Refunds Manager Blog

This blog post has been created by Teikametrics: The world leader in leveraging data science and machine learning to automate advertising on Amazon. They’re offering Refunds Manager followers exclusive, early access to their new Retail Optimization Platform, Flywheel.

It’s no secret that Amazon has become a major destination for online shoppers. No matter what you’re shopping for, Amazon has become the go-to source for everything from toilet paper to sporting goods, clothing to toys for your kids. In fact, nearly 45 percent of all product searches start on the Amazon marketplace.

Before Amazon came onto the scene, there was no central marketplace for online retailers to access fulfilment and advertising services. Today, Amazon sellers have access to these advantages and more, and sellers who know how to use all the tools that Amazon offers are better equipped for success than those who don’t.

With that said, the world as an Amazon seller can be difficult to navigate, and it is important for online retailers to know the ins and outs of the ecommerce terrain. One of the most important aspects of financial understanding is gross profit. Most business owners feel that they have a firm grasp of what profit is. However, fewer might realize what exactly gross profit is, how it’s calculated, and why it is so important to Amazon sellers.

What Is Gross Profit?

Gross profit is the total amount of revenue that a company makes after subtracting its direct costs. For Amazon sellers, gross profit takes into consideration all of the expenses associated with selling on Amazon, including:

• Cost of Goods Sold (COGS)
• FBA fees that Amazon collects from sellers. These include fees for services like shipping, pick & pack, order handling, and storage.
• Costs associated with being an Amazon Sponsored Product
• Amazon seller’s fees, which Amazon charges per product, depending on the business category. Usually, this fee is about 15%.
• Other marketing costs, like promotions or Amazon advertising spend

Many Amazon sellers focus solely on profit, but gross profit is actually the more important metric to identify and understand. Let’s explore this further.
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Today on the blog we’re talking about how to know if you’re ready to launch your next Amazon brand. Is it time to take on something new? Or is your new idea just a distraction, and should you focus on your existing brand instead?

As an entrepreneur, these are important questions. Many entrepreneurs get about a thousand ideas a minute, so it’s up to you to know which one to pursue.

If you’ve had some success on Amazon and are wondering if it’s time to diversify, this post is for you.

The strategy behind building brands (instead of just launching products)

Before we dive into the criteria, let’s first take a moment to review the strategy of brand building, as opposed to selling random products that seem to be a good opportunity.
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Have you heard of Amazon sellers using third party logistics companies (in addition to using FBA)?

Do you think those sellers have lost their minds? Amazon offers storage and order fulfillment, so why would an Amazon seller use a third party logistics company, or 3PL?

Most sellers assume that 3PLs only need to be used for channel outside of Amazon, such as your own Shopify store.But with increased Amazon fees (especially long term storage), more and more FBA sellers are turning to 3PLs to help them save money.

We surveyed a few successful Amazon sellers who learned the hard way how to save money when working with 3PLs. Read on to learn more.

What is a third party logistics company?

A third party logistics company helps ecommerce entrepreneurs with storage, order fulfillment, shipping, and customer service issues like exchanges and returns.

This allows the entrepreneur to focus on growing their business, building their brand and increasing demand for their products, rather than worry about the nitty gritty details of order fulfillment, which is mainly time-consuming, low-skill labor.

What do 3PLs do?

Depending on the deal you make with a 3PL, the company might handle only storage (so you’re not shipping everything from your supplier to FBA) or they may also handle order fulfillment (if you are a multichannel seller).

Here’s a list of what most 3PLs provide:

• Ecommerce order fulfillment / pick & pack
• Long term storage
• Shipment receiving from suppliers
• International freight and customs clearance assistance
• 2-day or 3-day delivery (at an additional cost to the customer)

Why would an FBA seller want to use a third party logistics company for their Amazon business?

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Are you looking to expand your Amazon FBA empire? Do you want to avoid some of the costly mistakes you made in your first 1-2 years of business and choose a product category with fewer customer returns and more opportunities for success?

We’ve put together a list of the 8 top categories for selling on Amazon. Success is never guaranteed, but you can make running a profitable FBA business easier for yourself.

Read on for details on why these categories are great!
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Hey Amazon sellers!

Today we have a special treat for you. Jazzel Yousef, the owner of a private label brand on Amazon, is telling us some of the mistakes he’s made on the path to generating $400,000 a year in top line revenue within three years of starting to sell on Amazon.

How did you get started selling on Amazon?

I started back in 2015. I graduated from university in 2014 with a degree in electrical engineering. I tried to go into my first business venture which was mobile application development for Android and iPhones but that didn’t work out.
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Guest post by Chris Dunne from FeedbackExpress

According to BrightLocal, 79% of us trust online reviews as much as personal recommendations and 91% of consumers read online reviews for local businesses.

This is why product reviews are so vital for private label sellers on Amazon — they are a silent force that help drive sales and increase conversion rates.

Positive product reviews provide social proof and build consumer trust — potential buyers (and Amazon) can see you’re selling a quality product which people are happy with.

Product reviews on Amazon also help improve your product visibility, making it easier for buyers to find your products and boosting sales.

How to generate more product reviews

Firstly, (as I’m sure many of you are aware) it is against Amazon’s terms of service to offer incentives for product reviews. Don’t do it, it’s not worth it. If you get caught (and you will eventually), you’ll lose your selling privileges.

In Amazon’s words, “You may not intentionally manipulate your products’ rankings, including by offering an excessive number of free or discounted products, in exchange for a review.”

Amazon encourages you to request reviews but any attempt to manipulate reviews is prohibited. This includes asking for a positive review or providing incentives for reviews.

Getting product reviews on Amazon requires patience, but ask for reviews consistently and with the right message at the right time—the rewards can be considerable.

Here are typical engagement rates for Amazon sellers:
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A sales tax resale certificate is a form that confirms a retailer’s right to not pay sales tax on items they are buying and intend to resale. The idea is that even if an item is supposed to be taxable, a buyer who is going to be reselling the product can collect the sales tax during the final retail transaction. This allows resellers to buy more product with less capital. It also streamlines the tax collection process for the state.

How Do I Use One?

To get a resale certificate, you first have to be registered to collect sales tax with your state. (Remember, you’re going to be collecting sales tax when you resell the items.) Each state has its own application process, which you can find on its website. In many cases, there will also be an opportunity in the application process to request a resale certificate. But sometimes, just having a sales tax permit means you also have a resale certificate. Then, depending on the state, you’ll either be given access to blank resale certificates or given instructions on how to request a certificate for each wholesaler you work with.

Resale certificates should be presented to the wholesaler during the transaction. They will take the original and perhaps give you a copy back. Then, they will continue your transaction but your total will not include state sales tax. Depending on your state, you can use one resale certificate on all transactions with that vendor and you only need to update it when your license renews. However, in some cases, you may be asked to present a certificate for each individual sale.

What Do I Do If I Receive One?

If you’re the retailer being presented with a resale certificate, it’s your job to authenticate it. In some states, there are online verification systems but in many cases you’ll be verifying the certificate based on the information on it. It should be filled out completely and match the information of the buyer.

You must accept a resale certificate in “good faith.” This is just means that you have no reason to not believe the certificate is not being used in the manner it’s supposed to be used. So, if you know that buyer doesn’t intend to resell the goods or isn’t buying something they have tax exemption for, you can’t accept the certificate.

Once you verify the certificate, you should complete the sale without the sales tax. Then you should keep the original certificate in your records in case you need to provide documentation that the sale was tax exempt.

What If I Have More Questions?

Resale certificates aren’t super complicated but there may be a time when you need more information about the process. This is especially true because each state handles its own sales tax and can have differing rules. The best way place to get more information is to contact the state in question.

Most have basic information to help you on their websites and all of them will have contact information to have your questions answered by a staff member. This list of state websites will get you started. Just remember that even though it may take longer to get a reply, it’s always best to get your answers in writing for your records.

Do you have questions or something to say about using and accepting resale certificates? Start the conversation in the comments!

About the author

TaxJar is a service that makes sales tax reporting and filing simple for more than 10,000 online sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!