Selling on Amazon

[Rich Brady]

A client of mine was asking me about selling on Amazon and I have to admit I know very little about it.

Do any of you sell through Amazon?
How does it compare with/against eBay and your Actinic site?
Is it worth investigating or are there more beneficial avenues to explore?

Thanks in advance,

RiCh

[grantglendinnin]

Tried it before, once you get to a competitive pricing level - after Amazon take off their fees it made the effort virtually worthless.

Not worth the effort IMO - though these were all high-value items, perhaps other industries are different.

[leehack]

Lots of people become busy fools on Amazon, depends what you are selling I feel.

[Darren B]

I have been listing a few items recently, amazon charge me £18.50 to sell and item for £100

not worth the hassle if you ask me. I'll let my competitors waste there money, i would rather knock £15 off my askign price on my site

[kathynewman]

We sell alot on Amazon and yes the fees are heafty but for us it is good. I do wonder how much it takes away from sales directly on our site as Amazon rates very well in search engines.

We very carefully work out the prices taking into account everything and even with the fees on the whole we still make a reasonable profit.

Hardly list anything on Ebay these days as never did very well with it.

IMO Amazon yes is expensive but the volume of sales we get makes it very worthwhile for us.

[Fairyglass]

We sell alot on Amazon and yes the fees are heafty but for us it is good. I do wonder how much it takes away from sales directly on our site as Amazon rates very well in search engines.

We very carefully work out the prices taking into account everything and even with the fees on the whole we still make a reasonable profit.

Hardly list anything on Ebay these days as never did very well with it.

IMO Amazon yes is expensive but the volume of sales we get makes it very worthwhile for us.

In my market the reverse is true- competition on Amazon has driven the price down to a point where it's no longer worthwhile once fees have been taken into account. Our latest Ebay shop (my third attempt at one in three years) is doing well and in some cases we're able to increase prices above those on our site which helps with fees. I find both Amazon and eBay equally useful in terms of promoting customers to our sites, but sadly Amazon is no longer viable financially and I'm about to close our shop.

[pnagames]

we have been selling in Amazon with great success, ebay with decent success and Play with again decent success.

our pricing for all of the above is higher than our store to take into account fees etc.

in our view it would be foolish to disregard these sites as the money they spent on advertising is huge and indirectly it benefits us

we have seen a few customers jump ship from amazon to our site to buy the product as we sell it cheaper on the site

[Rich Brady]

Thanks for all the feedback guys.

I appreciate you taking the time out to comment,

Rich

[Benjamin Dyer]

Do any of you sell through Amazon?

Yes, Emma my wife is an Amazon Seller Central merchant, has been for about 18 months now, ever since they opened up the Sports category.

How does it compare with/against eBay and your Actinic site?

Taking off my Actinic hat for a moment... Firstly, the problems.

Frankly Seller Central is an absolute load of garbage. Almost everything about it feels about 10 years out of date. Inventory control is very difficult and your constantly at the mercy of other merchants. Everything listed is controlled either by ASIN or Barcode, if for whatever reason another merchant has uploaded the wrong image or description your in trouble.

Em has also had huge problems with phantom stock levels, products appearing that have previously been deleted and occasional orders from other merchants.

There is also a desktop product, my advise would be to avoid it, problematic and it tends to screw up your listings.

The most disappointing thing from my perspective is Amazon are absolute trailblazers in web market, they have built some of the most impressive apps and reinvented the infrastructure to host and support it. However, Seller Central is the pits, it has its own API but getting anything out of it very difficult. Frustrating to say the least.

Now for the good!

Yes its worth investigating, as a secondary channel complemented by your own store. The sheer quantities of scale make it almost impossible not to succeed. However from first hand experience some advise if you are planning to use it:

1. Amazon are HOT on buyer feedback, its like eBay on steroids, its very clear who comes first in the Amazon customer / merchant relationship!

2. They are also extremely pro active in monitoring Order Defect Rate, Cancellation Rate, Late Shipment Rate and Policy Violations. My advice in light of the above issues is to have a small product range, a subset of your core channel which you can monitor.

3. Its expensive, and Amazon encourages a culture of undercutting your competitors.

4. The deal is to get your product on the front is to have a combination of best price and a pre-fulfillment cancel rate of <2.5%. If you get this right its a winning combo.

5. Its hard work, it could just the the quantities but Amazon buyers seem to require 75% more effort than people that come direct!

6. THE BIGGEST ISSUE - Your at the mercy of Amazon. I know lots of people who have literally had their stores turned off over night for perceived policy violations or poor performance on some of the metrics. Use it as your sole channel at your peril.

If you want to learn some more about it happy to put you in contact with Em. For her business its worth the cost / effort combo but its taken a long time!

Hope this was helpful.

Ben

[acompton]

Amazon has been discussed before - search the forum.

I have had a lot of success as a Seller Central; and some conversion to site sales. I've said it before: there is a high trust factor for buying on Amazon.

The UI isn't great, but I haven't had the dire (groan!) problems that Ben decribes. If you do a good job, you won't have problems with the performance metrics.

You'll always get some negative feed back from the odd nutter, which can be demoralising. You have to learn to ignore it where its not your fault.

I find the biggest problem is in trying to contact customer. You have to send an email through Amazon, which arrives in a 'standard' form and either gets trapped by spam filters or the customer ignores it - especially at Christmas when they will be getting load of these emails.

[kathynewman]

One point on negative or neutral feedback from Amazon customers. If the feedback is deemed to be a direct product review such as "product no good" or "my dog didn't like this toy" then you can email Amazon and get these removed. The feedback is purely there for customers to review the service provided by the supplier not a product review.

[acompton]

One point on negative or neutral feedback from Amazon customers. If the feedback is deemed to be a direct product review such as "product no good" or "my dog didn't like this toy" then you can email Amazon and get these removed. The feedback is purely there for customers to review the service provided by the supplier not a product review.

Also, if you're a Market Trader, where Amazon set the postage, they will remove bad feedback about postage rates.

I wonder what Amazon would make of this recent gem:

"a little misleading wish i had read the details better"

[Stereo Steve]

Amazon can be very powerful for the right product. All the above is true but we still make serious profitable sales on Amazon Seller Central so it's very well worth it. Amazon are TOUGH on their sellers and won't take any BS. If you get an A-Z claim, you refund there and then, no question. If you are going to spend the rest of the day sulking about such things, it's not for you. If you can take it in your stride and see the bigger picture, go for it.

The problem with Amazon is that some products are effectively off limits. If Amazon sell it, you will never get the buy box while they have stock, regardless of cost. You will also find that some products (for instance TDK blank media) is sold almost at cost. This is because there are so many sellers trying to shift it.

The truth is that probably 60% of our Amazon sales come froma couple products which sell well (20-30 a day) and nobody else has stumbled upon (yet). Of course, you need to keep in mind before ordering 15 pallets of said profit that Amazon can see that you are selling lots of this item, out buy you and list for less at any time.

It's fast moving, it's rife with undercutting idiots but there is gold in there somewhere. Have a go, you never know.

[Stereo Steve]

Also, a good tip is that Amazon is great for end of line stuff. If the disties have stopped moving something and you can buy up the last of the line you will have the market to yourself and can make serious wedge.

[kathynewman]

Steve - did you ever get a definative answer re Amazon & VAT? (did post on Amazon Vat thread but no one replied)!!

[Stereo Steve]

You mean, when you account for VAT? On the advice of our accountants, we account for it when the sale is made and we treat the Amazon account as a bank account of ours, regardless of when funds are transfered to our current account.

I think it's open to interpretation but as far as I can see, this means we are liable for VAT at the point of sale and I'm happy with that. I can only see downside from taking any other approach.

Or did you mean something else? Age and alcohol are not good for the memory.

[kathynewman]

Thanks Steve - well that is good to know because that is exactly what we do.

Was thinking more along the lines of the VAT on the Amazon Fees tbh though - how do you deal with those?

(with you on the age thing btw!!)

[Stereo Steve]

Amazon fees are exempt aren't they? We get a monthly invoice and there's no VAT on there. It's removed at source. I can't remember if we had to register as we did with ebay.

[Rich Brady]

Thanks again for all the feedback I'll get the client to take a look at the thread.

Ben thanks for the offer of chatting with your wife. I may still take you up on that.

Rich

[acompton]

Amazon fees are exempt aren't they? We get a monthly invoice and there's no VAT on there. It's removed at source. I can't remember if we had to register as we did with ebay.
I've always understood this to be true, but I get a twinge when I see that phrase in the Amazon Fees invoice about the seller must account for VAT.

As I see it, you have to account for VAT on the sale (effectively to the end customer) and there is no VAT no claim back on the Amazon fee as its a B2B transaction between different EC countries. I did run this by the accountant back at the beginning and they agreed with this interpretation.

[Mike Hughes]

I've always understood this to be true, but I get a twinge when I see that phrase in the Amazon Fees invoice about the seller must account for VAT.

As I see it, you have to account for VAT on the sale (effectively to the end customer) and there is no VAT no claim back on the Amazon fee as its a B2B transaction between different EC countries. I did run this by the accountant back at the beginning and they agreed with this interpretation.
__________________
Alan

When you buy goods and services from another EU country then you have to account for the VAT in the UK at the UK rate. i.e. if Amazon invoices you from another EU country then you have to pay the current UK VAT rate of 15% to HMRC.

This should all be worked out on your VAT return when you enter the totals into the section for goods and services purchased from within the EU.

Mike

[acompton]

When you buy goods and services from another EU country then you have to account for the VAT in the UK at the UK rate. i.e. if Amazon invoices you from another EU country then you have to pay the current UK VAT rate of 15% to HMRC.

This should all be worked out on your VAT return when you enter the totals into the section for goods and services purchased from within the EU.

Mike

Hmm... then I've been getting this wrong all along. I can see a visit to the accountant coming up. Truth to tell, I have a feeling the accountant isn't up to speed on this one.

[pnagames]

now i am confused a lot more

as i understand people account the vat on the amazon sales on a different way.

i dont understand why you have to calc the vat on your selling price. in effect amazon is your customer and not the third person customer.

[acompton]

..then you have to pay the current UK VAT rate of 15% to HMRC.
And having paid it, I can then claim it back as a VAT output?

[acompton]

now i am confused a lot more

as i understand people account the vat on the amazon sales on a different way.

i dont understand why you have to calc the vat on your selling price. in effect amazon is your customer and not the third person customer.
I thought this for a while, but the end customer is actually your customer for VAT purposes (delivery is to the UK). This is probably one of the most confusing areas of VAT, and I've never seen a clear, worked example.

[pnagames]

but it is not my end customer really is it?

its like someone comes to you shop from us buys a game but asks for a delivery in the uk

[Mike Hughes]

It's not that confusing unless you try and make it so. VAT is chargeable on goods and services at the purchase price.

The customer buys goods at the selling price. They have to pay VAT on that at the current rate of 15%. Not much room for confusion or doubt on that.

Amazon charge you a fee for managing the transaction. You have to pay VAT for that service. As you're invoiced from another EU country they don't charge you VAT but you have to account for it (i.e. pay it) at the UK rate to HMRC.

Amazon may deduct their fees before sending you the customer payment, but that has no effect on the tansactions that have actually taken place.

Mike

[Mark H]

We have discussed elsewhere who is the customer, and it is clear that the end purchaser is the seller's customer. Also, the seller is Amazon's customer, since Amazon have sold the seller some "marketing services".

Say the end purchaser spends £100. The purchaser is charged £13.04 VAT, and the seller pays this £13.04 VAT to HMRC (my understanding is that most sellers work out what VAT the customer would have been charged, £13.04 in this case, and pay this to HMRC). Thus the seller is due £100, £13.04 of which is VAT payable to HMRC in the usual way.

However, as part of the process, Amazon have charged the seller for "marketing services". This charge is 15% of the purchase price, which they deduct from the money the seller gets. They don't charge VAT because the seller will have given them their VAT number on registration. The Amazon charge has to be accounted for in your VAT return, in exactly the same way as you would if you had bought stock from the EU (having provided your VAT number to the supplier).

So the seller gets £85, £13.04 of which has to be paid to HMRC in the usual way. The seller has paid £15 to Amazon, and has to account for the VAT on this EU transaction where VAT hasn't been charged (Amazon charges are not quite this simple, but this will do for an example).

Mike - I know this is basically what you said, but I wanted to provide an example.:)

[pnagames]

We have discussed elsewhere who is the customer, and it is clear that the end purchaser is the seller's customer. Also, the seller is Amazon's customer, since Amazon have sold the seller some "marketing services".

Say the end purchaser spends £100. The purchaser is charged £15 VAT, and the seller pays this £15 VAT to HMRC (my understanding is that most sellers work out what VAT the customer would have been charged, £15 in this case, and pay this to HMRC). Thus the seller is due £100, £15 of which is VAT payable to HMRC in the usual way.

However, as part of the process, Amazon have charged the seller for "marketing services". This charge is 15% of the purchase price, which they deduct from the money the seller gets. They don't charge VAT because the seller will have given them their VAT number on registration. The Amazon charge has to be accounted for in your VAT return, in exactly the same way as you would if you had bought stock from the EU (having provided your VAT number to the supplier).

So the seller gets £85, £15 of which has to be paid to HMRC in the usual way. The seller has paid £15 to Amazon, and has to account for the VAT on this EU transaction where VAT hasn't been charged (Amazon charges are not quite this simple, but this will do for an example).

Mike - I know this is basically what you said, but I wanted to provide an example.:)

i can understand what are you saying on the first part. still not convinced 100% but i think i will send this to my accountant to get his opinion.

2nd part (amazon fees). what do you mean? do you mean that you need to add these fees in the "purchased goods from EU" box? if so, then yes based on the way you work the vat and the fees, amazon fees will be another expense of the business and they need to be added to the purchases box.

[acompton]

Mike/Mark,

Thanks for the input.

2nd part (amazon fees). what do you mean? do you mean that you need to add these fees in the "purchased goods from EU" box? if so, then yes based on the way you work the vat and the fees, amazon fees will be another expense of the business and they need to be added to the purchases box.

I'm with Panagiotis on this one. I'm paying VAT correctly on the sale, but not accounting for the Amazon invoice on the VAT return. And also, how do I put the Amazon fees invoice into my accounts - it never gets 'paid'.

[Mike Hughes]

I'm with Panagiotis on this one. I'm paying VAT correctly on the sale, but not accounting for the Amazon invoice on the VAT return. And also, how do I put the Amazon fees invoice into my accounts - it never gets 'paid'.

Sure it does. there two transactions:

1. Customer buys at purchase price. VAT at 15% is included.

2. Amazon invoices for marketing fees.

Amazon may only send you the balance between the two, but that just means the two transactions (i.e. payment of the amazon invoice) take place at the same time.

Mike

[Mark H]

Sellers should receive regular statements from Amazon (this one has been sanitised and most of the transactions removed):

Greetings from Amazon.co.uk!
We're writing to provide you with an electronic VAT invoice of 2/2009 seller fees paid in connection with your sales on Amazon.co.uk Marketplace, Auctions, and zShops.
Here's your electronic VAT invoice:
------------------------------
VAT INVOICE
Invoice Date: 28/2/2009
Invoice Number: ************
Supplier Name: Amazon Services Europe S.a.r.L.
Supplier Address: 5 rue Plaetis, LUXEMBOURG, L-2338, LU
Supplier VAT number: LU19647148
Seller Name: **********
Seller Address: **********
Seller VAT number: **********
Date Description Price
(VAT Exclusive) VAT% VAT Total
03/02/2009 Seller Fees £****** 0.0% £0.00 £******
05/02/2009 Seller Fees £****** 0.0% £0.00 £******
07/02/2009 Seller Fees £****** 0.0% £0.00 £******

Totals £****** £0.00 £******
--------------------------------------------------------

VAT on this supply is to be accounted for by the customer (Article 56 service COUNCIL DIRECTIVE 2006/112/EC, Reverse charge applies in accordance with Article 196 of COUNCIL DIRECTIVE 2006/112/EC).

Please note that this invoice is not a demand for payment. An advanced electronic signature has been attached to this electronic VAT invoice.
To view your account at any time, access ************
Amazon Services Europe S.a.r.L., 5 rue Plaetis, LUXEMBOURG, L-2338, LU
R.C.S. Luxembourg: B 93815; Share capital: EUR12,500; Business license number: 100416
Amazon.co.uk - Amazon Services Europe S.a.r.L.

The relevant bit is the text under the total.

[pnagames]

i am getting more and more confused by the minute

i passed to my accountant which i am sure he will reply in a few months saying either he does not have a clue or he is as confused as me:D

[acompton]

I have talked to a VAT consultant about this one and this is the advice I received:

If you are VAT registered and are not restricted in the VAT you can claim back, then European B2B transactions incur no VAT, which is why the fees invoice from Amazon has no VAT on it. Strictly speaking, you should declare the VAT of the fee portion of your Amazon sales as an input and the ‘notional’ VAT of the Amazon fee as an output and these should be declared appropriately in boxes 2 and 6 of your VAT return. However in practice, as these two amounts cancel each other out and no VAT is lost in the process, these can be ignored completely. This practice is acceptable to HMRC. So the result is: the fee portion of an Amazon sale incurs no VAT.