As the largest online marketplace in the world, Amazon provides an outlet for customers to buy just about anything. On the flip side, it provides an outlet for sellers to sell just about anything, and from anywhere.
From a profitability standpoint, purchasing items overseas to sell here in the US on Amazon is great in theory – we have many retailer clients who utilize this business plan. But it’s no easy game to play. Once you deal with crossing borders things get complicated.
Since some of our clients have asked questions relating to overseas customs laws and fees, specifically with regards to FBA, we decided to turn to an expert on the topic. We spoke with Nicola Phillips, FBA Manager at Shapiro with some of the common questions that Amazon sellers have about importing and exporting goods.
What’s the most important piece of advice you have for new sellers looking to import goods for an FBA business?
Shapiro: Educate yourself on all costs involved before placing your order. Importing involves several different cost factors, including but not limited to: Customs duties and taxes, freight forwarding Customs clearance, and of course there are the unforeseen costs such as Customs exams. It’s important to budget and plan for all these costs in order to properly price your products. Our aim at Shapiro is to educate sellers on all of these logistical cost factors as soon as possible, as these can really make or break a business.
What is the most common problem Amazon FBA sellers run into with importing/exporting FBA products?
S: Not doing their homework. We see a lot of FBA sellers ship goods without doing the proper research and they end up absorbing a lot of their profit margins to cover for costs they did not anticipate. As an example, if you didn’t find out what duties are imposed on your goods, and when they arrive you find out that the rate is 20%, that can really affect your pricing strategy. Other issues we see are sellers not working with budget-friendly freight forwarders, who end up shipping very inefficiently. The key is to partner with businesses that see the value in your success. At Shapiro, we understand the needs of FBA sellers and work with each of our clients individually to provide the logistics solution most suited to their business.
You talk a lot about Value Added Tax (VAT) and how important a role this plays when importing goods into the European Union. How do you keep these numbers organized and make sure clients don’t run into tax complications?
S: Shapiro doesn’t get directly involved with VAT management; the only taxes we deal with are Customs taxes (duties). However, we have partners in the EU that do provide fiscal representation services and work with each client directly on their registrations and tax reconciliations. Sellers can also choose to manage their own VAT filings if they haven’t budgeted for a fiscal representative, but to avoid possible complications, we highly recommend hiring a professional service to manage their taxes at least initially.
What does every FBA seller importing goods need in their toolkit?
S: Patience. Importing is a complex process and there is quite a sharp learning curve in the beginning. However, once you’ve been though the cycle once, it does get easier! Between freight quotes and Customs classifications, there are a lot of details required and it’s all for good reason. As a broker and a freight forwarder, we strive to provide clients with flexible logistics solutions that work with their budget, as well as keeping them compliant with import regulations. We truly care about our client’s businesses and take pride in helping them grow.
For more information on Shapiro’s FBA Consulting, visit www.shapiro.com/consulting/fba/