Selling to Amazon US/CA

[JJWinst]

Hi Guy's,

Do any of you do this and if so how have you got on?

The hardest thing for me has been working out the pricing differences in US dollars. I have been using google's currency converter but this isn't very accurate and a £5.00 swing either way could make the item profitable or not..

 

[Dan Eales]

We have been selling to the Americas for a good few months now, and I would say that where pricing is concerned it's a bit of a split. but that could be said for any of the Amazon's really. Or indeed any marketplace.

We've always used a custom Excel spreadsheet to work out our pricing as this allows us to work out multiple products in bulk. Obviously I have no idea what calculations you are using to work out your pricing, but a spreadsheet may be a better way to go for you rather than Google's converter? I can imagines that using Google must take some time?

It's just a case of whether spending some time with setting up a spreadsheet is worth it for you and your company.

May I ask in what way Google's converter hasn't been accurate for you?

 

[JJWinst]

Could I ask what you used in your table? I have an Excel sheet setup but the sales price/Postage cost and fee cost is converted into GBP using google converter. I am slightly worried as I have tested a few amazon withdrawals and the price has been slightly less when it has dropped into my account in £ as what google say's it should be..

 

[Jayser100]

The biggest headache selling in the US and Canada is Amazon's insistence on quoting four-week shipping times from the UK, even though airmail will make you much faster than that in reality. It puts a lot of US and Canadian customers off. The obvious answer, you would think, is to use FBA but if you do that, you will become liable to pay taxes to the state governments in those states where the fulfilment warehouses are located. That's almost impossible to do because, even though you will know what fulfilment centres Amazon asked you to ship product too, you can't always tell which centre fulfilled which order. Amazon often split the same inventory item between two or more warehouses, so when you make a sale, how do you know which one fulfilled the order, and hence which state government are owed the tax? Answer: you don't.

If you are not going to do that, i.e. you will fulfill orders from the UK, you realistically need a returns agent located in the States or Canada because without one, you will be expected to pay the shipping costs of all returns, regardless of the reason the customer no longer wants the goods.

I'm not trying to put you off but I do think prospective sellers in the States need to be aware that it's not nearly as simple as you might think, and definitely not easy to do with any success. I know because I've been trying for years, and basically getting nowhere!

 

[Dan Eales]

With regards to shipping to Amazon US, tracking can also be an issue. Dot Com is set to expect a tracking number for all orders and I believe there is a seller metric somewhere in the Amazon US account that will be marked down if orders are sent minus tracking. I don't believe that this metric affects overall account health, but still a bit of a pain nonetheless. The new Royal Mail 2D Barcodes will be used as tracking next year and should also be applied to Airmail, but Royal Mail haven't really revealed how in depth the tracking will actually be. And it may just be when it's shipped and when it's delivered.

I'm not trying to put you off but I do think prospective sellers in the States need to be aware that it's not nearly as simple as you might think, and definitely not easy to do with any success. I know because I've been trying for years, and basically getting nowhere!

Totally agree with that statement. It's a great marketplace to get into, but it's a very long road to getting the logistics in place.

 

[Jayser100]

Royal Mail are indeed introducing a barcode system for PPI but it appears to be for their benefit rather than ours. It's basically a way of preventing PPI customers from slipping mail through without paying for it. Under the present system, you make a list of what you're posting and then book it all online. Royal Mail make occasional spot-checks (what they call 'checking days') to ensure they aren't being diddled but I know from talking to various collection officers that a lot of companies out there extract the urine when it comes to slipping packages into their mail bags that they have 'accidentally' forgotten to book in online. The barcode system will prevent this because you have to print out the barcodes for each piece of mail as you go.

I have had conversations about the new system with our RM account manager and he has told me the barcodes will not be used for tracking purposes. To be honest I am annoyed that RM now expect us to buy a compatible printer for this, when we will in fact not see any benefit from the new system at all. Effectively we are being asked to pay to resolve a problem caused by the dishonesty of others. We use Dymo printers here - despite the fact they are probably the most commonly used, RM's new software does not support them (surprise, surprise).

We've been sending Amazon US orders tracked for years. They introduced tracked parcels as a standard requirement a long time ago and anyone who does not comply with that is asking for trouble because all A - Z's etc. for lost packages will leave you in the smelly stuff when you can't provide a barcode number.

Generally speaking, the saving made in not having to pay VAT on sales covers the extra cost of using International Tracked but the weakness of the dollar against the pound makes it hard to be competitive on pricing. I guess the simple truth is, we're never going to better the prices offered by dealers in the US who import direct from China and then use cheap domestic shipping.

 

[Dan Eales]

I have had conversations about the new system with our RM account manager and he has told me the barcodes will not be used for tracking purposes.

I have also heard the same from a few sources. But the Royal Mail website seems to think differently. This is one of the things that annoys me with couriers, the account managers rarely seem to be in the know

I can't post links yet, but if you Google "Getting barcode ready: Frequently asked questions" and then look down the page for "Will we be able to track the items once barcoded?" it does state that some kind of tracking will be available from this service. But there is not mention of what this tracking will include. The fact that they go on to say that Tracked services are available doesn't sound promising, but at the same time the Tracked services are more expensive and it is in Royal Mail's best interest I suppose to get the tracked services used.

We've been sending Amazon US orders tracked for years. They introduced tracked parcels as a standard requirement a long time ago and anyone who does not comply with that is asking for trouble because all A - Z's etc. for lost packages will leave you in the smelly stuff when you can't provide a barcode number.

We felt that this was a necessary evil a while back, and have also been sending tracked for a little while now. But as you also correctly mentioned, it's hard to have tracking and stay competitive. We have a few unique and lesser known lines in stock, but anything big, popular or trending you can be sure that you'll be on a thin margin at best.

 

[Page]

The 2d barcodes will allow tracking for all parcels and large letters and by the sender

They are on trial at the moment being settled in before they say okay - this is the score

 

[Pish_Pash]

Amazon often split the same inventory item between two or more warehouses, so when you make a sale, how do you know which one fulfilled the order, and hence which state government are owed the tax? Answer: you don't.

In seller central ..... Reports , Fulfilment by Amazon, .....left side of the screen (under the heading Sales) ...there's a report there called 'Amazon Fulfilled Shipments'

Download that report, open it up in excel - there's a column headed fulfillment-center-id - it shows where each order was shipped from.

 

[Jayser100]

That's helpful Pish_Pash but it doesn't change the fact you have to register for tax in all states where fulfillment centres are located that handle your goods. For a small business it's an accounting nightmare.

I have now found a fulfillment agent in the States who will ship all of our US orders out of one place (in Illinois). This means we only need to register for tax in one US state. The only downside is that we won't get the potential sales hit from using FBA (which makes your products Prime) but for me as a small and already over-complicated business, this is the way to go. At least I will now be able to compete on a level playing field as regards shipping times, and I will be able to reduce my prices a bit too because my agent's fees per item are considerably less that we're paying for Royal Mail International Tracked shipping.

BTW please don't contact me for my agent's details. He has been buying and selling our goods as a dealer for several years but he runs a small operation from his home and he isn't looking to fulfill orders for anyone else's businesses.

 

[MattDV]

Hi. Another thing to take into consideration is the foreign exchange rates that Amazon is charging. 4% markup or higher on USD / EUR / CAD sales that are sent to British banks in GBP. This would affect pricing and profit margins, of course.

I have actually covered this area on my website, but I can't post links yet, and don't want to be overly promotional. If you're interested in learning about solutions to this, you can view my blog through my profile. My first post titled "Online Sellers and Bank Accounts" links to my website where there's a guide about this very topic. If anyone who's interested wasn't able to find it, shoot me a PM and I'll reply with the URL.

 

[Jayser100]

All you need to do is open World First bank accounts in US dollars, Canadian Dollars and Euros. You can then take advantage of World First's much better exchange rates and, if you don't need the cash immediately, hold it in those bank accounts until rates are favourable and then transfer it into your own sterling business account.

The only drawback of World First accounts is that they only allow you to use them for channeling ecommerce payments through and into your own bank account. For most people that isn't an issue but for me, as I have trade customers accounts abroad who like to pay in Euros or US dollars, and I have to pay tax bills in other countries in Euros and US dollars too, it is an issue but I found a way round that. I have Barclays business accounts, including one in Euros and one in US dollars. I can't take Amazon payments directly into those accounts because they are based in London (Amazon have a strict rule that, if you want them to transfer your funds in the native currency, they will only make the transfer to a bank account that's based in the country where the Amazon is based or, in the case of euros, a bank in the eurozone) but this allows me to have funds transferred from Amazon - World First - Barclays without changing the currency. I can then pay my tax bills in the same currency without ever incurring any FX charges. World First do charge a fee for transferring funds to another account in the same currency but overall it does save me money.

By way of example, I have to pay German VAT in Euros. So, I have my Amazon.de money transferred into the World First account (which is actually a Barclays account in Paris), then it transfers into my London Barclays euro account, then I pay the German tax bill in euros from that account.

It does make for more complicated banking but anything that reduces fees will do for me! if I don't need all of my euros in the World First accounts for paying bills then I can choose to send them directly into my sterling business bank account instead.

 

[Pish_Pash]

By way of example, I have to pay German VAT in Euros. So, I have my Amazon.de money transferred into the World First account (which is actually a Barclays account in Paris), then it transfers into my London Barclays euro account, then I pay the German tax bill in euros from that account.

Are world first ok with this? Because if they aren't converting EUR->GBP they aren't making any money? Also, how do you instruct them to send your Euos to another Euro account?! (I'm getting the feeling that World First aren't too happy letting my Euros accrue.... when the Euro tanked, I toughed it out & just sat on my Euros with World first...I've had a few emails which go a long the lines of "erhmm, when do you intend converting your Euros?"

 

[MattDV]

@Pish_Pash thanks for the valuable feedback. Besides the reminder email did you have any indication at all that World First will not allow you to keep holding the Euros through their account? Why don't you use Forwards to secure the rates and eliminate the overhead?

 

[Jayser100]

Hi Pish Pash, yes they are fine with it. I called them to discuss it because I wanted to set myself up as two separate beneficiaries, i.e. one as my sterling account and the other as my euros account. In actual fact they won't allow this until you call them and explain why you are doing it, then they can manually activate it.

As I explained in my message above, World First do make money on it because they charge a fee for transferring the money to your UK euros account, and that fee is the equivalent of what they would charge if they were converting the currency. You do not therefore, save any money by doing this but for me it is highly convenient due to my own business needs.

I don't see how World First can force you to convert your money and withdraw it, they may have been putting some moral pressure on you to do so but I wouldn't worry too much about that. It's your money in your bank account, remember.

 

[Pish_Pash]

World First do make money on it because they charge a fee for transferring the money to your UK euros account, and that fee is the equivalent of what they would charge if they were converting the currency. You do not therefore, save any money by doing this but for me it is highly convenient due to my own business needs

Now that to me -on the face of it - is cheeky....and I can see why now there'd be no issue!

I don't see how World First can force you to convert your money and withdraw it, they may have been putting some moral pressure on you to do so but I wouldn't worry too much about that. It's your money in your bank account, remember.

I agree they can't....but they want 'churn', not someone accruing, so I guess that's why I'm picking up on their somewhat "Hmm..." tone.

@Pish_Pash thanks for the valuable feedback. Besides the reminder email did you have any indication at all that World First will not allow you to keep holding the Euros through their account?

No.

@Pish_Pash Why don't you use Forwards to secure the rates and eliminate the overhead?

Do you mean instructing them to convert a at a given exchange rate that gets triggered/transacted automatically? I'm too much of a control freak to roll with that. I prefer to see what strength/momentum the Euro has to decide when to pull the trigger vs. a 'set & forget' type trade.

 

[MattDV]

@Pish_Pash what you're referring to is a rate alert. There are plenty of other derivatives you could use to secure currency rates, and World First which is a dear partner of mine offers them all. Let me send you the link to a page on my website explaining all of those privately, if you don't mind (I cannot post any links here as a newbie).

 

[Pish_Pash]

Thanks... I've looked at your link - so what you initially described as forwards is hedging, again that wouldn't have helped ....I didn't think the Euro would tank as ferociously as it did, so I saw no reason to hedge!

Let's not forget, hedging is not free, it's akin to an insurance policy....if the currency moves against you, you're covered against the downside, if it doesn't you lose the cost associated with the hedge. I've never been one for insurance, but everyone is different so obviously it has its place!

 

[MattDV]

I completely agree with your standpoint in regards to insurance, in general. When it comes to currencies I do like to use Forward contracts. You pay in cashflow (10% upfront), and you lose out on potential gains when currencies move in your favour, but you don't pay an interest (besides the usual FX markup you'd be paying anyway) so I wouldn't classify it as an insurance. In any case, there are bigger experts than me on this topic, and perhaps some other people who can contribute their experience hedging foreign exchange