Introduction
In this next section, we will focus on some Amazon best practices, including:
-
How to sell on Amazon
-
Amazon selling tips
-
How to improve your Amazon reviews
How to sell on Amazon
If you’re new to selling on Amazon, we recommend you review this Getting Started with Selling on Amazon guide to help you list your first products for sale. For the more seasoned Amazon sellers among you, here is some advice to help you enhance your experience selling on Amazon.
Understanding Amazon Sales Tax
Within the modern era of e-commerce, the world is your customer. Selling overseas has never been easier, but with that, comes the added complexity of ensuring you’re on top of Amazon sales tax and VAT rules.
Amazon Sales Tax: USA
You are liable to pay sales tax if shipping to any one of these US states:
-
Alabama
-
Arizona
-
Arkansas
-
California
-
Colorado
-
Connecticut
-
District of Columbia
-
Florida
-
Georgia
-
Hawaii
-
Idaho
-
Illinois
-
Indiana
-
Iowa
-
Kansas
-
Kentucky
-
Louisiana
-
Maine
-
Maryland
-
Massachusetts
-
Michigan
-
Minnesota
-
Mississippi
-
Missouri
-
Nebraska
-
Nevada
-
New Jersey
-
New Mexico
-
New York
-
North Carolina
-
North Dakota
-
Ohio
-
Oklahoma
-
Pennsylvania
-
Rhode Island
-
South Carolina
-
South Dakota
-
Tennessee
-
Texas
-
Utah
-
Virginia
-
Vermont
-
Washington
-
West Virginia
-
Wisconsin
-
Wyoming
The amount of tax you should pay depends on each state’s tax laws, as well as the total selling price of each item. You should ensure you review these tax laws carefully as there are a number of discrepancies and exceptions to the rule. For instance, some states such as Virginia expect handling charges to be taxable, whilst shipping charges are not.
Furthermore, Amazon sales tax rules will also differ if you offer item-level discounts, gift wrap charges and order-level discounts. Before you start selling in and around the US, ensure you’re clued up fully on what tax you’re expected to pay. Regarding sales tax and shipping, this detailed guide from TaxJar should help.
Amazon Sales Tax: UK
For sales tax purposes, the UK is defined as England, Scotland, Wales, Northern Ireland and the waters within twelve nautical miles of their coastlines. The standard VAT rate in the UK is 20%, but some items will either not be taxable at all (including most food and children’s clothes), or have a reduced VAT rate of just 5% (including children’s car seats and home energy).
Amazon Sales Tax: Europe
Across the EU, there are 28 sets of interpretations of the same tax system. Each of these have different tax rates, frequencies of filing and reporting, product rates (i.e. what’s taxable in one country may not be in another, or may have a different rate) and they also have different methods of collecting tax.
If selling on the Amazon Europe marketplace, you can sell to the following countries:
-
UK
-
Germany
-
Spain
-
Italy
-
France
Amazon Europe also has 31 (and growing) distribution centers across 7 countries, including:
-
UK
-
France
-
Germany
-
Italy
-
Spain
-
Czech Republic
-
Poland
And there are 5 different selling structures:
-
Merchant Fulfilled Network (MFN): This allows you to advertise with Amazon and use your own warehouse or a 3PL to fulfill and ship goods. If you’re using a 3PL warehouse to ship goods and it is in another EU country (i.e. you’re selling on Amazon UK with a 3PL in France), you must register for VAT in that second country as well.
-
Europe Fulfilment Network (EFN): This allows you to sell to all 5 Amazon marketplaces but you only ship from one warehouse, such as from the UK.
-
Multi Country Inventory (MCI): If you sell on Amazon and you choose to manage which countries you ship and store your inventory in, MCI could be for you. With fulfillment centers in all 5 Amazon Europe marketplaces available to choose from, there is the need for multiple VAT registrations if you ship or store inventory in more than one country.
-
Central European FBA: If you choose to list on one European marketplace, such as France whilst holding inventory in another one or two countries, such as Germany or Poland, you will need multiple (and separate) VAT registrations.
-
Pan EU FBA: Launched in 2016 and the newest way to sell to European customers, this allows you to sell on all 5 marketplaces. Your products can be stored in any of the 7 countries that Amazon has fulfilment centers in, but this requires you to complete VAT registrations for all seven countries and for all 5 marketplaces you sell on.
In basic sales tax terms: anywhere you ship from needs to have an accompanying VAT registration. As an Amazon seller, this could mean you end up completing up to 7 VAT registrations, and up to 64 tax returns per year; simply because each country and selling structure has different rules.
Read More: Selling on Amazon – A Retailer’s Guide to European VAT
Amazon Selling Fees
When choosing to sell on Amazon, you’ll need to ensure you’re clued up on the various Amazon selling fees you may be subjected to as a Pro Merchant, including:
-
Monthly Subscription Charges: With all Pro / Business Amazon accounts, you are charged a monthly fee, which depends on the specific marketplace you’re listing on. As an example, Amazon.com charges sellers $39.99 per month for Pro Merchants (sellers with a professional selling plan), which have over 35 sales per month.
-
Referral Fees: Referral fees are the fees that Amazon charge you each time you sell an item. The percentage you’re charged is based on the product category you’re selling in, as well as the value of the total sales price. Amazon will charge whichever of the following is higher for each item:
-
Referral Fee as a percentage of the sale price. This can range from 6-20%, but it’s commonly around 15%.
-
Minimum Referral Fee of either $0 or $1. Jewelry and watches are the only two categories this isn’t applicable for, as they each have a rate of $2.
-
-
Variable Closing Fees: The closing fee is fixed for media products, but is variable for all other non-media items. If you’re selling books, music, videos, DVDs, video games, consoles and software, you can expect to pay $1.35. If you’re selling non-media products, the closing fee will vary based on the weight of the package you’re shipping, as well as which shipping service you decide to use.
5 essential Amazon selling tips
When searching for Amazon selling tips online, you’ll find article after article on the topic. To help save you some time, here are the 5 essential Amazon selling tips you need to know:
Amazon Tip #1: Get to grips with Amazon SEO
In order to sell well on Amazon, you need to be at the top of the search results. Although customer reviews and fast shipping are crucial to doing that, you’ll get nowhere if you don’t get to grips with Amazon SEO (search engine optimization). Investigate which keywords your competitors are using and ensure you’re using the keywords you want to rank for in your:
-
Listing titles and subtitles
-
Listing descriptions
-
Image alt text
If you’re unsure which keywords you should be using, Amazon has their own Keyword Tool you can use to help optimize your copy around less competitive long-tail keywords. There are also various other free and paid for tools you can use for keyword research, including KWFinder and Ahrefs.
“Search is the primary way that customers use to locate products on Amazon. Customers search by entering keywords, which are matched against the information (title, description etc.) you provide for a product. Factors such as degree of text match, price, availability, selection, and sales history help determine where your product appears in a customer’s search results. By providing relevant and complete information for your product, you can increase your product’s visibility and sales.”
Amazon Tip #2: Use FBA
By selling with Fulfillment by Amazon (FBA), you will drastically reduce the time you and your team spend on fulfilling and shipping orders, you’ll also save space in your warehouse and appear in Prime-filtered searches. Prime Eligible products typically have higher conversion rates versus those that are not eligible for Prime delivery. Using FBA can be a winning solution for those intent on improving sales conversions on this booming marketplace.
Amazon Tip #3: Increase your conversions with the Amazon Buy Box
Quite simply: If you appear in the Amazon Buy Box, you are likely to sell a lot more. If you sell many of the same items as other retailers, you may want to consider dynamically re-pricing your items in order to remain in the box. There are tools to help you do this, but you can also do it manually if you prefer. Furthermore, a focus on decreasing inventory errors such as mispicks, misships and stock outs with the help of order management software will also help you win the buy box. And if you create a unique item bundle, such as 3 related beauty products, you should win the buy box time and time again.
Amazon Tip #4: Increase the quantity and quality of your reviews
Reviews are crucial to your selling success and you’ll need a healthy balance of both quantity and quality in your reviews. If you have customers raving about your products elsewhere, ask them to leave you a review on your Amazon listing. It’s also a good idea to have a small number of average reviews mixed in with the good so that your listing looks honest and trustworthy. Just as long as your overall review rating is good, you shouldn’t see a dip in sales.
Amazon Tip #5: Master the art of branding
When customers search for products in Amazon, they’re bombarded with a number of similar items from lots of different sellers. In order to win sales, you’ll need to stand out from the crowd! You’ll need to put some work in to understand your target audience and what makes them tick. Once you know that, work to ensure your product photos, pricing, product description, listing title and reviews all emanate what your target audience are looking for and wanting to buy.
5 tips for improving your Amazon reviews
There is a wealth of knowledge from experts all around the globe advising how you can get Amazon reviews, but here are some best practice tips to help get you started:
Tip #1: Exceptional customer service is essential
Exceptional customer service is the most effective way to differentiate your brand from your competition, increase the number of positive reviews you get and thus, improve conversion. Establish timely touchpoints with your customers and create a connection with them. Always ensure your replies are speedy (particularly to complaints and buyer questions) and don’t be afraid to show some personality in your messages. By using open and friendly language, you create a conversational tone, helping to improve trust and the relationship.
Tip #2: Timely shipments and packing accuracy are paramount
Accurate and on-time deliveries have always been a key piece of being a successful Amazon seller. Ensure that you have the correct inventory numbers on Amazon, especially if you sell on multiple marketplaces, and ensure you only ever sell what you can deliver. Not being able to fulfill an order is a surefire way of receiving a complaint or negative review!
Tip #3: Ensure your review tools are compliant with Amazon’s policies
There are many review enhancement tools out there for Amazon. Most have amended their approach to fit in with the recent change in Amazon’s policies, but it doesn’t hurt to verify that your vendor is compliant with the switch and updated policies.
Tip #4: Generating your first round of reviews is difficult, but not impossible
Incentivized reviews used to be a great way to drive an initial round of reviews to establish your products and brand on Amazon. However, Amazon are coming down hard on sellers with more of these than ‘organic’ reviews. Although generating your first round of reviews will be difficult, focus on your customer service, order fulfillment and product quality in order to naturally increase the volume of stellar reviews on your listings.
Tip #5: Historic incentivized reviews could be pulled off the marketplace
If you did choose to use incentivized reviews, it’s important that you identify any of your products that have high numbers of these types of reviews. You should be aware that their standing in Amazon search results could change with the recent updates to Amazon’s policies mentioned earlier. You could consider a tactical price change to counter this, or adjust your forecast and budgeting appropriately for a potential change in sales performance.
Read More: 7 tips to achieve glowing reviews on Amazon
Further Reading
Selling on Amazon: A Retailer’s Guide to European VAT