Maximising Amazon Profits in Europe

Intro

In this post I’m going to explain how to sell your Amazon products in Europe using EFN (European Fulfilment Network), how to price and maximise your profits. This is aimed at sellers with a co.uk account (but the majority will be the same for other home marketplaces).

One of the great things about selling on amazon.co.uk is that you can automatically list your items on the other European marketplaces (France, Spain, Italy and Germany) and if you’re doing FBA then Amazon will take care of the deliveries (for an extra charge of course). The image shows my Amazon sales for Q4 2017, the combined sales in the rest of Europe were close to my sales in the UK, profit wise they were actually greater.

Setting Up

To enable selling in Europe, in Seller Central go to “Inventory -> Sell Globally”. (I’m not going to do screen shots of EVERYTHING as that would take too long and be pretty damn tedious to write).

As I already sell in Europe the next page now shows a pretty little graph of my sales. What you need to do to enable sales (or change your European pricing rules) is click the link in the new top menu “Build International Listings”, on this page you select which marketplaces to sell in (do them all). You also need to change the “connections” pricing, I’d recommend setting it to £5 more (explained more in the next section).

I only bother creating listing that are FBA as I don’t want (or need) the hassle of shipping FBM (Fulfilled By Merchant) orders myself to Europe (the Channel Islands are bad enough).

Pricing

One thing you need to account for are the increased fees that Amazon charge for shipping to Europe.

All fees are available here. Some people recommend pricing a percentage higher, I wouldn’t recommend this as it under prices cheap items (so you could make a loss) and it overprices your expensive stuff (so it will never sell). By default I would add on a fixed fee of £5, to cover the extra charges. This makes standard size things more profitable and oversize stuff less so, but it’s quick and easy.

If you’ve got the time (and not too many products) you can manually set different prices on different marketplaces. If you use a re-pricer (which you should (different post)) then you can normally setup rules o multiple marketplaces. A cool and pretty cheap tool I use is EUEssentials (aff link), which lets you see and modify prices across all marketplaces very quickly (it also does some auto repricing but I haven’t experimented with that yet).

Converting Currency

Amazon are happy enough to pay your Euro earnings in to your sterling bank account, DON’T. The exchange rate they use is not the best (you know they have overheads and they’re not exactly a charity). Get your self a Euro bank account (much easier than you expect). I started off using World First (pretty good), by default they charge 2.5% but you can haggle them down (after using them for a while one email got them to reduce their rate to 2%). The best service I’ve found to use now is Transferwise, they only charge 0.3% and you can also get a Euro bankcard so you can pay (and withdraw) in Euros without any conversion fees. It’s actually worth getting an account simply for holiday money.

I did an identical transfer on World First and TransferWise at the same time to do a comparison, images below which speak for themselves. If I’d made the switch sooner I’d be quite a few grand better off, d’oh!

Transferwise

World First

So here’s a big affiliate link to Transferwise, sign up and save yourself a shed load of fees and I get a tenner for telling you about it :).

Pitfalls

With foreign customers come foreign questions, Google Translate is your friend. The other markeplaces also have different rules that you should read (like you read every TOS that you agree to). A few bits I’ve experienced:
I got suspended on amazon.de for selling a nerf gun:

The product is a “Nerf Rival” blaster. The sale of firearms which have a kinetic energy output of more than 0.5J is not permitted on Amazon.de. Further information can be found at: https://www.gesetze-im-internet.de/waffg_2002/

I’ve also had a warning for selling biocidal products (some cleaning thing).

You need to check Performance notifications daily on ALL marketplaces that you sell on, sometimes they only give you 48 hours to correct any lapses in judgement. You also want to check your customer reviews for potential problems. I had a few complaints about a board game being in English whilst the listing showed a different language, so I simply removed the listing from other marketplaces. I say simply but it’s a bit of a pain as you need to go into your inventory of each offending marketplace, find the listing and delete it. Hmmm that gives me a product idea.

You also need to watch out for VAT, different countries have different thresholds but if you’re close to hitting one that should mean you’re doing ok and have looked into it.

BREXIT, ha – who knows what that’s going to mean (VAT complications likely) but I’m guessing it’s going to make stuff a bit more complicated (and expensive).

A Little Webinar about Retail Arbitrage

So I did a webinar with Matt from The Secret Wealth Project, on the topic of Retail Arbitrage (buying stuff from shops and selling on Amazon). I’m always uncomfortable speaking in front of an audience (in person or virtual) but I quite like Matt and the fact we agree to disagree is cool. Only thing I’ll add is I should of answered “There’s only one King of the North and his name is Snow”.

I don’t normally waffle, so no idea how this lasted longer than an hour. If you watch all of it you probably need a bit of help and do some more useful shit than watching videos.

Different Selling Business Models on Amazon

So I’ve been selling on Amazon for just over 3 years now. In that time I’ve made a fair few mistakes and successes. I’ll document a load of examples in future posts. For this post I’m going to explain some of the different business models that Amazon sellers are using today (this is more for folk that don’t sell on Amazon or are just starting out).

Secondhand Stuff

firstsales
Great way of learning the process, sell the crap you’ve got around the house that you don’t use or read anymore. I tested the waters by sending in some books and DVDs (see the screenshot of my FIRST sales). Looking at the prices I’ll have lost money on those (I was testing (or clueless about fees)). I know a few people that purely source stuff from car boots (garage sales to US friends) and do pretty well out of it. The biggest third party seller on Amazon in the UK is Music Magpie and I think they do ok.

Pros:

  • Very cheap to get started

Cons:

  • Not so easy to scale

Retail Arbitrage (RA)

This is were you go out to physical “retail” stores, find stuff that you can buy and sell for a profit. At first it seems odd that you can buy something from a shop and then sell it on Amazon for a profit (even when you take all of the other fees and costs into account), but it’s very possible and lucrative. Major stores often do sales and 3 for 2 deals which means you can often find stuff cheaper than a wholesaler.

Pros:

  • Can be very profitable
  • Pretty easy to do
  • Cool if you enjoy shopping

Cons:

  • VERY time consuming (traveling)
  • Location dependent
  • Painful if you hate shopping
  • Not easily scaleable

I don’t enjoy shopping but it’s lucrative so I employ somebody near enough full time to drive around in a white van and shop (she loves it (I think)).

Online Arbitrage (OA)

This is the online version of RA, so you do your shopping online. Probably one of the most common business models on Amazon (I don’t have statistics to back that claim up with, it’s just from what I have noticed when speaking to other sellers).

Pros:

  • Location independent (can use prep centres)
  • Scaleable
  • Easy to find suitable suppliers and products (this is also a con)
  • Easily out-sourceable with VAs (Virtual Assistants)

Cons:

  • As not much skill is needed there’s LOTS of competition
  • Penny price wars
  • Not always repeatable (you need to keep finding new deals)

Flipping

This is just bizarre, Amazon prices fluctuate a lot. When the price is low you buy off Amazon, send the stuff back in to Amazon and sell at a higher price. I used to do this a bit when I first start selling on Amazon. I’ve made a fair few grand profit from it. I will post examples of some of these in a future post. You can also do euro flips, were you buy from co.uk to sell into the European marketplaces and vice versa (I used to buy light sabres from Amazon Germany to sell on amazon.co.uk).

Pros:

  • Pretty easy
  • Can be highly profitable (I bought things for £5 and sold for £32)

Cons:

  • You are restricted to what deals are out there
  • Cannot buy with a prime account and quantities are often limited (3 or 5)
  • Not scaleable
  • Feels like a grey area (to me) that Amazon could slam the door on

The Keepa graph below shows a flip I did, were I bought at ~£7 and sold each unit for ~£20. As an example of some of the random stuff I sell it was a soft hammer (with hindsight I wouldn’t of bought that as they took ages to sell).

Wholesale

This is now getting to the more ‘traditional’ way of selling businesses. You buy the products from a wholesaler and ship them to Amazon to sell.

Pros:

  • Scaleable
  • Repeatable
  • Proper invoices
  • Finding suitable wholesalers is hard (yes that’s a pro)

Cons:

  • Often lower profit margins
  • Not all wholesalers will work with Amazon sellers
  • Anybody can find easy to find wholesalers (competition)

Own Products

If you already sell your own products then adding them to the Amazon marketplace should be a no brainer. This is not something I do but have advised a few different businesses about it.

Private Label (PL)

In simple terms, you buy a generic product from a manufacturer or supplier (often imported from China), put your own brand on it and create a new Amazon listing. Promote the listing and sell for a profit.

Pros:

  • Highly scalable
  • You are creating an asset
  • Can be very profitable
  • Own the Amazon listing so should be no competition on it

Cons:

  • A relatively high investment
  • High risk (if it doesn’t sell you could be left with a lot of stock)

I’ve done a bit of PL with other people before and this is an area I am actively growing into at the moment.

Drop Shipping (DS)

I’ve got no experience of drop shipping on Amazon (I have on other platforms). This is basically when you do not physically have the product but still sell it. When somebody buys from you, you get your supplier to ship it to the customer. I know a few people that do this (some very successfully)

There are probably other models that I don’t know about (yet) but if you’ve ever wondered how third parties sell on Amazon they will typically be using one or more of these methods.