US Sales Tax for European Online Sellers: The Essential Guide

By Emma Scotton

Ecommerce is booming and businesses are increasingly fighting for a share of the lucrative global market by looking at ways to take their online business cross-border.

The US market makes for a particularly attractive option, with US consumers expected to spend $327 billion online in 2016. Moreover, the number of web shoppers in the US is expected to grow by 15% this year to 192 million and each shopper will be spending more on average, up 44% from 2012 to $1,738 per year.

What’s more for marketplace sellers is that global marketplaces are expected to own nearly 40% of the online retail market by 2020, providing a viable and rewarding route to new markets for businesses of all sizes.

In the rush to expand, however, merchants can overlook areas of international business that are unfamiliar. Ensuring you support international payments and have a logistics network capable of fulfilling orders is important, but with new opportunities come new complexities, particularly when meeting the challenge of sales tax compliance in the United States.

Businesses in Europe are used to dealing with transactional taxes in the form of VAT, but US sales tax is a different prospect entirely.

With over 12,000 taxing jurisdictions throughout the US, each empowered to alter rates and rules with little oversight, the complexity for companies trading in the US becomes mind-boggling. There are 100,000+ rules and boundary changes annually, so it’s easy to see why many companies require outside expertise to manage what initially seems like a straightforward process.

On which items do you charge sales tax? What rate of sales tax do you need to charge for different addresses on the same street? What is the difference between state, county, city and special taxes? Where do you need to file and remit sales tax? What records need to be kept in case of audit? How often do you file taxes and to which authority? And what on earth is nexus?

These are just some of the questions merchants will need to consider before either selling or planning to sell in the US. It’s a veritable minefield of legislation, regulation and complexity but if you get it right the rewards for your business could be sizeable.

What is sales tax?

As revenue from property taxes collapsed during the Great Depression in the 1930s, US states implemented transactional taxes on commodities. As an indirect tax (a tax levied on goods and services), sales tax requires the seller to collect funds from the consumer at the point of purchase.

Today, there are over 12,000 state, county and city jurisdictions in the US charging a sales tax. Forty-five states and the District of Columbia now impose a sales tax on retail sales and some services. The bulk of their revenue is now generated from sales taxes, not income taxes.

The five states that do not have a state-wide general sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon, although Alaska and Montana do allow localities to charge local sales taxes.

How does sales tax differ from Value Added Tax (VAT)?

Many European businesses are familiar with VAT and may assume that they can apply current processes to US sales tax. However, VAT is applied every time value is added at each stage during the supply chain, whereas sales tax is collected only at the time of the final sale.

If a seller has nexus in a state (more on that below) they must collect sales tax on all taxable sales to customers in that state, regardless of the channel.

Just how complex is sales tax?

Depending on the state in which your customer is based, different items may be taxed at different rates. In some states, for example, food is not taxed, while in others the same item may be classified differently. So far so good.

In New York, clothing and footwear costing less than $110 per item/pair is exempt from state sales tax, yet it is still subject to local sales tax in some jurisdictions. Local jurisdictions can change their tax policy towards clothing once a year, however, “most fabric, thread, yarn, buttons, snaps, hooks, zippers and similar items that become a physical component of clothing” or are used to repair it are exempt.

To be compliant, a retailer needs to know the correct classification of an item in each state to ensure it collects and remits the correct level of tax. Collecting too much in one state will make them uncompetitive, while not collecting enough increases their exposure to potential fines. Adding to the complexity, in some states the rates can vary by city, county, or even street. Two adjacent properties can have different tax rates.

What is the risk if you’re not compliant with sales tax regulations?

In an effort to safeguard tax revenues, each state conducts audits of businesses, which may result in penalties and interest. Businesses must keep records of sales in each US city, county and state in which they sell. California alone announced in August 2014 the hiring of 100 auditors, lawyers and specialists to help collect online sales tax.

As more businesses sell in the US, auditors are also turning to international sellers to ensure they do not have a competitive advantage over domestic retailers. The financial importance of collecting sales tax on a state cannot be underestimated. The more auditors assessing international businesses, the more revenue a state can make in penalties and unpaid tax.

With the average audit costing as much as €79,000 (US $100,000) you can’t afford to be complacent about compliance.

What is nexus?
The good news is international businesses selling in the US are not required to collect sales tax in a state unless they have “nexus”.

Nexus is defined as a connection or business presence in a state or jurisdiction. If you have nexus in a state, you need to collect and remit sales tax according to their regulations.

How do you determine if you have nexus?

On the face of it, for a marketplace seller, it sounds like you need not be concerned with Sales Tax. However, here comes the bad news. Activities leading to having nexus vary per state and can include activities such as opening offices, stores or franchises, storing items in warehouses or even attending meetings or tradeshows.

Determining nexus can be confusing if you are unprepared or do not fully understand the obligations. This will ultimately increase your business’ exposure during potential sales tax audits.

Once you have determined where nexus exists for your business, you are required to calculate, collect, report and remit that state’s sales tax. There are several scenarios where nexus can be applied to marketplace sellers giving you a “significant physical presence”, and these should also be considered before you start selling to US consumers.

What constitutes a “significant physical presence”?
Nexus rules are established by individual states and every state defines them uniquely.

Determining exactly how a rule applies to a business is critical. With more than 12,000 sales tax jurisdictions across North America, and with rates and boundaries constantly changing, staying on top of nexus responsibilities is a substantial drain on businesses, carrying no benefit to the bottom line.

Recently, in an effort to avoid losing taxes, many states have enacted Amazon laws, requiring more national and international online retailers to collect sales tax for the first time. These laws expanded definitions of nexus to include online-specific relationships such as affiliate and web advertising.

As a marketplace seller, you will need to consider closely the ways in which you manage your fulfillment as a number of scenarios here may trigger nexus.

Nexus triggers

The following scenarios are some of the more common situations in which marketplace sellers can trigger nexus.

Owning or leasing property or warehouses in the US

To better serve US consumers, and for cost-effective delivery, many marketplace sellers opt to store inventory in the US itself. Whether you decide to own or lease property in the US for this purpose, or you decide to rent or own storage or warehousing facilities, this will be considered a nexus-triggering activity. You will therefore be required to register, collect and remit Sales Tax for sales in the state in which your property, storage or warehouses are located.

Using a third party fulfillment provider with a presence in the US

Similarly, some marketplace sellers may decide to outsource elements of their supply-chain to a third-party, who will store and deliver goods to customers on their behalf. This method of fulfillment can prove cost-effective for businesses and enable you to get goods to your US customers much quicker. However, even if you outsource to a third party, and it is the third party who owns the warehouse and delivers your goods in the US, this can still trigger nexus.

Let’s take Fulfillment by Amazon (FBA) as an example. FBA helps sellers sell products internationally by giving you access to Amazon’s logistics network. If you ship your products to their fulfillment centers, they’ll store, pick, pack and ship it locally to your customers.

Whilst the definition of nexus varies slightly from state to state, all states where Amazon has warehouses (with the exception of Virginia) say the same thing, namely that this suffices for the creation of nexus. For example, Kansas regulations state that “stocking inventory in a Kansas warehouse or consignment” triggers nexus. Similarly, Washington regulations state that where “the goods are located in Washington at the time of sale and the goods are received by the customer or its agent in this state” nexus will be triggered.

Amazon won’t always notify you if they move your inventory to a new fulfillment centre. So a conservative approach is to register for Sales Tax in all the states where Amazon has a fulfillment centre to avoid getting caught out. It should also be noted that once you have nexus in a state you must collect tax on all sales into that state whether or not you ship them yourself or through a third party.

Drop-shipping methods
Many retailers and marketplace sellers utilize drop-shipping as a supply-chain management technique. In this scenario, the retailer does not keep the goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer or a wholesaler who then ships the goods directly to the customer. This triangular situation adds a layer of complexity when it comes to determining nexus.

If both you as the retailer and your drop-shipper are situated outside of the US, and thus have no nexus in the state of your US customer, it will be the customer who is subject to “use” tax.

But if your drop-shipper is located in, or has nexus in, the state in which the sale occurs, then the drop-shipper could be responsible for collecting sales tax. That said, the rules vary again across different states, and in certain circumstances use of an in-state drop-shipper by an out-of-state retailer is a nexus-creating relationship, and it will be the seller who will be responsible for collecting the sales tax. In other states de minimis thresholds apply, whereby nexus is triggered only once the retailer or the drop-shipper have shipped $50,000+ worth of goods.

With this degree of complexity, sellers must ensure they plan ahead. All members of the supply-chain must cooperate to determine nexus to avoid either double-charging for sales tax or not charging at all.

Determining nexus
To safely navigate these challenging tax rules, businesses should understand their exposure as part of a nexus study. Making the nexus determination on your own is difficult, confusing and can lead to problems further down the road.

Other sales tax rules
This complexity doesn’t end at nexus! Sales tax compliance is full of complicated rules and nexus is just one aspect. Several other layers must also be considered in order to be fully compliant.

Some bizarre but very real sales tax laws:

In New York, any bagel that has been sliced or prepared with toppings is subject to a sales tax. However, if it is sold whole and consumed outside of the store, it is untaxed.

Alabama charges a 10-cent tax on any pack of cards that contains 54 or fewer cards in the deck. The seller must also pay $1 and an annual tax of $3.

Pennsylvania taxes air – at least the air that comes out of a compressed air vending machine or vacuuming vending machine. Therefore, petrol stations must charge the tax when customers pump up their tyres. Also in Pennsylvania, state and US flags are not subject to tax, but if either is sold with “accessories” (i.e. a pole), the entire purchase becomes taxable.

In New Jersey, naturally carbonated water is exempt, but artificially carbonated water is taxable.
And finally… in Tennessee, the sale of a good is subject not only to the state sales tax of 7%, but the local sales tax on the first $1,600, plus an additional state sales tax of 2.75% on the second $1,600, all of which cannot exceed $3,200 – potentially subjecting a sale to a 9.75% sales tax rate.

Top points to consider before selling into the US

1. Keep up to date with each state’s tax requirements
Businesses need to keep up to speed on all the changes made by states and municipalities each year. These changes include rate increases/decreases as well as new sales taxes added to jurisdictions, and boundary changes.

2. Establish processes for water-tight record keeping
The best way to stay compliant is to keep up to date on filing sales tax returns and payments (quarterly or monthly, depending on the state’s requirements) and keep accurate and detailed sales records.

What records do businesses need to keep?

Sales invoices
Paid bills
Contracts
Purchase orders
Register tapes
Bank statements
Cancelled cheques and similar original documents
Depreciation schedules and other fixed asset records
Documents supporting tax-exempt sales, such as resale and other exemption
Certificates
Freight bills indicating shipments to addresses across states
Keeping records and preparing and filing sales tax returns can be a major headache, particularly for small businesses. The good news is there are tools available that automate these processes, reduce this tedious and labour-intensive task, and save you money in the long run.

3. Understand your nexus requirements
As outlined above, nexus-triggering events can be complicated and vary across states and product types. The way in which you deliver the goods sold to US customers will have implications for your tax obligations. Using any third party, whether it’s a drop-shipper, carrier or warehouse can trigger nexus for your business, so consulting with experts will be critical.

4. Plan to use geo-location over ZIP codes
While the US Postal Service has established ZIP codes for mail delivery, tax jurisdictions do not generally follow ZIP codes. Going down to street level is essential to get it right. Businesses relying solely on ZIP code often find big discrepancies during audits.

In order to help businesses cope with these differences, providers of automated solutions continually research the physical boundaries of taxing jurisdictions nationwide. Without the use of geospatial technology, there is limited chance of accurately determining which jurisdiction applies to a transaction.

5. Set out your returns filing and remittance schedule
Each US state has its own set of rules and regulations for filing and remitting tax, which may differ from other states. In addition to state rules, cities and counties may impose and manage sales tax returns on their own.

Responsibility lies with businesses to not only determine if they have to file with specific cities and counties, but also to register of their own accord. Moreover, filing frequencies vary by jurisdiction so not all returns are due on the same day of the month. When dealing with multiple states and local jurisdictions, the number of due dates and filing schedules that must be managed can be daunting.

Filing methods can vary just as much, even within the same state or municipality. Some states now require sales tax returns to be filed electronically; others still require hard copy submission, while a few states offer online filing along with an electronic data interchange (EDI) option.

6. Collect and store all exemption certificates
Not everyone is required to pay sales tax. Depending on the rules in the taxing jurisdiction, certain businesses and individuals may be exempt. The vendor must collect and keep on file a valid exemption certificate for each business, organization or individual with an exemption.

It is also up to vendors to ensure that exemption certificates are valid for each sale transaction. This requires businesses to keep a copy of each exemption certificate and ensure that they are renewed when they expire.

7. Identify if the “Streamlined Sales & Use Tax Agreement” is right for you
Around half of the states have worked together on an agreement called the Streamlined Sales and Use Tax Agreement, designed to “simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance.” Signing up to SST requires only one form to register across all SST states. Once registered, businesses then have to file returns every month in all SST states.

For companies selling, or looking to sell in the US, or have affiliate relationships in a number of states, registering as an SST volunteer can save you a lot of time, effort and money. There is no cost for registration and if you qualify, filing is a free service across the SST states. SST volunteers have limited audit exposure (no negative audits are possible).

As of early 2015, SST Member States include:

Arkansas
Georgia
Indiana
Iowa
Kansas
Kentucky
Michigan
Minnesota
Nebraska
Nevada
New Jersey
North Carolina
North Dakota
Oklahoma
Ohio
Rhode Island
South Dakota
Utah
Vermont
Washington
West Virginia
Wisconsin
Wyoming

8. Plan for sales tax holidays
Further complicating the matter, dozens of states also declare sales tax holidays. Some states offer tax reprieves for products like school supplies for kids, while others give consumers a tax break on hurricane preparedness items, like plywood and nails. In states where hunting is a big business, tax holidays might be in place for firearms, ammunition and hunting supplies.

The holidays are varied and complicated, often taking place over specified dates and limiting the number of items that can be purchased tax-free.

In Virginia, for example, during the sales tax holiday for clothing and school supplies, many items are singled out as exempt. For clothing, this includes clerical vestments, choir and alter clothing, corsets, girdles, lingerie, purchased costumes, steel-toed shoes, suspenders, formal wear, etc. However, protective gloves, hard hats and helmets are taxable. School supplies that are exempt include calculators, binders, erasers, lunch boxes, highlighters, notebooks, paintbrushes, scissors, etc.

Keeping up to date with these tax holidays may seem burdensome, but could actually prove part of a rewarding marketing strategy and help you to take advantage of peak selling times.

Steps to successful market-entry in the US

International trade is a great way to grow your business, so don’t be put off by the complexities of sales tax. Expansion need not be daunting and provided you take the right steps, selling your products in American markets could be the boost your business needs.

Work out where your business has nexus, so you know in which states you’ll need to register by declaring your business.

Get your ID number by setting up an account with a state, and visit their local “.gov” website to determine the exact steps. Usually they will have you file a form and register.

Once that is complete, you will have a unique code applied to your business and this code will show up along with your business name in all future sales tax filings.

As soon as you have completed your paperwork, make sure to check that same regulatory department for up-to-date rates, tables, rules, and boundaries.

Research the taxability of your items, making sure to apply thresholds and tax holidays if they apply in the state.

Make sure that you only have to file one sales tax form in one state, as many states require remittance to local jurisdictions (which can number in the hundreds), as well as the state.

Alternatively, there are a number of solutions available to merchants to help automate and take the administrative burden out of US sales tax. You can speak to the KnowGlobal team to find out more.

(SOURCE)

Everything sells, eventually: My most insane Amazon FBA experiment yet

By Peter Valley

The results of my totally insane cassette-single experiment.

(An earlier version of this story appeared in my book Blindspot Profits. This is the updated and expanded story.)

It’s true: Everything sells on Amazon, eventually. And I’ve proven it.

There’s a lot of talk about “what sells” on Amazon. My contribution to the conversation usually starts and ends with one line:

“Everything sells…. Eventually.”

Not everything. But close enough.

No matter how weird, obsolete, or pointless a used media item, there’s someone on Amazon weird enough to buy it – and hungry enough to pay for it no matter what it costs.

Failing to understand this means you’re leaving a lot of money on the table. And even though I say “everything sells” a lot, I don’t think I really internalized it until the experiment I’m about to recount.

Let’s take this to its extreme….

The insane experiment

One day I decided to see how far I could take this. And by “this,” I mean listing things on Amazon that any reasonable seller would assume no one would ever, ever buy.

I decided to make a really bad investment in some really obsolete media, and see what happened.

It’s been a year since launching this experiment, and I’m here to report the results. And it involves cassettes.

If you don’t remember cassette singles, that’s exactly why this experiment was doomed to fail

Remember cassette singles? Also known as “cassingles.” They were usually two songs, one on each side, in a paper slipcover. Their reign was roughly from the late 1980s to the early-1990s.

These offer literally nothing that is not found on other formats, except for possibly unique artwork. They offer absolutely no value, and no reason for anyone to buy them.

No unique content, least-popular format. It all raises the question as to if, in this century, anyone would ever purchase a vintage cassette single.

I decided to find out.

Sourcing cheap, pointless, obsolete media to resell on Amazon

One day on eBay I saw a listing for 385 cassette singles, mostly from the early 1990s. I jumped on it, and got the whole lot for $36 postage paid. Now, I could really test my theory that people will buy anything on Amazon…

The box arrived and I started going through all 385 of them with my scanner. Most of them had product pages on Amazon. If they didn’t, I threw them in the discard pile. I had too little hope for any of these selling to spend time setting up product pages.

Anything that I couldn’t list for at least $6 also went in the discard pile. That eliminated the vast majority of the lot. When it was over, I had 72 cassette singles I deemed worth listing.

I shipped them in to Amazon, and waited.

The results

And 18 months later (now), I tallied up the results. Here they are:

Total listed on Amazon: 72
Total sold: 11
Total Amazon payout: $57.75
Total investment: $36
Total net profit: $21.75

For several hours work, that’s pretty abysmal. But it isn’t the whole story.

First, the lessons…

Notice that over 15% of the lot sold. As much as I tell myself anything will sell, I actually had close to zero hope of even one of these cassette single selling. Not one. I just knew I had to find out for myself. Over 15% of them selling over the 18 months was a big confidence boost.

It’s true: Anything sells.

Two, we can learn a lot from what did sell. Of the 11, all of them were artists that were household names. As in, the most mainstream of the mainstream (Madonna, etc). These are artists that have tons of rabid fans who need to own everything they ever put out on every format. So it makes sense.

The majority of the singles I listed were not A-list artists. It was a lot of weird dance music from artists I’d never heard of. In the future, I would jump on investing in a collection like this again if it were all mainstream artists. Anything out of print from them appears to sell. This is valuable information to know, and I wouldn’t have learned it had I not run a test with the most undesirable items on the recorded music spectrum.

Epilogue

Aside from the lessons, there was one more thing that took this experiment out of “abysmal failure” status.

There were over 300 cassettes I didn’t send in. I put them back up on eBay, and actually received $8 more than I paid for them.

Total net profit: $65. And some important lessons.

Endnote:

If you want over 100 pages on weird, used items (like cassettes) that every other seller overlooks, I have a whole book about this: It’s called Blindspot Profits.

Basically it’s the top 20 things you’ll find in the second-hand market that 1) Every other seller misses, and 2) Can be sold on Amazon for big profits.

Check it out here.

(SOURCE)

- Let us know what you think of this article on the comments below!

Selling Shoes through Amazon FBA: 

Buying Decisions

By Rebecca Smotherman

We’re excited today to continue our 3-post series on selling shoes through Amazon FBA. If you didn’t get a chance to read the first post in the series (Why We Added Shoes to Our Sourcing Strategy), you can check it out here at this link. Be on the lookout for the next post next week on how to prep and process shoes for Amazon FBA.

Let’s get down to the nitty gritty details of sourcing shoes for FBA, shall we?

As I (Rebecca) mentioned in the introductory post of this series, I personally don’t source for shoes using retail arbitrage (RA). I tried it and came up dry. I use 100% online arbitrage (OA) for my shoe sourcing strategy. The gist of this post, however, will cover topics that apply no matter what type of strategy you use for sourcing. I won’t get into details of what types of stores to find shoes in, what brands to look for, what styles to look for, and so on. Instead, I’m going to talk about some fundamental issues related to sourcing shoes that you can apply to your own personal sourcing strategy, whether you prefer RA, OA, wholesale, or something else.

Our Initial Two-Week Shoe Experiment

After we got approved to sell in the shoe category, we decided to spend a two-week period sourcing shoes through OA, track the resulting sales, calculate our return on investment (ROI) and profits, and then decide from there how we wanted to proceed with adding shoes to our overall FBA strategy.

Every day for two weeks, I diligently looked at the deals on my Your Sourced Inventory list, spent my sourcing budget, and waited for the shoes to arrive at our doorstep. The shoes came in, we processed them, and we sent them to FBA and waited for the sales.

And waited. And waited. And waited.

I didn’t source any more shoes online for about five or six weeks after that, as I waited to see how our experiment turned out. The sales trickled in soooooooo sloooooooowwwwwwwwwly from those two weeks of sourcing. I was very discouraged that shoes I thought were a low rank at the time I bought them turned out to not sell for weeks and weeks and weeks. I questioned whether I should stop thinking about buying shoes and just stick to toys, books, or another category I already knew well.

Rather than completely giving up, I decided to learn more, ask a ton of questions, reach out to people who have experience in the category, and try again. It was a slow process, but here we are a year later – and shoes are consistently our second highest category in dollar amount of sales.

For the rest of this post, I want to give you several points of consideration for making buying decisions in the shoe category that will hopefully accelerate your learning process.

What I Wish I Had Known About Sourcing Shoes Before I Started

1. Shoes take a LOT of capital to buy.

Unlike categories such as books or toys, with shoes it’s not possible to take a small amount of capital, buy items at a ridiculously low price and high ROI, and turn a fast profit that you can reinvest within a short amount of time. Shoes can give you a great ROI and a fantastic average selling price (ASP), but the buy cost for one pair of shoes typically ranges from $20 upward. It’s not uncommon to spend $50 or more on one pair of shoes.

2. Shoes are long tail items.

Not only does it take a large initial investment (relative to other categories) to start buying shoes, it takes a lot of patience. Shoes typically do not sell at the same velocity as toys, books, groceries, and other faster moving categories. Shoes aren’t typically something that you can replenish, either. You generally buy a style of shoe, send it in to FBA, and move on to finding the next pair of shoes.

I sank a bunch of money into shoes in our original two-week experiment and became frustrated and disappointed that I didn’t get my return on that investment as soon as I had hoped. I eventually did sell all the shoes from that two weeks, but it took as long as six months for some of those shoes to sell – and in some cases as long as nine months. Once they did sell, the high ASP was nice to eventually see in our disbursement, but if we had needed that money back any sooner than nine months, we would have been in trouble.

The key with getting a steady stream of high ASP sales from shoes is to give yourself several months to ramp up. It will take several months of sending in a steady stream of shoes, and then you have to wait for those high-priced shoe sales to start trickling in. If you continually source shoes and send them in on a regular basis, after a while you will see the fruits of your labor in the form of higher disbursements and higher ASP. Stephen is always saying that patience brings profits, and that is definitely the case in the shoe category.

One item of note: Because shoes are a long tail item, it is more strategic not to go deep in any one variation, but go wide and buy multiple variations of the same style instead. It’s much easier to sell out quickly of one pair in each of size 6, 7, 8, and 9 than to sell out of four pairs of size 8.

3. Sales rank for shoes is much different to gauge than in other categories.

Each shoe listing on Amazon can potentially have dozens of variations, depending on the number of colors and sizes available. When you look at the sales rank for a pair of shoes you want to source, you aren’t looking at the sales rank for that particular pair of shoes; you’re looking at the sales rank for all of those variations combined. If the Amazon product page says a pair of shoes is ranked #568 in the overall shoe category, you have no way to know which size and which color of those shoes are receiving the sales that give it that low rank.

To further complicate matters, CamelCamelCamel and Keepa do not show sales rank history for shoes. When I’m making sourcing decisions, I don’t even bother looking at Camel for shoes. Keepa, however, does provide crucial information about whether or not Amazon has ever been in stock on any variation of shoes, and it shows price history. I highly recommend becoming fluent in using Keepa for making shoe sourcing decisions (you can get started reading Keepa graphs with this blog post).

So how can we make smart sourcing decisions if we have no way to know the current sales rank or sales rank history for a variation of shoes?

Here are two ways I can limit my risk as far as shoe sales rank is concerned:

* I stick with buying shoes that have a low number of variations. I prefer to buy shoes with only a low number of color options, not 15 or 20 colors. I also prefer to source shoes that don’t have a narrow, regular, and wide variation for each size. Tons of colors and tons of size options means more variations, which means the overall sales rank becomes increasingly meaningless as far as each variation is concerned.

* I stick with buying neutral colors (black, white, gray, brown). The majority of people are going to buy neutral colored shoes, and I prefer to buy inventory that’s more of a sure bet. I don’t buy shoes in a crazy floral print or neon green, no matter how cute they are — unless the only options on a low ranking shoe are bright colors and no neutrals; then I’ll branch out.

4. Every shoe seller likes to take a different approach.

Keep in mind that I’m trying to give you some general principles for making shoe sourcing decisions. Every seller finds their own groove, and you have to figure out what approach you personally want to take.

Some sellers prefer to stick with common sizes and colors, while some sellers like to provide Amazon customers with the hard-to-find colors and sizes. Some sellers stay away from sourcing half sizes because they find they sell less than whole sizes, but other sellers swear by sourcing half sizes because they’re harder to find and therefore more lucrative.

Personally, I usually stick to sizes 9-12 for men, 6-10 for women (but if 5 or 11 in women’s is currently unavailable on Amazon, I will consider buying it). That’s a wider range than some sellers would recommend; many will only source women’s 7, 8, 9. Also, I tend to buy more half sizes for women, less for men.

5. Look at reviews to see popular color and size.

A work-around for making a shoe sourcing decision without sales rank history is to read the reviews. Within the Amazon reviews for any verified Amazon purchase, you can see what size and color the customer bought. It’s fairly safe to assume that colors with more reviews are receiving more sales. You can also read the reviews and look at the “fit as expected” percentage to see if shoes tend to run small, large, or as expected. You can assume that shoes with a high percentage of “runs small” or “runs large” are likely to have a higher rate of return, which is a risk you might not be willing to take with your sourcing budget.

6. Look at the average price of shoes across all variations, not just at the price of the variation you’re considering sourcing.

This might be the biggest lesson I wish I had known before I started sourcing shoes. It’s possible that one random person will be willing to pay 3x for a blue leopard print shoe in women’s size 11.5 – but it’s not likely. It’s less risky to source shoes you can price competitively with other variations of the same size or color, rather than keeping your fingers crossed that someone will pay way above the average price listed on Amazon for your particular variation.

Shoes aren’t for everyone selling on Amazon. The learning curve can be steeper than with other categories, shoes require a lot of capital, and the wait for sales can seem like an eternity. Even if you read every word I say above and every word in every Facebook group about shoes, it still takes trial-and-error to learn the category through your own experience. Everyone will have different results, and everyone will find different areas where they excel and prefer to source. What works for me might not work across the board.

But if you’re willing to commit the time and money…and some more time…and then a little more time to learning the category, the profits are worth it. We’ve spent the past year ramping up our shoe inventory and now have a continual stream of high-priced sales from shoes on a daily basis.

Have you found success selling shoes through Amazon FBA? Is there anything you would add to my above list of points to consider when sourcing shoes? We would love to hear from you in the comments!

(SOURCE)

Pan-European FBA to help sellers boost sales during the Christmas period

The Christmas period is around the corner and Amazon are reminding merchants that they can help them boost sales to customers in UK and across Europe with Fulfilment by Amazon (FBA).

On average, 7 of the top 10 most successful UK Amazon sellers in any given product category are currently using FBA, and it’s clear why: FBA not only reduces the load on their warehouse operations, but it also makes it more likely they’ll win the Amazon Buy Box and get their products in front of buyers. In addition, FBA products are Prime eligible, so they reach millions of Amazon’s most loyal customers.

This year, the new Pan-European FBA programme promises to deliver an even better Christmas to sellers and to customers in Amazon’s European marketplaces. This new service helps sellers of any size export to millions of Amazon customers across the EU more efficiently than ever before.

Pan-European FBA enables sellers to deliver their inventory to a local fulfilment centre for Amazon to take care of the logistics; automatically shipping sellers’ products across its European Fulfilment Network according to the anticipated local customer demand. Amazon will then pick, pack and ship orders to customers from the closest fulfilment centre where the product is available, as well as handling all customer service inquiries for the seller.

(SOURCE)

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Amazon FBA Tries to Clear Out Euro Warehouses

By Ina Steiner

Amazon is giving sellers in Europe an incentive to clear out slow-moving inventory from its Fulfilment by Amazon warehouses in preparation for the busy holiday shopping season. An FBA seller from the UK forwarded an email with details of a promotion that kicked off on September 1st.

"Amazon is running a free removals and Long Term Storage Fee refund promotion from 1 September, 2016 to 30 September, 2016. This promotion is applicable to units in U.K., France and Italy fulfilment centres on which Long Term Storage Fees (LTSF) was charged on 15 August 2016."

The promotion applies only to units in the U.K., France and Italy fulfilment centers on which Long Term Storage Fee were charged in August 2016.

Another point to keep in mind: "Units of ASINs removed under this promotion cannot be sent to U.K., France or Italy fulfilment centres till January 1, 2017, unless your inventory level falls below the number of units you have sold of this ASIN in the previous four weeks."

Sellers who qualify have until September 30th to place their removal order.

(SOURCE)

- FYI to anyone who needs it!

How to start selling on Amazon UK and Europe with FBA

by Kiri Masters

As an Amazon Seller, what do you do when you think you’ve “tapped out” of the market on Amazon.com? You could design and release new products, sure. But why not leverage the winning products that you already have in a new market that’s hungry for innovation? Just like in the US, Amazon offers their FBA program in Europe and the UK. That means that you can ship your inventory to an Amazon warehouse in Europe and they will handle order fulfillment for local customers. This means that you can access millions more Amazon customers, and continue to leverage the operational simplicity of the FBA program.

So how does it work? Let’s answer some frequently asked questions from Sellers about Amazon FBA in Europe.

HOW DOES FBA WORK IN EUROPE AND THE UK?

Once your inventory has been imported into Europe and is with Amazon, there are two fulfillment options to choose from - European Fulfillment Network (EFN) or Multi-Country Inventory.

EFN allows sellers registered for FBA in Germany, France, Italy and the UK to store their inventory in one country’s Fulfillment Centre, and still fulfill orders throughout Europe, regardless of the marketplace the item was sold on. Alternately you can arrange to have inventory held and shipped from FC’s in individual countries, known as Multi-Country Inventory.

Once your Amazon Europe Seller account is set up, all your orders will be managed in the one Seller Central account.

DO I NEED TO SEPARATE PRODUCT LISTINGS FOR EACH COUNTRY?

When you register to sell in any of the Amazon European marketplaces, your seller account is automatically enabled to allow you to sell in all other Amazon European marketplaces.

However, this does not automatically create listings in each of the Amazon European marketplaces - you need to set each listing up individually on each marketplace.

WHAT ABOUT THE LANGUAGE OF LISTINGS, PRODUCT PACKAGING, AND CUSTOMER SERVICE INQUIRIES?

• Product listing language: each country’s Amazon marketplace has different rules. But regardless of Amazon’s requirements, you’ll undoubtedly have better results if you translate your listings into the local language.
• Customer Service: Amazon asks that you provide general customer service, including handling customer’s VAT invoice requests, in the language of the marketplace you list your products on.
• Product packaging: Technically, product packaging is only required to be in the language of the country of origin. However for the best customer experience, you should consider having your packaging, instructions, and inserts translated into the local language.

But finally, good news! You can still view Seller Central in the local marketplace language of your choice, as well as in English.

DO I NEED TO IMPORT MY PRODUCTS TO EUROPE?

Yes. Using FBA will require importing your products to another country for storage in an Amazon fulfillment center to sell them to customers in that marketplace.

To import products into the UK or Europe, you’ll be paying import taxes and duties upon arrival. Your shipping carrier may assist with this process. You’ll also need to apply for an an Economic Operator Registration and Identification Number (EORI) in order to import your goods.

Tip: Your company (or your freight forwarder) needs to be listed as importer/consignee and nominate a customs broker. Do not import goods as "Amazon" or to show Amazon as the declarant, importer of record or consignee!

Inventory sent to Amazon’s fulfillment centers needs to be sent under “Delivery Duty Paid Destination” freight terms with all relevant import duties, import VAT and other taxes paid by you. If inventory arrives at Amazon with unpaid taxes or duties, it will be returned at your (predictably exorbitant!) expense.

DO I NEED TO REGISTER FOR, COLLECT AND PAY VAT WHEN SELLING ON AMAZON IN THE EU?

Yes. You must collect and pay VAT if your inventory is sent to and held in the EU. Amazon will require a VAT number from you to complete your account registration.

VAT can be avoided only if items are sold from outside the EU, are genuinely low-value and are imported in small packages already addressed to individual consumers. And in that case, you’ll probably be either paying hefty international shipping fees or having to pass that onto your customers, inevitably resulting in less sales or profits for you. Sometimes the end customer is even sent a bill by the customs authorities for the import duties. Not a good customer experience!

Best to buckle up and invest properly in being compliant in this new potential market. For that, you might want to consult a professional firm that specializes in VAT applications and ongoing reporting on your behalf. 

WHAT IS vAT?

VAT, or Value Added Tax, is a consumption tax which applies to goods and service that are bought and sold for use or consumption in the EU.

As a seller, you collect the applicable VAT (currently the standard rate is 20%) from  the buyer at the point of sale. You’re then required to forward on the VAT payment to the relevant country’s revenue authority on specific dates.

If you’re familiar with Sales Tax in the US, this concept may be familiar.

SO HOW DO I GET STARTED ON FBA EUROPE?

1. Apply for a VAT number. If applying in the UK, go to www.gov.uk and follow the links to apply for a VAT number. You can also apply for a VAT number in other European countries.
2. If you apply for a VAT number in the UK, you should get a VAT registration certificate within 14 working days, though it can take longer.
3. Once you have your VAT number, you can apply for a new Seller Account in your chosen marketplace. This will be a separate account than your North America Seller account. To apply, you’ll need:
   1. A valid credit card
   2. Phone number
   3. Tax information - your EIN (or equivalent if you’re not a US entity), and your VAT number.
   4. Bank account which is in a country and currency supported by Amazon.
4. Enroll in FBA in your chosen marketplace. You may have a payout restrictions placed on your account while Amazon goes through the process of further verifying your business registration information.
5. Start preparing your inventory for import into Europe.  To start importing inventory, need to apply for an EROI number. Consider working with a freight forwarder or customs broker to help with the importing & customs process. Some shipping carriers such as DHL offer this service for a fee.
6. Create a plan for product returns. You’ll need to provide Amazon with a returns address in the country of the fulfillment centre. Without a local returns address your products can’t be returned and may need to be disposed without reimbursement to you. However, just like with FBA in the US, Amazon can repackage and re-sell returned items for you, as a default option. Just be sure to work this into your selling costs and avoid surprises.

So, it can be a long journey to get started on Amazon in Europe, but from many accounts it is well worth it. We’ll cover in more detail Why Selling On Amazon in Europe is Worth the Hassle.

If you have questions about the process, please leave a comment below and we’ll do our best to answer!

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