phone to overheat and catch on fire. If you sell silicone cutlery, someone could claim it caused them to become sick. If you sell blankets, someone could claim it caused a reaction on their skin.
Yes, Amazon FBA Sellers Need Business Insurance, Too
I hope you get the point! It doesn’t matter what the product is or how safe it seems, all it takes is one accident and one person to blame you and your products and you’re facing an expensive lawsuit that could potentially destroy your business.
And in fact, this can affect more than just your business! As I covered in our recent Sole Trader vs Ltd. Company comparison, one of the negatives of operating as a sole trader is that you’re personally tied to your business – you’re considered one legal entity. This means that any business liabilities are also personal liabilities and any personal assets are also business assets, so if you were found liable and ordered to pay £1,000,000 in compensation, that could potentially be recovered from you personally, even if your business doesn’t have the money.
I’m not trying to scare you with this horror scenario, but it’s important to understand how integral insurance is as an online seller – it’s not something you should just leave for later and hope nothing goes wrong in the meantime!
And one other important point – a lot of people mistakenly believe that it’s the manufacturer’s responsibility and as resellers we don’t have anything to worry about, but this is completely wrong and doesn’t apply to private label products!
When you’re ordering products from China and importing them into the UK or EU, you’re considered the manufacturer and are 100% legally responsible. This is exactly the same thing when it comes to product testing and certification, you can’t simply leave that to the manufacturer in China and accept whatever they tell you as it’s your responsibility.
What Type of Insurance Do You Need?
Now that I’ve gone over why you need insurance, let’s talk a little about the different types of business insurances for amazon sellers and what you need to cover yourself as an online seller.
Product Liability Insurance
Product liability insurance is the main type of insurance you need as an Amazon FBA seller and covers you against claims made for personal injury or damage to property caused by a product your business designed, sold, or supplied.
The insurance covers you for both the cost of any compensation you have to pay and also for any legal fees involved in defending yourself against any claims.
Public Liability Insurance
Public liability insurance is the main type of insurance for traditional retail businesses and covers you against claims made for personal injury or damage to property caused by your business. For example, if someone slips in your store due to the floor being left wet. Public liability insurance also covers you if you’re carrying out work at a client, for example if you’re a plumber or electrician.
As an online, seller you don’t really need public liability insurance as obviously you / your business don’t come into contact with the public but most insurance providers bundle together product and public liability insurance as a package and you can’t just get one or the other.
What Level of Cover Do You Need?
There are no real set amounts for this and it will depend on the type of business you’re running and what products you sell.
However, most providers offer cover starting at £1m, going up to £5m and above. These may seem like high amounts but it’s better to be safe and you have to bear in mind that any claims can include medical costs and loss of income so personally, I would suggest looking at £1-£2m in cover as a minimum.
More Insurance Types for Amazon FBA Sellers
While product and public liability are the main types of insurance there are also some additional options which you can include. Some are only really needed in special circumstances, some are a waste of money, and some are definitely worthwhile having – all in my opinion of course. But so you can make your own mind up let’s quickly run through them one by one.
For me stock insurance is a must have for any online business as it covers your products if they’re stolen or damaged.
This is especially important if you store stock at home before sending it to Amazon’s fulfilment centres as this won’t be covered by your home insurance. What happens if a water pipe bursts and destroys your stock? Or someone breaks into your home and vandalises it, damaging stock?
In fact, on a separate point it’s very important that you inform your insurance provider that you’re storing products at home as they may use it as an excuse to reject any claim you make, even if it’s unrelated to your business/stock!
Employers’ Liability Insurance
Employers’ liability insurance covers you against any injury or illness of an employee, caused by working for you. For example, if you hire someone to do the final quality control and prep your shipments to be sent to Amazon’s fulfilment centres and they injure their back while moving boxes.
Whether or not you should get employers’ liability insurance is very simple, and in fact you don’t even have a choice as it’s a legal requirement if you have anybody employed by you / your business. And if you don’t then of course it’s not needed!
Business Interruption Insurance / Business Income Insurance
Business income insurance covers you against any loss of income due to damage or theft. For example, if your laptop is stolen and you’re unable to trade, losing sales and income as a result.
Personally, I don’t see the value in this insurance as it’s hard to imagine a scenario where it would be needed.
Legal Expenses Insurance
Legal expense insurance is different to the legal cover which is already included within your product and public liability insurance and it specifically covers your business if a claim is made against you by an employee or you’re subject to an HMRC investigation.
Again, this isn’t something that I feel is needed for me and my businesses personally but it’s an option nonetheless and should be considered if you have employees.
So there you have it. Those are the main types of insurance options for UK businesses. For most Amazon FBA sellers and e-commerce sellers, product liability and stock insurance are all you need, especially when just starting out when you don’t want to be spending large amounts every month.
Who is the Best Insurance Provider for Online Sellers?
Most people I speak to are put off from getting insurance because they’ve heard stories about how difficult it is to get covered if you’re buying products from manufacturers in China and they expect it to cost a lot.
But I’m happy to say that from my experience, both personally and from helping countless Amazon Sharks members, both of those fears are unfounded.
In fact, it’s getting easier and easier as before you had to speak to traditional business insurers and get special customised quotes, but now there are a number of brokers who specialize in insurance for online sellers.
Once again they offer a specialised service for online sellers and you get quotes from multiple insurance providers and I’ve had very good feedback from people who’ve used them, including Amazon Sharks members:
How Much Does Insurance Cost for Online Sellers?
As we’ve already covered, this depends on multiple factors, such as your turnover, what products you sell, where they’re manufactured, the level of cover required, etc.
But generally, for Amazon FBA sellers with one or two product lines, you can expect to pay something around £30-£40 a month. This fits in pretty well with the example quotes given by Simply Business:
Of course, there are other factors to consider such as the excess and specific terms and conditions, so don’t simply go for the cheapest quote straight away!
And that brings us to the end of today’s post. As always if you need any help or have any questions about getting insurance for your own business, then email me and I’ll do my best to help.
Or if you have any suggestions for other blog readers on good companies to use then feel free to post them below.
Otherwise, until next time!
All the best,
Disclaimer – any recommendations or advice given are purely my own opinion. Please always seek professional legal advice if needed.
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.
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:
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.
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.
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