Last week I attended Prosper Show, a conference for Amazon sellers and service providers. Here’s a quick recap of hot topics discussed by experienced, high-volume sellers.
Hot topics for Amazon sellers in 2019
James Thomson, Co-Founder of Prosper Show and Ex-Amazon Insider:
- 50% of online purchases in the US are made on Amazon
- Changes to tax nexus rules (where to charge sales tax) in US since the June 2018 Supreme Court ruling. The change focuses on charging based on where customer is, not where merchant is located. Merchants are figuring out both logistical implications of reporting and financial costs taking away from margins.
- Fallout of US-China tariffs: merchants should now consider sourcing outside of China including Vietnam and other southeast Asian countries.
- Seller fulfilled Prime (SFP) and SellerFlex are FBA alternatives allowing products to be listed as available for prime promotion and shipping timelines, but the merchant stores and ships the product rather than Amazon. SFP is currently in beta but is expected to scale over the next 2 years
- Amazon private label products – contrary to popular belief, Amazon has not performed well with most of their private label products. Read more about this here.
- Amazon recently removed several first-party sellers, called 1P sellers who sell directly to Amazon) from their platform. (This is different from sellers who ship to FBA for items to be sold on Amazon called third-party or 3P.) 1P Sellers cut typically sell less than $10m annual on Amazon and many times sell oversized items that are expensive to ship. Read more about the change here.
Seller Fulfilled Prime (SFP)
Panelists: James Kelly, Co-Founder, Chairman, Jagerita Holdings
Eytan Wiener, Partner and Executive / COO & Co-Founder , Tradeport – product returns / Quantum Networks
Andy Slamans, Partner, Amazing Freedom
Matt Snyder, Director of Business Development, Ex-Amazon Insider, Varidesk
Why join SFP program? What are advantages of selling SFP over FBA or FBM?
- Adding the prime ‘badge’ increases business over selling FBM (20-30% in one case)
- Control over storage, packaging, and shipping methods.
- Good for high-priced items, oversized products (would have higher storage fees) or items with special shipping considerations (such as hazmat) that couldn’t be sold via FBA (due to FBA warehouse certification needs).
- Can handle returns better with customers – for oversized items can coordinate carrier pick-up rather than the customer needing to haul the item to a drop-off location.
- Can list more SKUs with smaller inventory count on SFP than is allowed via FBA.
- Typically not used as a replacement for items that work well on FBA, only when the product has special considerations such as size or handling considerations.
SFP Program – How does it work for sellers?
- Merchants can choose which states see SFP for that merchant (ie where they can ship it for a reasonable price in two days). SFP does not have to show to shoppers nation-wide.
- Can turn on/off SFP availability – merchants use this if they will not be able to ship in time or have another operational issue.
Metrics for Growth
Cyndi Thomason, Founder & President, BooksKeep
Paul Grey, Founder, A2X Accounting
Working capital = current assets (inventory, cash, bank balance, liquid assets, receivables) less current liabilities (debts, payables, taxes owed in the next 12 months)
Working capital ratio = asset/liabilities
- Less than 1.2 then you need to be careful with cash
- 2 and above is good.
Gross profit considerations for Amazon sellers:
- Selling cost
- Website fees
- Amazon commission
- FBA fulfillment fees
- Amazon advertising
- Gross profit
- Duty and taxes
- Product cost
- Shipping and handling
High-volume Amazon seller panel
Jonathan Goldman, President & Co-Founder, Quantum Networks LLC
Eugene Wong, Co-Founder, HDE
Kevin King, Serial Entrepreneur , Amazon seller
Brittany McCormick, Ex-Amazon Insider, Consultant
Steven Simonson, Managing Director of Catalyst88.com, Amazon seller
Scaling is better by expanding to other Amazon marketplaces (other regions such as pan-EU) rather than starting on other platforms (such as Walmart). Strategies and tactics (such as a high Amazon Search Ranking) that lead to success selling on one Amazon marketplace will produce similar results on other Amazon platforms. If you’re suspended or have a problem on Amazon US, it doesn’t mean you’ll have the same problem on Amazon CA.
Considerations when expanding to other platforms:
· Use a native speaker (even US vs UK) to create/translate the listing, truly localize, including images
· Us sellers expanding to the EU – be sure to account for VAT in your pricing and calculating margins.