Welcome to Basilio Inc. Build. Grow. Exit Big: The Professional’s Guide To Selling On Amazon. If you’re thinking about starting up your own business as an Amazon seller, stick around, because you’ve come to the right place.
Amazon is the world’s largest ecommerce site. As of 2018, Amazon had $233 billion in revenue, and more than 5 million third-party sellers currently operate across Amazon’s 12 worldwide marketplaces. So selling on Amazon represents a huge opportunity—if you know where to start and what to keep in mind as you build your Amazon seller business. In this comprehensive guide, you’ll learn everything you need to know about selling on Amazon. Here’s what to expect as you make your way through it!
Loans
Loans are essential for online sellers who constantly seek additional working capital to fuel their business growth. However, obtaining loans from traditional banks can be challenging for Amazon sellers, particularly those utilizing FBA. Banks often struggle to comprehend the intricacies of FBA, where Amazon holds inventory without owning or controlling it. As a result, many FBA sellers have faced difficulties securing loans from traditional banks.
Traditional Banks
Although the landscape may evolve in the future, given the substantial loan potential associated with FBA sellers, alternative funding sources currently offer more favorable options. These alternative channels have proven to be more understanding and accommodating toward the unique needs of Amazon sellers. By exploring these alternatives, sellers can access funding solutions that align better with their business models and overcome the limitations posed by traditional banks.
As the lending industry continues to evolve, it’s important for Amazon sellers to stay informed about emerging options and explore funding avenues that best suit their specific requirements. With a strategic approach to securing capital, sellers can enhance their financial stability and propel their businesses forward.
Amazon Lending
Amazon Lending has emerged as a notable financing option for Amazon sellers in recent years. Leveraging internal performance metrics, Amazon has developed its own risk profile for each seller, enabling them to assess the seller’s likelihood of loan repayment across various loan sizes. Initially, Amazon encouraged sellers to utilize these loans to enhance their FBA inventory, but legal constraints prevented Amazon from directly linking loan opportunities to inventory expansion.
However, the competitive interest rates offered by Amazon have attracted many FBA sellers, enabling them to fuel the growth of their businesses on the Amazon platform. In December 2014, Amazon began approaching specific sellers with loan offers, reaching loan amounts of up to $500k. Rather than sellers requesting loans or specifying desired amounts, Amazon takes the initiative to make loan offers to eligible sellers.
If a seller finds the offer appealing (typically featuring a highly competitive rate for a 6-month loan), the loan amount is automatically deposited into the seller’s regular disbursements, and loan repayments are deducted from subsequent disbursements. Despite the advantages, the unpredictable nature of loan sizes and timing of offers has prompted sellers to explore alternative funding sources.
While Amazon is currently working on redesigning the program, the Amazon Lending program remains unpredictable for sellers, as it is not driven by their explicit loan requests or preferences. As the program evolves, sellers continue to seek reliable and predictable financing alternatives that align more closely with their funding needs and growth strategies.
Non-Bank Lenders
Non-Bank Lenders have emerged as alternative financing options for Amazon sellers, offering loans to those who apply and accept the rates provided. Although the rates may not always be as competitive as Amazon Lending, they can still present opportunities for sellers with access to fast-moving products. By leveraging the loan to quickly turn inventory multiple times, sellers can potentially generate substantial profits.
Non-traditional lenders like Kabbage, Lendio, and OnDeck are gaining prominence in the market, and we expect their presence to grow in the coming years unless traditional banks adapt and adjust their risk assessment methods to accommodate online Amazon sellers’ unique circumstances.
International Amazon Marketplaces
Expanding into international Amazon marketplaces is another opportunity for sellers. As sellers become more established on their Amazon.com account, they receive invitations from Amazon to consider expanding their business to other marketplaces such as Europe, Japan, and India. Germany, Japan, and the UK were the largest Amazon marketplaces outside of the US as of early 2015. While selling overseas offers exciting prospects, it involves complexities that most sellers may struggle with without proper support from attorneys and tax advisors. Operating an Amazon account in foreign markets requires navigating legal and tax considerations, making external expertise invaluable for sellers venturing into international territories.
Things to Consider
If you are considering selling products in foreign Amazon marketplaces, there are several important factors to take into account. Here are some key considerations:
Right to Sell: It is crucial to check whether you have the right to sell each brand in the specific country. In the European Union (EU), different rightsholders may have varying rules on reseller rights. Many US sellers, accustomed to gray market selling, have faced issues with their EU listings being pulled down when the in-country rightsholder asserts that the seller lacks the authorization to sell the product in that particular country. However, if you are selling your own brands, you are likely the rightsholder and may not encounter these challenges.
Importation: When planning to house your products in a foreign marketplace, whether in your own overseas warehouse or an Amazon FBA warehouse, you will be responsible for importation and customs issues. While companies like UPS and Shapiro Shipping can assist with paperwork and processing, managing the importation process remains a significant challenge.
Local Tax Laws: Familiarize yourself with and comply with the local tax laws of the target market. These laws may not always be clear, and seeking advice from a tax attorney is advisable. It is essential to understand how sales tax is handled, as some countries include it in the product price rather than charging it separately.
VAT Number: To sell in the EU, you will need a VAT number. Check the local seller rules for selling in China or India, as these countries may have specific requirements. Registering a new account in Japan poses an additional challenge as there is no English language registration process, necessitating Japanese language skills.
In-Language Customer Inquiries: If you do not plan to use FBA in-country, be prepared to handle customer inquiries in the local language. Providing customer support in the local language is essential for a smooth customer experience.
In-Language Listings: Whether using FBA or not, if you list products on a foreign Amazon marketplace, it is your responsibility to ensure that your product feeds are in the local language. Relying solely on automated translation tools like Google Translate is insufficient. Hiring a professional translation service such as JRlanguage.com or local talent is recommended.
Customer Returns: Managing customer returns can be challenging, particularly when using Amazon FBA overseas. Amazon FBA requires customer returns to be sent to an in-country address. If you do not have a centralized location for return aggregation, you may face difficulties or incur costs for disposing of returned items.
Getting Paid: Amazon has been improving the process for US-based sellers to receive payment for international marketplace sales. For foreign marketplaces, Amazon handles currency conversion and wiring of US funds to your US accounts, usually charging between 3%-3.75% of the transaction. However, having an in-country bank account can enable you to handle conversion and wiring at a lower cost, typically under 2%. Services like WorldFirst.com can assist in setting up foreign country bank accounts, helping you save on transaction fees.
Taking these considerations into account will better prepare you for expanding your business into international Amazon marketplaces and navigating the associated complexities. Seeking expert advice from attorneys and tax advisors with experience in international e-commerce can also provide valuable guidance.
EU Unified Account
One specific international Amazon marketplace worth mentioning is the unified EU account. Amazon offers this account option, which allows sellers to create a single account on one of the Amazon EU marketplaces, including the UK, France, Germany, Italy, and Spain.
In Europe, Amazon has unified its marketplaces, enabling sellers to create and manage product offers across multiple marketplaces. While you still need to activate your offers in each individual country’s marketplace, there’s no need to set up separate Amazon accounts for each European marketplace you wish to sell in.
The advantage of the unified EU account is that if you choose to sell on only one European marketplace, such as Amazon UK, your products can still be purchased by and shipped to customers in any EU country (subject to any tax or regulatory considerations specific to certain items).
However, it is important to note that as a seller, it is your responsibility to understand and comply with the rules and regulations of each marketplace where you decide to offer your products within the EU. Stay updated with the latest developments by referring to Amazon’s Global Selling link on Amazon Services.
By utilizing the EU unified account, you can streamline your operations and expand your reach across multiple European marketplaces, tapping into a broader customer base and maximizing your selling potential in the EU.
Brand Registry
The Amazon Brand Registry is an invaluable program tailored specifically for sellers who manufacture or sell their own branded products. Its primary objective is to streamline brand management and product listing processes on Amazon.com.
By registering your brand with Amazon, you unlock a host of benefits that provide enhanced control over your product listings. You gain authority over crucial elements such as titles, details, bullet points, product descriptions, meta-data, and various other attributes. This heightened control enables you to maintain brand consistency and integrity across the platform, ensuring a seamless experience for customers.
One notable advantage of the Brand Registry program is the flexibility to list products without relying on Universal Product Codes (UPCs) or European Article Numbers (EANs). This feature proves especially valuable when dealing with customized items that do not naturally come with these standard identifiers.
Let’s explore some practical situations where Brand Registry can significantly benefit your business in terms of controlling the brand equity experience:
Selling Your Own Private-Label Products on Amazon: If you offer private-label products on Amazon, Brand Registry offers an effective way to protect and preserve the content you submit for your products. By registering your brand, you establish a robust safeguard against unauthorized changes or alterations made by other sellers. This ensures that your brand’s unique identity remains intact and consistent throughout the platform.
Manufacturer with Resellers on Amazon: Suppose you have authorized resellers listing your branded products on Amazon, but they have not provided accurate or comprehensive content for their listings. In such cases, Brand Registry empowers you to take charge and update the content to accurately represent your brand. Moreover, if there are products you don’t directly sell on Amazon but anticipate resellers offering them, Brand Registry allows you to create “shell” listings with locked-down content. This proactive approach ensures that future resellers have access to accurate information, maintaining brand integrity across all listings.
You Are A Reseller On Amazon, But The Manufacturer Isn’t Managing Its Brand Equity On Amazon
Even if you are a reseller on Amazon and not the rightsholder of a brand you sell, you can still obtain Brand Registry permission to lock down content on behalf of the brand. To initiate the process, navigate to Seller Central and search for Brand Registry, which will direct you to the application page.
During the application, you will need to provide specific information and demonstrate the situation for which you are applying for Brand Registry. As part of this process, you will be required to identify a unique product dimension to serve as the identifying criteria for each SKU in your brand. This could be the UPC, EAN, or manufacturer part number.
If your brand includes products in different package quantities, exercise caution to avoid using the same identifying attribute for different package sizes. Consider incorporating a combination of attributes, such as “UPC_Package Quantity,” to ensure differentiation.
The selection of the identifying attribute is crucial, so think strategically about which variable or combination of variables will best serve your brand. Once you have made your selection, the Amazon Brand Registry team will review your application, which may take a few days before approval.
Upon receiving Brand Registry permission for your brand, you will need to resubmit all of your feeds for this brand. Only after this resubmission will the desired data be locked down by Amazon. Each SKU in the locked-down brands will be assigned a unique Global Catalog Identifier (GCID), which will be tied to your third-party seller account. This ensures that no one else can modify the content you have submitted, except for product images.
While resubmitting your feeds in Seller Central, carefully review the error reports. If GCIDs are not successfully assigned to your products, you will not have greater control over your product detail pages. To confirm the presence of GCIDs for your products, check the “product-id” column in the Inventory Report under Seller Central > INVENTORY > INVENTORY REPORT. If a GCID has been assigned, you will see an alphanumeric, 16-character value without spaces or hyphens.
However, it is important to note a significant aspect of Brand Registry: any data you submit after being approved will be locked down for your exclusive control, except for images that can be uploaded by any seller. If certain types of data or specific fields are crucial for you, ensure that you include them in your feed after obtaining approval for Brand Registry on your brand. This way, you can maintain comprehensive control over the content associated with your brand on Amazon, enhancing your selling experience and preserving the integrity of your brand representation.
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