Miscellaneous Things to Think About
On-hand capital is king for most online sellers, and you probably will always want more cash to work with. There are a number of external sources for capital, and some are much more user-friendly towards the Amazon seller.
A bank may make you a loan to purchase inventory, but our experience has been that most sellers who are using FBA run into lots of problems with banks that simply don’t understand how FBA works – Amazon holds your inventory but doesn’t own or control it?
Hence most sellers doing a lot of FBA have not had much success getting loans from traditional banks.
While that may change in time due to the significant total loan opportunity that FBA sellers represent, we anticipate alternative channels to be better funding avenues today.
A couple of years ago, Amazon introduced its own Lending program using internal performance metrics to build its own risk profile of each seller, useful for estimating the likelihood of each seller being able to repay loans of different sizes.
From the very beginning, Amazon wanted to see sellers using such loans to add to their FBA inventory, but legally there are challenges for Amazon to tie the loan opportunities to such behavior.
Nonetheless, due to the competitive rates Amazon was offering, many FBA sellers have been able to grow their businesses on Amazon through these loans.
Unfortunately though, as of December 2014, Amazon was approaching specific sellers with loan opportunities of up to $500k – that is, a seller can’t ask for a loan, or ask for a specific amount; instead Amazon approaches the seller and makes an offer.
If the seller likes the offer (typically a very competitive rate for a 6-month loan), the monies are automatically deposited into the seller’s regular disbursements, and loan payments are taken from regular disbursements.
As these loans are unpredictable in terms of the size Amazon offers and if/when Amazon offers the loan, sellers continue to look for alternative funding sources.
While there is some reworking on the program design under way now, the Amazon Lending program is not yet predictable for sellers or driven by their desire for a loan.
There are several non-bank lenders, such as Kabbage, Lendio, and OnDeck that today make loans to sellers who apply for the loans, and accept the rates offered.
While the rates aren’t always as competitive as Amazon Lending, there is still opportunity for the right seller with access to fast moving product to take out the loan, turn the inventory quickly a few times, and still walk away with a tidy profit for itself.
We anticipate these non-traditional sources of loans to increase in the coming years, unless traditional banks wake up and adjust to risk factors available to evaluate the loan-worthiness of online Amazon sellers.
International Amazon Marketplaces
International Amazon marketplaces: it won’t take long after a new seller to get started on its Amazon.com account that the seller will start seeing messages from Amazon asking it to consider expanding its business into other Amazon marketplaces, including Europe, Japan, India, etc.
As of early 2015, Germany was the largest Amazon marketplace outside the US, followed by Japan and the UK. While the prospects of selling overseas can be exciting, due to:
- new markets
- potentially lower levels of competition overseas
- potentially better margins
…the process of operating an Amazon account overseas is still more complex than most sellers are able to handle without good external support from attorneys and tax advisors.
Things To Consider
If you are considering selling products in these foreign Amazon marketplaces, you will need to:
Right to Sell
Check that you have the right to sell each brand in that country in the European Union (or EU), each brand may have a different rightsholder who can decide whether a reseller has the right to sell a brand in that country. Far too many US sellers that are used to gray market selling show up and are surprised to find their EU listings being pulled down when the in-country rightsholder tells Amazon that the seller doesn’t have the right to sell the product in that country.
Now if you are selling your own brands in overseas marketplaces, you likely won’t have these rightsholder issues, as you are most likely the rightsholder
You are responsible for importation issues…. If you plan to house your product in the country of the foreign marketplace, you’ll have to import the product into that country (whether for your own overseas warehouse or an Amazon FBA warehouse). Either way, it’s up to you to manage the importation and customs issues. There are obviously companies like UPS and Shapiro Shipping (out of NJ – one of Amazon Retail’s own favorite carriers) that can help with the paperwork and processing, but it remains your substantial challenge to manage.
Local Tax Laws
You need to know and respect the local tax laws. Those are not always clear, and likely you will need the advice of a tax attorney. Keep in mind that in some countries, sales tax is already rolled into the product price, rather than charged in addition, so make sure to price accordingly.
You will need a VAT number to sell in the EU. Check to see if you are allowed to sell in China or India (both have local seller rules). Japan offers no English language registration process for a new account, so you’ll need Japanese language skills in house.
In-Language Customer Inquiries
If you don’t plan on using FBA in-country, you will need to be able handle customer inquiries in-language.
Regardless of whether you use FBA or not overseas, if you list products on another Amazon marketplace, you’re responsible for making sure your product feeds are in-language for the local marketplace. And our experience would suggest that Google Translate isn’t going to cut it for you. You’ll need to hire a professional translation service to help here, someone like JRlanguage.com or other local talent.
Customer returns can be tricky, especially if you are using Amazon FBA overseas. Amazon FBA will send customer returns only to an in-country address, so if you don’t have somewhere where returns can be aggregated for you, you may end up having to dispose of all returns.
Banking/ getting paid: Amazon continues to improve the process of how you as a US-based seller get paid for sales on Amazon’s international marketplaces. For its foreign marketplaces, Amazon will handle the currency conversion and wiring of US funds to your US accounts – for this, Amazon typically charges between 3%-3.75% of the transaction. However, note that if you had an in-country bank account, you could likely do the conversion and wiring for under 2% — firms like WorldFirst.com can help to save you money by setting up foreign country bank accounts for you.
EU Unified Account
NEXT I want to mention one specific international Amazon marketplace:
Amazon offers a unified EU account, which allows a seller to create an account on one of the Amazon EU marketplaces (such as UK, France, Germany, Italy, and Spain).
In Europe, Amazon has unified its marketplaces, meaning you can create and manage product offers in one or more of the following marketplaces: Amazon.co.uk, Amazon.fr, Amazon.de, Amazon.it, and Amazon.es
While you still need to turn on those offers in individual countries’ marketplaces, you won’t need to set up separate Amazon accounts for each European marketplace in which you choose to sell.
Fortunately, if you decide to sell on only 1 European marketplace (say, Amazon UK), your products can still be bought by and shipped to customers in any EU country (pending any tax or regulatory issues related to specific items).
And yes, it’s your responsibility to learn and apply those rules should you decide to make your products available on other Amazon marketplaces in the EU. Check Amazon’s Global Selling link on Amazon Services for the latest developments on this type of account.
The Amazon Brand Registry is a program for sellers who manufacture or sell their own branded products.
The program’s goal is to make it easier for sellers with their own brands to manage those brands and list their products on Amazon.com.
Registering your brand with Amazon gives you increased control over your products’ titles, details, bullet points, product description, meta-data, and other attributes.
This program also gives you the ability to list products without UPCs or EANs, like in a case where you make customized items that don’t naturally have UPCs or EANs.
Here are some of the useful situations in which Brand Registry will help your business control the brand equity experience of your brands:
You Sell Your Own Private-Label Products On Amazon
If you sell your own private label products on Amazon, and you want to make sure the content you submitted for your products doesn’t get changed by other sellers, this is a very good way to lock down content.
You Are The Manufacturer, With Resellers On Amazon
You may have other resellers listing your brand of products on Amazon, but they haven’t done a good job of creating accurate or complete content for the site – you can update and lock down that content.
You may also have products that you don’t sell on Amazon, but some reseller will eventually sell the items.
Through Brand Registry, you can create “shell” listings, and lock down the content so future resellers will have good content on existing listings to use.
You Are A Reseller On Amazon, But The Manufacturer Isn’t Managing Its Brand Equity On Amazon
Even if you aren’t the rightsholder of a brand you sell on Amazon, you may be able to get Brand Registry permission to lock down content if you send Amazon a letter of approval from the brand’s rightsholders for you to control and update Amazon listings content on behalf of the brand.
If you go into Seller Central, and search for Brand Registry, you’ll find a link that takes you to where you need to apply for Brand Registry.
You put in a bunch of information demonstrating the specific situation for which you are applying for Brand Registry.
As part of the application process, you will be asked to identify what product dimension you want to use as the unique identifying criteria of each SKU in your brand – something like the UPC, EAN, or possibly the manufacturer part number.
If your brand consists of some products in different package quantities, you must be careful about those multi-packs, as you might be using the same UPC, Manufacturer Part Number, or Model Number for different package sizes of same item…
So you may want to consider using as the key Brand Registry attribute something that combines UPC and Package Quantity – something like “UPC_Package Quantity” as a key attribute, if your product commonly is sold in different package quantities, or resellers create their own package quantities.
As you can pick whatever variable or combination of variables you want as the Brand Registry identifier, think strategically about what you select.
Once you have selected that identifying attribute, it will take a few days for Amazon’s Brand Registry team to review and hopefully approve your application.
Then you are granted Brand Registry permission for your brand, at which point you will need to RESUBMIT all of your feeds on this brand. Only then will the data that you want locked down get locked down by Amazon. And Amazon will actually apply a Global Catalog Identifier (GCID) to each and every SKU in the brands that you have locked down. Each GCID is unique, and will be tied to your third-party seller account such that no one else can change the content that you have submitted (with the exception of product images).
When you RESUBMIT your feeds in Seller Central, be sure to check the error reports. If a GCID is not successfully assigned to your products, you will not have greater control over your product detail pages. To ensure that GCIDs are assigned to your products, verify that your product listings have the following:
- Brand name (case sensitive)
- Key attribute
It’s not important to know WHAT the GCIDs are on your products, but rather to know that there IS a GCID tied to each of the SKUs on the brands that you have had locked down in Brand Registry.
To view your products’ GCIDs in an Inventory Report:
- Seller Central > INVENTORY > INVENTORY REPORT
- Select “Active Listings Report” from the drop-down list
- Once the report has been generated, open the file
- In the report, locate the column titled “product-id”.
- If your product has been assigned a GCID, you will see an alphanumeric, 16-character value with no spaces or hyphens. For example: 5C5CXXX999XXX999
Before we finish this discussion, I want to highlight one very important point:
Any data you submit AFTER being approved will be locked down for only you to change, with the exception of images which any seller can upload.
But IF YOU DO NOT SUBMIT A PARTICULAR COLUMN OF DATA to be locked down, another seller can come along and provide data.
If certain types of data or fields of data are important to you, make sure to submit them in your feed AFTER you are approved for Brand Registry on your brand.