Amazon FBA Third party shipping question(s)

[Johnny1975]

I want to ship products from factories in China to Amazon's warehouse in the US.

I am in neither country, so I would be the third party that gets billed.

I'd like to get clarification on a couple of things.

1) What incoterm would be best?

If I buy the products on EXW it means (as far as I understand), that the factory will make the products, package them, produce the shipping documentation (Bill of Lading, Commercial Invoice and Packing List), and nothing else. So when the carrier arrives, no one will load the products into the truck, because EXW doesn't include loading, and it's not the driver's job. So I'd have a big problem.

If I buy on FOB it means (as far as I understand) that the factory will make the products, package them and sort out the shipping documentation, transport the products to the port and do customs clearance. But then I'd somehow have to coordinate it so that the carrier knows where to pick up the products from. it sounds complicated and unnecessary to do it that way, because...

...if I buy the products on FCA it means (as far as I understand) that the factory will make the products, package them, and then part of the deal is that when the carrier arrives they (the factory) will load them onto the truck, and then the carrier can continue from there.

Is all of that correct?


It seems to me that FCA would be the way to go. But the suppliers in China always express their prices as FOB. Can I negotiate with them to make it FCA (or another incoterm if there's a better one)?

Also, is the factory likely to charge for storage until the carrier arrives?

Basically what's the best arrangement?


2) Like I say I would be the third party and I need to be billed for everything. How would I arrange it so that I am billed for everything that the carrier does? I've heard that I'd need to have it clarified on the shipping label, but if that's true I wouldn't know how to do that when arranging the shipment on seller central. I've also heard that I can clarify it on the carrier's website when arranging everything. I'm confused.


3) I've searched high and low for some way of calculating the total shipping costs (including customs and everything), but there doesn't seem to be any info on this. UPS have a calculator but I can't use it before having decided on a product because you have to enter the address or postcode of the origin. Is there any way where I can see for myself how everything is calculated? I have no idea how much shipping is, customs, or anything. I've heard that each country has some kind of code, but that's all I know. As for customs, no idea. I just want information which will enable me to make a reasonable estimate of total shipping and related costs for getting the stuff from the factory to Amazon's warehouse, without having to spend all day on the phone to UPS.

Danke.

 

[Mr D]

Number 2 you don't clarify it when creating the shipment. Makes no difference to amazon so long as no one tries to bill them. Whatever taxes will be billed to the importer (you) directly, through your shipping agent or through your courier.

And don't forget the sales tax aspect of using FBA.

Before working out shipping would it be an idea to work out how many shipments you are talking about? Can be to one, two or more destinations and packaged the appropriate way and labelled the required way. If its to a half dozen centres (it can happen) across the country your shipping may be higher than one delivery to one centre.

It may help to speak to a company who are used to shipping in stuff from China to amazon centres. There will be plenty of companies doing it, I have had some good discussions with Shapiro though decided not to use FBA there at the moment.

 

[Jayser100]

I looked into direct shipping from China to the US and you need to be aware, you will be liable to pay taxes in the United States.

If you already know where you are going to buy the products from, ask the factory or factories to give you a total shipping quote. In my experience, they can usually get a better price out of couriers like UPS than you will.

 

[Johnny1975]

Thanks for the replies.

I'm confused. I understand generally what incoterms are, but i'm very confused about what actually happens once I order products from China to Amazon.

Let's say I buy my products on FOB. The factory then takes the products to whatever port. Then what happens? Do I need to arrange with UPS for them to collect the goods from the port and take them to Amazon? Or does the factory do this? Do I pay the factory for everything?

 

[Jayser100]

If you're using UPS air freight, they will deliver door-to-door and perform the customs clearance 'in the air'. You will then be billed for the import duties and any other US taxes payable, afterwards. If you don't have an account with them they will expect immediate payment. It is possible to have an account with UPS for the purpose of paying duties and other taxes on account, only - I have one of these, because my main factory books the actual UPS shipments (to the UK) for me.

If you use sea freight, the shipping company will take the goods to the US port but they then need to be unpacked, customs cleared and forwarded to the Amazon warehouses. The forwarders will be a different company. Most shippers have a forwarding 'partner' who will contact you before the ship docks, in order to offer their services in clearance and forwarding. You then have the choice to either go with them, or shop around for other forwarders who might be cheaper.

As I said in my last message, you need to make sure you look carefully into the tax situation as my accountant warned me that if I directly shipped product from China to the US, I would have to pay US business taxes.

 

[Johnny1975]

So what kind of business entity do you think I should set up? I've heard that it should be Ltd, but just before writing this I read an article saying that it should be a corporation. It sounds like it could be complex. I hope this is something I can figure out without having to hire someone.

 

[Jayser100]

I don't honestly know. You really need to ask an accountant or other business expert that question. My main business is importing into the UK and distributing from here, which is not really what you're talking about doing.

 

[Mr D]

If in the UK then may be worth speaking to department of trade and industry. They are used to enquiries from companies looking to export. They may be able to point you in the right direction if they cannot help directly.
Usually pretty approachable, unusual as that is for a government department.

 

[Johnny1975]

Well thanks anyway Jayser.

I've been looking into it and it seems that I'd have to set up a Ltd company here, and then fill in these forms :

W-8BEN-E
110F
8833

That's all I've got for now. I'll keep digging. I don't think I'll have to pay US income tax, but I think I'd have to pay sales tax (the US version of VAT).

 

[Mr D]

Multiple sales taxes I'm afraid.

 

[Johnny1975]

Yes, I'd have to pay sales tax for the state where each sale occurs (I'm assuming that means the state where the warehouse is that fulfills that sale). But there's a site called Taxjar.com and they sort all that out. I'm not sure how though.

 

[Mr D]

Last I looked FBA had 19 nexus points. So potentially 19 states to register and file taxes with.
I was heading the other way, one state fulfilment but that wasn't through amazon.

 

[Jayser100]

I did briefly flirt with the idea of FBA for Amazon in the US but it's a total nightmare. One of the big problems is, you are asked to ship your stock to different fulfilment warehouses in different states; when a sale is made, it is difficult to tell which warehouse the item was shipped from, therefore you don't know which state you are supposed to pay the tax to. I gave it up as a bad job and moved on. I now have one fulfilment agent in Illinois who does the whole lot for me. As I import the goods from China here and then re-ship them to the US, I don't fall foul of the US tax system. I did call and chat to a rep at the Illinois tax department and went through it with him to ensure I do not have to pay any tax. This may change in the future if the US pushes plans through to force companies to collect sales tax, which at the moment is more or less paid voluntarily by the buyer in most cases. As you can imagine, most Americans don't bother to pay the tax at all.

 

[Pish_Pash]

One of the big problems is, you are asked to ship your stock to different fulfilment warehouses in different states; when a sale is made, it is difficult to tell which warehouse the item was shipped from, therefore you don't know which state you are supposed to pay the tax to.

The info is there in one of their (Amazon's) reports....as a three letter fulfillment centre code. At the time I was using Linnworks & asked if they trapped this fulfillment centre info "No" came the reply (so the folks who write the code for order management, are blissfully unaware of the needs of their customers!!)....so, with an eye to the future, I'm now able to collect this fulfillment centre location automatically myself (which means any tax obilgation can then be handled automatically), but frankly having done this, I can't be arsed to start selling Stateside! (though capturing FC location will help if I start fulfilling from within Europe via Amazon - so all is not lost!)

 

[japancool]

Buy FOB. Then use a freight forwarder to arrange delivery from factory to door (Ex Works) - they will take care of loading the goods onto the vehicle, and they will contact the factory to arrange a pickup schedule.

I'm not sure about delivery to Amazon, as I've never done that before, but I imagine they will be able to handle it.

 

[japancool]

The advice generally given is not to ask the factory to arrange delivery - they may quote you low fees, but you will find that you are hit with very high charges by their shipping agent once the goods arrive at the destination - which you will have no choice but to pay if you want your goods to be released.

 

[Johnny1975]

Buy FOB. Then use a freight forwarder to arrange delivery from factory to door (Ex Works) - they will take care of loading the goods onto the vehicle, and they will contact the factory to arrange a pickup schedule.

I'm not sure about delivery to Amazon, as I've never done that before, but I imagine they will be able to handle it.

This is the bit that confuses me so much. If I buy FOB, I'm paying the factory to :

* Make the products
* Package them
* Do the shipping documentation
* Transport the goods to the port

How could I possibly arrange for UPS or whatever carrier to collect from the factory, if I'm paying the factory to take them to a port?

This is why I thought FCA would be the way to go, but I've read enough to know that it's not. However, FOB still doesn't make sense to me if I want the carrier to collect from the factory. Or, if they collect from the warehouse at the port, how on earth could I coordinate something like that? I wouldn't know where to start.

This is all probably highly amusing to anyone who knows how this works, but I've been tearing my hair out for weeks over this (but it is still amusing).

So what do I do? I've been researching every aspect of this business for a couple of months, but this final part (shipping) is a huge barrier to me understanding everything.

Save me. Teach me how it works. I'll pay you 90% of my future profits. That's right, £0.90!

 

[japancool]

My apologies. I got that bit wrong. Buy it Ex Works from your factory, then contact your freight forwarder for them to arrange pickup and delivery to the destination premises.

The freight forwarder will handle customs clearance and paperwork.

 

[Johnny1975]

My apologies. I got that bit wrong. Buy it Ex Works from your factory, then contact your freight forwarder for them to arrange pickup and delivery to the destination premises.

The freight forwarder will handle customs clearance and paperwork.

That won't work because who will load the boxes onto the carrier's truck? The factory won't do it, because EXW doesn't include that, and the truck driver won't do it, because it's not his job.

 

[japancool]

That won't work because who will load the boxes onto the carrier's truck? The factory won't do it, because EXW doesn't include that, and the truck driver won't do it, because it's not his job.

The freight forwarder will arrange this.

 

[Johnny1975]

I'm still very confused. If I buy products FOB what happens next? Do I just contact UPS or whatever carrier and arrange for them to go to the factory, collect the products and then do everything necessary to get the products to the Amazon warehouse?

 

[Pish_Pash]

There's little to be confused about here.

A normal FOB scenario would be...the supplier takes your goods to the port, the freight handler arranges delivery to your door here in the UK. But since you don't live in the USA (& therefore they won't be coming to your door), you're going to need a USA freight handler who's flexible enough to take onboard your specific requirements to get the product to Amazon's loading bay. Amazon are quite strict...if a shipment arrives in a certain way & without certain documentation...they'll reject...then you've got problems in spades.

 

[japancool]

I'm still very confused. If I buy products FOB what happens next? Do I just contact UPS or whatever carrier and arrange for them to go to the factory, collect the products and then do everything necessary to get the products to the Amazon warehouse?

Basically yes (except that you need to buy it Ex Works not FOB). I don't know about getting it to the Amazon warehouse, as I'm sure Amazon have certain procedures you have to follow, and you may need to arrange these with Amazon, but your freight forwarder will be able to work with you to do this.

 

[Pish_Pash]

Basically yes. I don't know about getting it to the Amazon warehouse, as I'm sure Amazon have certain procedures you have to follow, and you may need to arrange these with Amazon, but your freight forwarder will be able to work with you to do this.

I would strongly suggest he goes with one who is Amazon Warehouse 'literate'/savvy...I found such Stateside freight forwarder a couple of years ago (by Googling), then binned the idea because his charges were stupid o clock & made me curl up into the foetal postion.

 

[Johnny1975]

I've heard that EXW is very very very inadvisable. I can't remember the reason but I read somewhere that it's bad and not to do it, (and the reason made sense but like I say I can't remember what it was) and that it should be FOB.

 

[japancool]

CIF is bad, since you will often be hit with a lot of hidden charges when the goods arrive in the country before they will be released to you. I've not had any issues with Ex Works.

 

[Johnny1975]

CIF is bad, since you will often be hit with a lot of hidden charges when the goods arrive in the country before they will be released to you. I've not had any issues with Ex Works.

I've just started watching this :

Alibaba - Your Gateway to Importing & Making Huge Profits

It's a free course on udemy. Check it out. Within 2 minutes it's saying that FOB is best and that EXW is not a good idea. Almost everywhere I've read they say the same thing.

With EXW you pay for everything after they manufacture the products.

But what I'm confused about is that if FOB means that they take it to the port, what happens next? Does the factory arrange for someone to take it from there or do I do this?

I've been researching everything to do with FBA and this is the final hurdle for me. If only I can grasp this, I'll be able to get started. But it's very confusing. Do I call UPS (or whichever carrier) and arrange for them to collect and take the products to the Amazon warehouse, or does the factory do it? And if the factory does it, doesn't that mean I have no control?

Very, very confusing.

 

[japancool]

Why don't you call UPS and ask them?

 

[lfw]

I'm confused as to what you find confusing. Honestly maybe you should rethink FBA Usa amazon as dealing with the taxation system with the 19 tax nexus in the states is far more complex than the logistics of getting the stock there.

 

[Pish_Pash]

I'm confused as to what you find confusing. Honestly maybe you should rethink FBA Usa amazon as dealing with the taxation system with the 19 tax nexus in the states is far more complex than the logistics of getting the stock there.

From what I can gather most non resident FBA sellers just don't pay tax (so perhaps not)

 

[Johnny1975]

I'm confused as to what you find confusing. Honestly maybe you should rethink FBA Usa amazon as dealing with the taxation system with the 19 tax nexus in the states is far more complex than the logistics of getting the stock there.

I pay a factory FOB to make my products. They make them, then they take them to the port. What happens next and who arranges it?

 

[Johnny1975]

From what I can gather most non resident FBA sellers just don't pay tax (so perhaps not)

They don't pay US sales tax? How do they get away with that?

 

[japancool]

I pay a factory FOB to make my products. They make them, then they take them to the port. What happens next and who arranges it?

Your freight forwarder.

 

[Johnny1975]

Your freight forwarder.

What I mean is, who contacts the freight forwarder? I know this sounds really stupid but I really don't know.

 

[lfw]

From what I can gather most non resident FBA sellers just don't pay tax (so perhaps not)

If the goods are in the states you need to pay tax. Why would you want to play that game of avoiding tax. Amazon reports items sold to the taxman. It gets confusing as to what amazon warehouse sells what.... I think the OP should find a company either in China or the USA who can package goods amazon ready. Maybe you should go back to your supplier and see if they can do this for you.

 

[Pish_Pash]

They don't pay US sales tax? How do they get away with that?

I don't speak from experience...but the USA sales tax system is unlike ours - we have to pony up to one VAT agency (HMRC) from whichever county we sell in! I think USA FBA overseas sellers take advantage that the individual States have no idea/notion what's sold where & therefore rely on sellers fessing up - many don't!

For example...I send 100pcs of a hair dryer (fwiw I don't sell hair dryers). Amazon then distributes these 100pcs amongst all their USA Fulfilment centres. How would the State know how many hair dryers Amazon sent to the fulfilment centre in their own state....how would they know how many I sold there?

If the goods are in the states you need to pay tax. Why would you want to play that game of avoiding tax. Amazon reports items sold to the taxman.

Are you 100% certain on that? Also I'd imagine that'd be utter chaos for a tax man to track.
"Hmm, ok Amazon said pish_pash sold 1 hair dryer, ok let me look up his tax return....". I'm not condoning it...but I'm figuring most overseas sellers feel outside the jurisdiction of being jailed (we see it here in the UK all the time - I'd imagine the Stateside sees the same activity - but on steroids!)

It gets confusing as to what amazon warehouse sells what.... .

This bit is not confusing ...Amazon provide logfiles/APIs which shows you which Fulfilment Centre an item was sold from.

 

[japancool]

What I mean is, who contacts the freight forwarder? I know this sounds really stupid but I really don't know.

YOU contact the freight forwarder! You contact the freight forwarder, get the delivery details from them, sort out the FOB with your shipper then advise the freight forwarder that they will be receiving a delivery.

It's not really that hard to understand, is it?

 

[Johnny1975]

I don't speak from experience...but the USA sales tax system is unlike ours - we have to pony up to one VAT agency (HMRC) from whichever county we sell in! I think USA FBA overseas sellers take advantage that the individual States have no idea/notion what's sold where & therefore rely on sellers fessing up - many don't!

For example...I send 100pcs of a hair dryer (fwiw I don't sell hair dryers). Amazon then distributes these 100pcs amongst all their USA Fulfilment centres. How would the State know how many hair dryers Amazon sent to the fulfilment centre in their own state....how would they know how many I sold there?



Are you 100% certain on that? Also I'd imagine that'd be utter chaos for a tax man to track.
"Hmm, ok Amazon said pish_pash sold 1 hair dryer, ok let me look up his tax return....". I'm not condoning it...but I'm figuring most overseas sellers feel outside the jurisdiction of being jailed (we see it here in the UK all the time - I'd imagine the Stateside sees the same activity - but on steroids!)



This bit is not confusing ...Amazon provide logfiles/APIs which shows you which Fulfilment Centre an item was sold from.

I know about the US sales tax and I'm going to just upgrade to pro seller so Amazon will collect it, and pay Taxjar to take care of most of the legwork (I know I still have to register with all the states and make the payments). It's going to cost $708 (£562) per year but what the hell. It will save me a lot of hassle.

It would be nice if I could just ignore it all and hope to get away with it but I'd rather not take the risk. I've done way too much research over the last 3 months into everything to do with Amazon FBA to mess this up.

But since you mention HMRC and VAT, do I also have to pay VAT here? Please say no.

 

[Johnny1975]

YOU contact the freight forwarder! You contact the freight forwarder, get the delivery details from them, sort out the FOB with your shipper then advise the freight forwarder that they will be receiving a delivery.

It's not really that hard to understand, is it?

So I have to coordinate. Is it hard to do or it straightforward? I just tell the freight forwarder to go to the port and collect the goods and take it from there?

 

[Mr D]

But since you mention HMRC and VAT, do I also have to pay VAT here? Please say no.

Are you selling to buyers here who are paying VAT on the purchase?