The Seller Abroad

Using FBA to sell on Amazon from abroad… can't be that hard!

Category: Logistics

Questions – Part 2

Questions & Answers – Part 2

Welcome to the second post where I will share some questions and answers that have eventuated from the “Question?..Contact Me” form on this blog. There are some great questions that have come through and I believe the answers to these will be useful to the whole community. So let’s get into the Questions & Answers.Questions

Question 1

A question from the USA:

So I received a quote from the supplier in China, not realizing it was an FOB quote. With the customs fees and transportation costs how does one possibly turn a profit while doing this? Any advice or information would be greatly appreciated, it all seems next to impossible with the doubling of the COG’s just in transportation. Thanks for your blog, and all your information.

Answer 1:

I think this is something we can all relate to. I went through this exercise for a few products before I found one that would be profitable. I think it is important to realise that the freight portion of the cost is going to be much higher on your first ‘test’ batch of product due to the small ‘test’ quantity ordered. The freight ratio will get better on larger orders as freight per unit cost will reduce. That said, the key is to find a product where the numbers work. There are two general paths that seem to work. Number 1, you can try looking for a very small/light product to reduce transport cost; or number 2, look for a premium product that can be sold at over 3 times the cost of manufacture (FOB cost). A third option that I am yet to try myself is to source the product locally to avoid shipping and customs charges.  My first two lines of product fit into the number 2 and 1 category (in that order) and are turning a healthy profit.

I myself found this the biggest challenge in starting to sell a product. This is also why not every story is a success story. There is a fair element of risk. That said, nothing ventured nothing gained. I recommend taking the leap if you can afford the risk.

Question 2

This question is from the neighbour, Canada:

I read your cheat sheet for both shipping and tax id and have a question. When is it necessary to get an EIN? Would I be able to get away with not having one for shipping by courier such as UPS/FedEx? From what I’ve heard, they don’t really require EIN if shipment value is less than $2500, is this correct? Have you shipped smaller amount before using courier companies? What is the process with that? Do they basically take care of customs/duties and just charge you for that service?

Answer 2

To answer the question, you don’t need an EIN before importing product using UPS/FedEx. In my experience, the only time I required the EIN was when I had to collect sales tax for the items that were being sold on Amazon. My first shipment value was more than double the $2500 value and I did not require an EIN to get the product through customs.

I’d love to hear from anyone that might have had a different experience to mine. Please feel free to leave a comment with your thoughts.

Question 3:

Here is one from the UK:

I have a question regarding getting approval (un-gating) in certain categories in the US. I am based in the UK, and am looking to sell in the health and personal care category (although my product won’t actually be sold in that category, Amazon has told me I still need approval in this category). It seems Amazon will only accept invoices from wholesalers on their approved list and it turns out my China-based supplier is probably not on this list and so my applications keep getting disapproved. I was wondering if you’d come across anything similar.

For people based in the US it seems like all they have to do is buy a few random products from US based wholesalers and send in these invoices, and once they are un-gated, they can go on to sell anything in that category. But being based in the UK, I don’t think that will work as US wholesalers aren’t likely to send products to the UK, and UK documentation may not be valid for them.
Another difficulty of selling in the US from abroad!

Answer 3:

This is an interesting one. In my initial research into potential products I found that products in the health and personal care category were trending and ticked all the boxes in terms of being small, light and easy to ship as well as having the ability to sustain a healthy mark-up. That said, the complications highlighted in your question are the very reason I did not go down this path.

I’m afraid I cannot answer this question directly. The one idea that did come to mind is to have a US manufacturer package and send product to Amazon directly (not via the UK) in order to get approval. Once you have gotten approval, you can bring in product from abroad that meet all the required approval specifications.   

If anyone has experienced this issue and has a way of making it work please share your experience on the comments for this page. It would really help out a fellow seller abroad from the UK.

Questions – Part 1

Questions & Answers – Part 1

In this post, I will share some questions and answers that have eventuated from the “Question?..Contact Me” form on this blog. There are some great questions that have come through and I believe the answers to these will be useful to the whole community. So here goes the first of hopefully many Questions & Answers posts.  Questions

Question 1

This question is all the way from Macedonia:

I am not sure how I can import my goods in the USA without having a company there. My accountant told me that I need to have some entity (Company, etc.) in the USA that will be importer of the goods and I need to make invoice for the goods that will be paid by that entity. Are you doing something similar or you solved this issue on some other way?

Answer 1

You do not need to have a company in the USA to import. The Amazon recommended freight forwarders know how to set up the import details such that you can do it from abroad. I recommend having a look at the Shipping Cheat Sheet post for a detailed walk through on how to handling shipping from abroad.

Question 2

Another question from Macedonia:

Do I need to have EIN or ITIN number in the USA for tax collection in order to sell on Amazon?

Answer 2

Yes, you need an EIN for Sales tax collection when selling using FBA on Amazon. I recommend reading the Tax ID Cheat Sheet for a detailed walk through on how to obtain an EIN. 

Question 3

Third time lucky from Macedonia:

Do I need to create Invoice for each product bought by the end customer?

Answer 3

You do not need to create an invoice for each product bought. Amazon produces reports of the number of sales, amounts, discounts, etc. There are a number of reports you can get the Amazon system to generate for you to keep track of sales and cash flow.

Question 4

This one is from my local, Australia:

Is it worth it? Have read a few of your posts. Can one still make the $10,000 plus profit per month some sellers claim?

Answer 4

Good question! I’ve seen a lot of big claims out there as well. I guess it comes down to what you define as “worth it”. I can see hitting the $10,000 in revenue a month being realistic with about 3 or 4 products or 2 killer products. That said, $10,000 profit will probably require a much large business built over a couple of years with a good amount of invested capital. For me, this does not replace my primary income but serves as a good supplementary income stream that lets me live my lifestyle stress free. For example, 1 product with roughly $4,000 in revenue a month may generate $2,000 in profits a month, which is a nice little leg-up. The more products you add the better it gets. That said, you are obviously risking your investment with each new product. I am sure like any high risk investment, it pays of huge for some people (like in those claims you mentioned).

 

 

 

Shipping Cheat Sheet

Okay, so I’ve been getting a lot of questions of how exactly to go about dealing with shipping your product into the USA and to the FBA warehouse when you live abroad. I figured the best way to address this was to create a Shipping Cheat Sheet that takes you through the process and points out some of the sticking points. So here goes…

  • Firstly, ensure the quote from your manufacturer includes FOB – This is a service that most manufacturers offer. It means they will cover the cost of getting your stock loaded onto the ship.
  • Get a quote from your freight forwarder – Ask for a quote from FOB at the port of your manufacturer to the Amazon FBA Warehouse address.
  • Ensure customs brokerage is included in the quote – This is a fee that you pay for a customs broker to file the appropriate paperwork when your stock arrives at the US port.
    • Single Entry Bond Vs Continuous Bond – This is a decision you have to make when requesting the customs brokerage quote. There is a fee charged when you import items into the USA. This is basically a bond that you pay (and don’t get back). There are two ways you can pay this bond. Below is a description of the two options.
      • Single Entry Bond – This option, as the name suggests, covers the bond for a single shipment into the US. It is normally cheaper than the Continuous Bond (Usually between a third and half of the price) but it does take longer to clear at customs (about a week). Keep in mind that you will have to pay this bond every time you import product. Some freight forwarders have a policy of not allowing more than 1 single entry bond for a customer as this option requires the freight forwarder to mess around with an agent, which I am guessing is a waste of time for them.
      • Continuous Bond – This option, covers the bond for your shipments into the US for a period of 1 year. It is more expensive that the Single Entry Bond however it is much quicker (only takes about a day to clear at customs). Your freight forwarder will not require an agent to fulfil this option.
    • Make the Decision – I personally went with a Single Entry Bond as I was strapped for cash when I started and was unsure about how successful my product sales would be. In hindsight, I should have gone for the Continuous Bond from the get go. I now have a Continuous Bond in place. You will have to decide what works best for you and inform your freight forwarder.
  • Keep the freight forwarder informed – Despite you providing an expected shipment date, the freight forwarder will likely wait till you remind them to start booking things in. I would recommend you keep in touch with your manufacturer and give the freight forwarder a reminder a week prior to the completion date. At this stage, the freight forwarder will likely ask you for some paperwork and get you to fill out ISF form.
  • Submit Paperwork – You will likely have to send the freight forwarder an official invoice and a picking slip from the manufacturer. This cannot be done until the goods are complete so allow at least a week between completion of manufacture and the ship sailing. Once the freight forwarder receives these documents, they will use their foreign agent to book space on the next ship. These usually leave every week or two. The most complicated form you will need to submit is the ISF form, details of which will also be requested by your manufacturer in order to provide FOB service. Fortunately you do not have to wait till manufacturing is completed to fill out this form.
  • ISF Form – This form documents all entities involved in transporting the goods. The most confusing part about the ISF form is knowing who each entity is. If you have seen one, it basically asks for consignee details, importer details, container stuffing and loading details, ect. The ones you will need to worry about are Importer, Consignee, Notify Party, Seller, Manufacturer, and Ship-to Party details. Keep in mind that not all this information may be required, however I had to provide all of it my first time so I’m going to cover all bases for you. All other details will be done by the manufacturer or the freight forwarder. Let me try clarify these entity references for you as it drove me insane trying to understand what information I had to provide for which field.
    • Importer – This is yourself. You will need to provide your name and an Importer of Record Number, which is usually your Federal Tax ID. What’s that… you don’t have one? Nor did I! Luckily they also accept the following details in lieu of the Federal Tax ID: your passport number, country and document description, date of birth. So it should look something like this:
      • Name: Sherlock Holmes
      • Importer of Record Number: M1234567, Australian Passport, 22nd January 1986
    • Consignee – This is again yourself. Only issue is that this field sometimes requires a physical address based in the USA. If not, you can just say same as Importer. But what happens when they ask for an address? You use your Amazon FBA Warehouse address. It should look something like this (take note of the name section):
      • Name: Sherlock Holmes C/O Amazon.com
      • Address: 123 Warehouse Road, San Francisco, CA 12345-1234, USA
    • Notify Party – This is going to be the same as your Consignee. Sometimes they ask for the address details under Consignee sometimes under Notify Party.
    • Ship-to Party – This is just a name and Amazon warehouse’s address. Should look like this:
      • Name: com
      • Address: 123 Warehouse Road, San Francisco, CA 12345-1234, USA
    • Manufacturer – This is your manufacturer’s details. You will need to provide the name and physical address
    • Seller – In most cases this is the manufacturer, unless you are buying from a middle man. In which case, put in the middle man’s name and physical address.
    • Buyer – They sometimes ask you for buyer details. If they do, you can put in your name and your actual physical address in whichever country you live in. It does not have to be a US address.
  • Keep up Communications – Once the manufacturing is completed, promptly forward the invoice and picking slip to your freight forwarder. Ensure you inform them that the product is good to go. They will then communicate with the manufacturer using their agent in the country of manufacture to arrange shipment loading. This is around the time I also mark the FBA shipment on Seller Central as “shipped”.
  • Pay Freight Forwarder – At this stage your freight forwarder will likely request payment prior to commencing shipment. I recommend doing this as quickly as possible to avoid delays.
  • Wait – Now you wait until the product hits your Amazon warehouse. Most freight forwarders will inform you of the progress of your shipment along the way. If you are getting nervous, you can always email them to ask for an update. I tend to do that a lot! Be prepared to wait for a while. Shipment from China to USA takes about a month on the water. After that you need to clear customs (time varies depending on the type of bond you chose). Then there is the land portion of the freight which cannot happen till Amazon receives communication from your freight forwarder informing that the product is ready to send to the warehouse. Amazon will then have to give the freight forwarder a delivery appointment. During busy periods such as Christmas, you might have to wait a week or two to get an appointment.
  • Product Received – Amazon will inform you once your product has been received. Now you are good to go.

Hope that helped… Good Luck!

Shipping Clarified

I’ve had a few questions come through about shipping and quality control. In this post I’ll clarify how the shipping part works and what quality control measures you can take.

One thing you have to get used to, when dealing with shipping, is playing the middle man. This can be quite a frustrating experience when emailing across language barriers and dealing with logistics related terms that are super confusing. Especially so when you are in a different time zone where every sent email takes a day to receive a response and calling is not a great option. So be prepared for a potentially emotional experience!

Shipping - Freight ForwarderShipping – Freight Forwarder

I’ve mentioned this before but first of all, to make things easy, I highly recommend using the one freight forwarder for the entire sea/air and land freight journey. This means you have one point of contact for all things freight. If you choose a competent freight forwarder, they will hold your hand through the process, making dealing with all the freight jargon that little bit easier. When getting a quote, ensure you get a quote from FOB at the port in China all the way through to delivery to the FBA warehouse/s. Also ensure you ask the freight forwarder to include customs brokerage in their quote.

Shipping – Manufacturer

Negotiate FOB (Free On Board) along with your manufactured price. This is usually offered for free but if it isn’t, make sure you play hardball to get it for free. FOB means the manufacturer covers all costs to get the freight loaded on the ship. This is usually cheaper to do with the manufacturer than the freight forwarder.

Shipping – Play Middle Man

You will have to play middle man as mentioned at the very top of this post. You will have to inform the freight forwarder when the product is ready for shipment and pass on the freight forwarder’s Chinese agent’s contact to the manufacturer. Likewise, inform the freight forwarder of the contact at the manufacturers. This will ensure smoothest coordination.

Shipping – Quality Control

This part is a bit tricky. In general, you can negotiate to pay 50% of cost to manufacture when production begins and 50% once goods are completed. There are also escrow options (offered via Alibaba), which is a third party that holds on to the money until goods are confirmed shipped. These are options to avoid being scammed. With regards to quality control, ensure your manufacturer provides photos and videos of the finished product. You should review images of both packed and unpacked product. Unfortunately that’s about as far as budget conscious quality control goes. You can go a step further and enlist the help of a third party pre-shipment inspection company such as China Inspection Services. This can get quite expensive though. Freight forwarders generally will not do quality inspections for you. I did not use a pre-shipment inspection services as it wasn’t in my budget to do so. Other steps you can take to mitigate quality control risk is to inspect samples and test how far the manufacturer wants your business by asking for additional features such as labelled packaging and so forth prior to placing an order. The way I figure, these manufacturers want repeat business and so will try to do the right thing by you. Another factor to take into account is that when selecting your final manufacturer, make sure they have a good selling history (3 years or more) on Alibaba or Aliexpress. At least this way you know they are somewhat reliable. It was way too expensive to ship product to the US via Australia, so inspecting the product myself was definitely not an option!

Post Highlights for shipping clarified

  • Be prepared to be the middle man for most communications
  • Use a single freight forwarder for the entire journey
  • Ensure your manufacturer provides FOB service as part of their package
  • Use manufacturers with a good track record to mitigate quality control risks

Creating a FBA Import Shipment… The Big Decisions

I thought I’d sneak this post in as I’ve had a few friends that have got stuck when creating an FBA import shipment. This step fits in between getting your product manufactured and booking in the freight company. An FBA shipment is basically your way of lodging paperwork with Amazon identifying exactly what, when and how you are shipping items to the FBA warehouse. You can create one of these by going to the “Manage FBA Inventory” option under the main “Inventory” drop down menu.

Import Shipment Labelling

FBA Import Shipment

There are a couple of key decisions to make when creating a shipment. The first one is pretty easy; do I want to label the product or do I get amazon to? In my case, I chose to label the product myself given that I had purchased the UPC code. My manufacturer was more than happy to print and stick the barcode labels for free. I recommend going down this path as Amazon say they will charge for labelling, and I’m going to guess the charges would be somewhat unreasonable.

Import Shipment FBA Warehouse Selection

The second however gets complicated; do I want to ship to the FBA warehouse or warehouses Amazon allocates or do I want to choose my own? This is a bit of an interesting one and it is something you might try chopping and changing until you find a system that works for you. You will find that at times when you create a shipment, Amazon will request that you send your stock to a couple of different warehouses. These are usually warehouses that best suit Amazon’s distribution of the product. However, shipping to multiple locations can be a pain. There are a couple of ways around this.

  1. Enable the “Inventory Placement Service”. When you enable this service and create a shipment, Amazon will only give you the ship to location of one FBA warehouse where you can send the entire order. Note that there is a fee for this service. In order to activate this option, you will have to go the “Fulfilment by Amazon” tab under the “settings” menu. Here you will see a section called “Inbound Settings”. Click in to edit this section and choose the “Inventory Placement Service” tick box under the “Inventory Placement Option” section.
  2. Enable the “Premium Placement Service”. This is the method I used for my first shipment. It is the easiest but is quite expensive! Not only does this option let you ship to the one FBA warehouse but it also lets you choose which warehouse you ship it to. So you can pick a warehouse close to the port your ship will be docking at. Again, do not sign up for this without checking out the fees involved. In order to activate this option, you will have to email seller support by creating a case log and request this service. It will take 2 to 3 weeks to set up.

When deciding between going with the standard ship to locations or the two alternative options above, make sure you consider the additional fees involved as they can be quite steep. A painful lesson I learnt after my first shipment was that the fees for either option are charged in a one off lump sum about a fortnight after the stock arrives at the warehouse. I was initially operating under the premise that the fees would be charged per product as they were sold, so you can imagine my shock when I got hit with a massive bill!

When I did the sums, it worked out that he most cost effective way was to use the default FBA warehouses that Amazon assigned to me. Most good freight forwarders can pick up at one location and ship to multiple without too much trouble. I have avoided any sort of placement service option for my second shipment. The numbers work out better. Worth running the numbers yourself though as it largely comes down to your product weight, or dimensional weight (a tricky metric Amazon like to use), which Amazon use to calculate the service fees. Make sure you read up on dimensional weight on the Amazon website. It could mean the difference between a $700 and $1,100 fee… ouch! My take on it is that any premium kind of service you sign up for will likely be less cost effective but more convenient… makes sense right?

Those are the big decision when it comes to creating a FBA shipment. So take your time, do the sums and get all your details in. As soon as the shipment has been created, it is time to tackle the logistics side of things.

Logistics…. a learning experience

In this post I will cover dealing with the logistics side of importing product to a FBA warehouse.

Logistics

Logistics can be such a pain. If you are using the Amazon FBA service, you will need to create a product listing in order to find out which warehouse you need to ship your product to. At this stage, I wouldn’t waste too much time with the listing as you’ll have plenty of time to work on the marketing aspects of it while waiting for the product to be manufactured and shipped. That said, you will need to input product dimensions, weight, general information and a UPC code. If you do not have a UPC code, you can easily buy one on ebay or one of the several other websites offering it at a low price. I got mine from a site called Speedy Barcodes, which worked well for me. Once you’ve created a rough listing, you’ll have to create a FBA shipment that will provide you with the delivery warehouse information. The shipment can be created in your sellercentral account under the “Manage FBA Inventory” page. Now comes the process of vetting multiple quotes from several freight companies. Fun right…

Logistics – Picking the Freight Company

Logistics

In my case, I was transporting from China to America. In my extremely unclear state of mind, I decided to use three different companies for logistics for my first shipment. I had the manufacturer use their freight forwarder for the sea freight, I used a customs broker recommended by Amazon and used a land freight company I found online. It was a nightmare! I definitely do not recommend using multiple freight forwarders to get the job done. I strongly recommend using one of the Amazon recommended customs broker companies (found here) for the whole freight process first time around. It will likely cost you a bit more however it will save you a lot of trouble. The additional expense is usually not as bad as it seems when you spread the costs among the hundreds of products you are transporting.

The biggest help in using one of the recommended freight forwarders is that they know how to file the customs for someone that does not live in the USA. Most freight companies get confused with this and require a US address, which drove me up the wall…. Turns out you don’t need that.

Logistics may be a significant cost for your initial stock order, however if the product is a winner and you order larger quantities in the future, it will only get better. I am in the process of ordering 3 times the amount I did in my first order and the logistics costs per item has almost halved!

Post Highlights for logistics

  • Create a rough listing and FBA shipment to obtain destination FBA warehouse address
  • Stick to a single freight forwarder for the entire journey
  • Use an Amazon recommended customs broker for customs clearance
  • Be aware that freight cost can be high for initial small shipment. This will get better with the next bigger shipment

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