After many years of speculation, it has finally been confirmed that Amazon will launch its first website for the Nordic markets, www.amazon.se
For over 5 years, I have been working with Finnish companies to get their products listed and selling on Amazon Marketplaces around Europe. This seems like the perfect time to share a few key lessons I’ve learned over the years, to ensure your account set-up on Amazon goes as smoothly as possible.
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Before continuing, I want to be completely clear, I am going to be talking about Finnish companies selling their own products on Amazon Marketplace. That is the experience I have. There are many people identifying a gap (or niche) in the market, sourcing a product and then selling it on Amazon. This is a completely valid way of making business on Amazon, it’s just not my area of expertise.
Research The Competition On Amazon & Assess Your Potential Profitability
When considering selling on Amazon, the first thing to consider is ‘can I make money from this’? There are several factors you need to consider:
- Amazon’s costs
- Your production price
Amazon has several potential costs for marketplace sellers. For everyone, there is the Referral Fee, this is Amazon’s sales commission taken as a percentage. In general, this is 15% although some categories are lower. If you use the Fulfilment by Amazon service (FBA) there are other costs to consider. With FBA you ship a quantity of stock (e.g. a pallet) into Amazon’s Fulfilment Centre (FC) and then when a customer places an order, Amazon handles the onwards logistics; picking, packing and shipping to the end-customer. In this case, there is a Storage Fee (based on the dimensions of the product, the volume of space it takes in the warehouse) and the Fulfilment Fee ( based on the weight of the product)
The alternative to FBA is Fulfilment by Merchant (i.e. the manufacturer). In this case, you store the products in your warehouse and ship individual deliveries when a customer places an order. In this case, the only additional cost is shipping.
When considering profitability, you need to factor in your production price or the ex. works price from the factory. You also need to understand the competition in each marketplace. Are there competitive products that are much cheaper than your product? Can you afford to compete with these and still achieve a profit margin? It is not essential to just be cheapest, especially if your product offers other values or features. Before doing anything else, I would recommend researching competitors to understand the ‘market price’ then calculate your profitability.
I have developed a spreadsheet to calculate all of these factors and illustrate the profitability of your products. If you are interested in purchasing an illustration for your company, contact me. Even if you then decide not to continue, it would be worthwhile. Spending a few hundred euros and then deciding not to continue, will save you a lot more money and hassle, in the long-run:
First, Register For VAT
In the past couple of years, VAT legislation across Europe has become more strict. Countries are placing more responsibility on Amazon which is, correctly, being passed on to the marketplace sellers. What this means is that you will not be able to sell on Amazon using FBA, until you have registered for VAT in the target marketplace. For example, if you are putting stock in Amazon’s FC in Germany, then you need to register to pay VAT in Germany. This will provide you with a German VAT number and a certificate – both of which must be uploaded to Amazon.
If you are fulfilling you own orders from Finland, then distance selling rules apply, where you need to hit a certain level of sales into each marketplace before you need to register for VAT:
- France € 35,000
- Germany € 100,000
- Italy € 35,000
- Spain € 35,000
- Sweden SEK 320,000
My recommendation here is to make registering for VAT the first thing you do. Even before starting your Amazon Seller account application. Especially if you are planning to use FBA, because you cannot complete opening your account without it. While Amazon does offer a VAT registration service, I would recommend finding an external service provider. There are several companies offering VAT services for e-commerce and they will probably have your registration complete more quickly.
The following will give you an example of the info you will need to provide (it should not be considered a complete list as requirements may change or vary for each company/country):
- Photo ID – Passport of Legal Representative
- Extract of Trade Registry – available from PRH in Finland
- Company Bank Details
- Company’s Articles of Association – translated into English
- Certificate of VAT registration – available from local Vero office
Be Patient When Opening Your Seller Account
This stage has caused frustration for many Finnish companies. It IS bureaucratic and requires the company to upload a lot of documents. This is because Amazon needs evidence that you are a real person, opening an account on behalf of a legitimate business, and not a money-laundering operation!
The following will give you an example of the info you will need to provide (it should not be considered a complete list as requirements may change or vary for each company):
- Passport scan and proof of address for the company owners or Managing Director
- Official company registration documents
- Proof of address for teh company e.g. a utility bill
- Company bank account details
- Company credit card
- A ‘letter of authorisation’ giving the contact power to act on behalf of the company
- Connection to an Authenticator app (to provide two-factor login protection to your Seller account)
Apply For Amazon’s Brand Registry
Applying to Amazon’s brand registry not only gives additional marketing opportunities within Amazon, but it is also a necessity before you can create your product listings in certain categories e.g. grocery/food. The following will give you an example of the info you will need to provide when applying to the Brand Registry (it should not be considered a complete list as requirements may change or vary for each company):
- Your brand name that has an active registered trademark; the active registered trademark for your brand must appear on your products or packaging.
- The trademark registration number provided by the Intellectual Property office. Please note that we do not accept application numbers.
- A list of product categories (e.g., apparel, sporting goods, electronics) in which your brand should be listed.
- A list of countries where your brand’s products are manufactured and distributed.
- An image of the logo that appears on your trademark registration
Maintain Stock Levels & Product Availability
On Amazon, sales generate sales. The more you sell, the higher you will rank in the search results. The higher you appear in the search ranking, you more chance you have of getting more orders. This is why most advisors will tell you to invest in advertising at the start, to help gain visibility, orders and a higher search rank.
One way to undermine this is to not have a constant supply of stock. If you hit a good run of sales and then go ‘out of stock’ you will actively undo all your good work. Your product will start to drop down the search results page and your rate of sales will also decline. Be sure to monitor your sales and use Amazon’s tools to project your sales demand. Then try to maintain constant availability in Amazon’s FC.
If you are interested in selling on Amazon.se. I’d be happy to discuss this with you in more detail. Use the button below to reach out and let me know what you are thinking.
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