PLH 99 | Brexit Risks

 

 Amazon is very large with all the different markets in it. Going beyond the US, the Amazon UK and EU market are definitely the potential recourse for those who want to expand. If you are aiming to grow your product sales into the Amazon UK and EU market, then you have to learn what they need. Amazon selling strategist Karen Codd answers some questions that bugs most Amazon sellers. Karen talks about the product changes you need to make in order for them to perform well in the UK and Europe, and gives tips on knowing when you are ready to move your brand. Getting deep into some Brexit risks, Karen lays down the effects it has on selling into the UK, what it looks like for the Amazon market, how it happens, and who pays what.

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I have an interesting guest, Karen Codd. She is an Amazon seller in the UK but more importantly, she advises Amazon sellers on getting into the UK market and Europe for that matter. I know there are a lot of questions you have about that. I was so excited to be able to bring her on here. She’s been selling and coaching for over five years. She has experience in lots of knowledge to share. I’m super excited. I’m going to go right into it with her because I have a list of questions right here. Some that I got from other Amazon sellers who are like, “If you’re talking to her, please ask her these questions.” Karen, tell me how you got started selling on Amazon?

We started the same way as a lot of many sellers. It was something of a side interest. We initially started to break into this new emerging market. We started testing different products. It eventually got to the stage where we were manufacturing our own products and private labeling them. We started in the US. We started in the UK. We eventually expanded into the other European markets. Much like everybody else, it was a lot of trial and error at the start. A lot of learning as you go along, a lot of trying everything that the gurus are telling you is the best way to do it.

Which doesn’t always work out?

A lot of going through different conflicting information that you’re getting from different people trying to find out what’s the best way to do it for yourselves. That’s how we started. As our business grew, it became more and more time that we spent on it. From there, it’s something that we spent the vast majority of our day.

How robust are the UK and European markets compared to the US?

It’s an interesting question because what’s happened is obviously the US market is quite developed. A lot of Amazon products that they bring up themselves in terms of the services that they provide to both customers and to also sellers are all tested in the US. Sometimes they’re parallel tested in the UK. Sometimes they’re not until they’ve been tested and trialed in the US. Then they brushed over to the UK and Europe. From a selling perspective, certainly when Amazon started encouraging a lot of the US sellers into the European market, what they did was they encouraged them. Because of the language, what happened was a lot of the US sellers went onto the UK, first of all. From there, they scaled up into the rest of Europe. The UK and German market combined is the second largest Amazon marketplace. It does speak to a huge potential for other sellers coming into those markets.

It’s so interesting because I hear from a lot of Amazon sellers who while they’re encouraged by the UK market and they think it’s a little bit easier because English speaking and all of that, it’s not all that dissimilar from what goes on in the mass market. We see the same exact thing because I’ve done the majority of my work with Costco, Walmart, Target and places like that. They do the same thing as they test first in the US. If it’s working, they start to explore Canada and UK next. From there, they’ll try Australia. From there, they’ll go to Germany. It’s interesting that the flow of the way that it goes. Japan is another one. When they do Australia, they usually test Japan. It’s an interesting way that retail expands and why should Amazon sellers be any different?

There are a few hazards to take in mind. Amazon is very large. Something as simple as the language doesn’t necessarily mean it’s the idea market for you to be scaling into. A lot of products need changes to them in order for them to perform well in Europe and the UK.

PLH 99 | Brexit Risks

Brexit Risks: The first thing that every business owner should do whenever they are bringing a product to market is research the marketplace.

 

 There are standard differences. We experienced that because I used to do a lot of office chairs. There are much higher fire standards, much more equivalent to California because California has strict standards. There’s a lot of that. If you’ve got upholstered goods, it’s very different in the UK and Europe.

There are certain products that would be allowed to be sold in the US, for example, that wouldn’t be over in Europe or the market may not even exist for them. For example, I was speaking to someone who was talking about bear repellants. This is a product which basically repels bears out in the woods. We don’t have many of those over here in Europe. It’s not something that certainly in the UK is not going to take off. One of the biggest things that did happen when Amazon began encouraging sellers into the UK and into Europe, but especially into the UK, is a lot of sellers lifted and dropped their inventory and lifted and dropped their listings. They hadn’t done enough research into whether or not the market was suitable, whether there was a desire or a need for that product in the UK.

That brings up the question, how do you research and how do know if your product is ready or if your brand is ready?

It’s the first thing you should do whenever you’re bringing a product to market. You need to research the marketplace. We spoke about language. For example, we have the same product in the UK, in the US. It’s called something completely different. Whereas in our UK marketplace, we may be familiar with the name that it’s called from the US because we get a lot of American TVs. We get a lot of American podcasts. We might have a little bit more language flexibility in terms of the actual words that are used to describe things than maybe it goes the opposite direction. You in the US may not have the same exposure to our different language. The specific words that we use.

You are going for things or terminology for things, your keywords, if you’re talking about that are different because what you most commonly call it is not necessarily something we commonly call it.

The first thing you need to do is you do need to research the marketplace. Look into things like obviously the usual things that you would do when you’re doing any research for a new product on Amazon. Review your bestsellers. Look at your new arrivals, your featured brands. The biggest source of information in terms of product development, in terms of what customers want, in terms of what they value, can be found in reviews, both negative and positive and obviously in seller feedback.

You need to be aware of things so that you don’t build yourself up for something that you’re not prepared for.

You need to be aware of things so that you don't build yourself up for something that you're not prepared for. Click To Tweet

That’s not that dissimilar. It’s the other marketplace and screening through that other marketplace, not assuming that you know all of that ahead of time. Use your metrics. You set metrics when you first looked at your SKU. Because it’s going well in the US, don’t assume when you should like, “I don’t see quite the same mix, but it’s doing so well over here. It will be fine.” It may not be fine for these reasons Karen is pointing out.

The different product standards in your target countries. For example, you mentioned upholstery, which is things like your electrical plugs are so different from the US and the UK. Even from the UK to Europe is different. That needs to be considered. Also, the types of materials that can be used is another one. It comes down to, “Is there a lack of the product that you’re selling in the marketplace? Is there a lack of demand for it? Is there an actual demand for it?” Those kinds of questions. The usual questions that you’d bring up when you’re doing some product research entering any marketplace are what you need to be looking at. Another thing that you need to be aware of, and this is something that you may not pick up directly on Amazon, but you can pick up from local websites would be cultural differences. There could be something that is acceptable in the UK but may not necessarily be acceptable in the US. In one respect, the US is more developed in terms of political correctness than maybe we would be in the UK.

You are a little more accepting than we are of things.

It might be something. I’m talking in terms of off Amazon, how you look at things like your social media campaigns. You do need to be aware of things like that so that you don’t build yourself up for something that you’re not prepared for.

It’s not the product fit, it’s every part of what you’re going to do, how you’re going to name it, how you’re going to market it. How you’re going to spread social media messages and how you’re going to package it. What materials do you use? How you’re going to check that all again. It’s a big undertaking to say it’s not a plug and play, “I worked here so it’s going to work over here.” That’s not how it happens. I think it’s the other thing. It’s always been daunting to me as the designer because I designed so many products. They do end up a lot of times worldwide, but it’s not like it was purposefully designed. I got asked to do some work for a Polish company. I was like, “I don’t know anything about the country. I don’t know anything about the people. I don’t know anything.”

For me, that’s critical to the design process because I want to deeply know that they’re going to love this color that they’re going to put in their home or I want to know that, or I don’t feel confident in my choice and what I do. What I know is the American consumer well. Other countries love to come here and do that, I get that. It doesn’t work as well going the other way because part of my research that I do would be what are your big department stores and what other shops do you have that are popular? Is this style trending? What are the big magazines that are read in your country? I don’t have full exposure to that because I don’t live there.

That’s it exactly. That information is available. You do have to spend time. The one thing you have to be prepared for is that when you do move into a new market, it’s not as simple as I say switching on your listings. It doesn’t happen like that. One of the big differences that we find with US sellers coming into Europe is understanding something as simple as how the price is displayed and sales tax and VAT. In the US, sales tax is applied after. You have your starting price. You get your sales tax on top of that. How it’s structured and how it’s displayed on the Amazon European marketplaces is the price that’s displayed on the listing includes your tax element. For example, you have a product that sells for £10 in the UK. What you will see displayed on the Amazon page is £12. £10 is your net price and then £2 would be your 20% VAT. Whereas in the US, what you would show is your $10 and your sales tax would be added on to your checkout process.

PLH 99 | Brexit Risks

Brexit Risks: Different places ask for different things. There is no one-size-fits-all.

 

 We’re in a little battle here in the State of California against Amazon here, which hopefully will end up in favor of US sellers and California sellers in particular. It’s very complicated because we have so many counties and all the other things, so the tax varies all the time. For third-party sellers to collect that money and then submit it to all the different counties, it’s like a large undertaking. We’re battling that here. One of the proposals that I’ve heard is to do it similar to the way that you do with the VAT so that the dollar amount would already include that, but Amazon would pay it on behalf of the seller.

That’s not fully how it works over here because what happens is while the price is displayed, and you are paid, basically what you end up in your bank account. When Amazon does their payout from the European listings, you would have the same as what you have in the US, your product costs, all your Amazon fees, advertising costs, if you’re paying it through your salary account. Those types of fees would all come out, but VAT is not withheld by Amazon. You have to keep that separately and build a fence around it so that it’s not used for something else because when your tax is due, you have to pay it on time. The figure that you get into your bank account is obviously inclusive of VAT. You do have to factor that in and remember that when you’re looking at your cashflow and say, “I have more than I expected to have.”

This is where we highly recommend a second account, a tax account, which we have here set up all the time in the US and money can be automatically transferred and all of those things. Be thinking about that because this is important. We’re talking about taxes and other things, what are the risks of Brexit? We’re getting a little like interesting news over here, back and forth. What are the risks with Brexit happening?

Amazon is saying so little about it because they can’t commit to something until they know what the actual Brexit will look like. With Brexit, what’s happening in the UK have voted to leave the European Union. That will happen at the end of March. For the best part of the past two years, negotiations have been ongoing between the UK and the European Union to determine the agreement that post-Brexit would look like.

What it looks like, how it happens and who pays what?

The agreement of what it will look like has been made. It needs to be voted upon by first of all the UK, then it has to be voted upon by the European Union, then it has to go through many different stages in order to be accepted. If the agreements that have been agreed already is accepted, what will happen is there will be a two-year period in which the UK as a whole, so that includes Northern Ireland as well as the island of Great Britain, will remain part of the Customs Union. The Customs Union is important because if it remains part of the Customs Union, it means it remains within the conditions for selling and moving goods into and out of the UK. If they don’t accept the agreement, the theory is that they would renegotiate an agreement before the end of March. The third option is that no agreement in how the trade will look after Brexit is made. At that stage that would mean that the UK is immediately out of the EU at the end of March.

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Does this have any effect though on a seller selling into UK and Germany? Do we store our inventory and goods in one central location, so it gets cleared through customs? Does that matter?

It does matter. This is one of the things that you have to consider. If you think about how many US sellers have moved into Europe at the moment, they have gone through the UK. What that has meant for a lot of US sellers is that they have moved stocks, they’ve moved inventory into the UK. They’re either storing that off Amazon in other warehouses, or they’ve shipped directly into FBA. What they have done then is when the goods have come into the UK, they’ve paid import tax. As the goods are leaving the UK, they’re transferred to other European countries, whether it’s to a customer in Germany, there are different programs that you can use within Seller Central.

For example, if you use Pan-European FBA, what that means is that you bring in your inventory into Amazon’s FBA network. They then move it to their European fulfillment centers. All of your stock is moving across borders. It’s moving through Germany. It’s moving into the Czech Republic, Poland, France, Italy and Spain. At the moment, that’s not a problem because there are no borders between those countries because they’re part of the European Union. As soon as the UK leaves the European Union, if they are in a situation of what we call a hard Brexit, which means that there is no agreement in how the trade will be maintained, you immediately have a border built up between the UK and Europe, which means that you are now exporting goods from the UK into the European.

You’ve exported them from the US to the UK, and then from the UK to somewhere else. You’re getting hit with taxes again.

You’re getting hit with paperwork. You’re getting hit with delays at ports. You’re getting hit with transport costs.

We’re going to keep our fingers crossed over here and say a few prayers for a soft Brexit for you. That doesn’t sound good for anyone especially you.

There will be contingencies. If you’ve already imported your goods into the European Union, through the UK, there will be measures made by HMRC, which would allow those goods to move freely into the European marketplace. It won’t be close the doors after and the gates come down without trying. There will be measures in place, but it makes things a lot more complicated. It can mean that there will be delays. I’m speaking about the worst-case scenario. The one we’re all crossing our fingers for is that we will have this transition period, which would be for two years after Brexit. In that situation, there would be no difference in how we’re trading. There will be no difference in how goods are moving through the UK into Europe. What that does give us is two years then for people to work on their supply chain, to work on where they would store their goods, to work on building up relationships with freight forwarders throughout Europe or with warehouse networks throughout Europe, so that they can move their inventory through a different supply route into the European marketplaces.

Karen, in case we have scared anyone off, I would love to talk a little bit about what your services are because this is what we’re here about and this is why I wanted to bring you on the show. What we are here about at Product Launch Hazzards is making sure that people are aware of the resources, the right things, the right order and the right resources is our motto here. Those things make things flow, they make things faster, they accelerate your business. They grow your brand faster, they do all of those things. You are one of those resources. Tell me a little bit about the consulting and agency services you have because it sounds like we need some hand-holding here.

Our agency has come out of what we’ve seen underneath. The questions that people are asking are ones that we know the answers to. Number one, because we are from this marketplace. We’re very familiar with how it works. That is something we deal with. Every single purchase we make has these VAT implications, but also my own background is in indirect taxes. I’ve worked for multinational companies looking after their indirect tax reporting or VAT submissions and all of that. This is my background. What you need to think about in terms of Europe and what you need to think about in terms of your de-risking your move into Europe. It’s all to do with your inventory. Where you store goods can trigger your VAT liability as in your obligation to register. The volume of sales that you make into a country can trigger your VAT registration requirements. You need to be aware of how you are going to fulfill your customer orders and where you think those orders are going to go. Are they going to go to Germany? Are they going to go to France? Are they going to go to the UK? You need a contingency plan for that. How you’re going to fulfill your orders and where your stock is going to move from and to?

PLH 99 | Brexit Risks

Brexit Risks: You need to be aware that there are differences that you can’t lift and drop.

 

 Does the type of product matter in that as well?

Generally speaking, goods are taxable. They’re VATable. It depends on the type of product. I don’t want to say it’s not that I can’t say it, I don’t want to say one size fits all. It’s not like that at all. No two Amazon sellers are exactly the same. They do not have exactly the same inventory. They do not have exactly the same type of product. What I would encourage sellers to do is when you have questions, get in touch with us. We’re happy to answer questions. In a lot of cases, it’s the same type of questions that are coming up. On that Contact Us page of our website, what we’ve done is we’ve set it up in such a way that we asked, “What is your most important question about entering into the European marketplace?” The second question then is why did you come looking for an answer? In that, 80% of our questions relate to this area. Then we can determine what’s the best approach for 80% of the people who are in touch with us.

You also do more than that. As we were talking, some of the advertising and social media messaging, you can help optimize that and do some other things as well on the frontend?

Absolutely. Especially in terms of language, if you’re moving into other European marketplaces if you think about it, your keywords, they’re not a direct translation from one language to another. We touched on that in terms of the specific keywords that are used in each country. When you’re building your listing, you refine your listing. You come across new keywords every month as you’re going through your search term report, for example. The initial stages of building your listing so that you’re getting conversions. It comes down to cultural differences even in terms of how you present lifestyle languages on your listing. That can have a very different look at how you present something to a German buyer as opposed to how you present it to a UK or a US or an Italian buyer. Everything that you consider for a US seller, you need to consider that. You also need to be aware that there are differences that you can’t lift and drop.

Do you offer product evaluations? If somebody has said, “I think I have this line of products, this brand, are these a fit?” Can you help them evaluate that?

What we would say is that the person who’s selling, the seller knows her product inside it. You’ve designed the product. You’re familiar with the product. You’re the person who knows the product inside out. We would work very closely to make sure that our understanding of the product and what you’re trying to get across as the main benefits, the main features of that product, are brought across. The other thing that a lot of sellers would like to know is whether the products actually sell once it gets into Europe.

It’s the big question here too.

What happens is you ordered a quantity because your manufacturer says you must order this amount in order for us to manufacture it for you. You’re saying, “Do I take a chance and order that?” What I would suggest that you can do is one of the services that we can provide is we would act as a reseller for your product.

You could market test it for us. I love that, Karen. That fits totally to our model here because we’re all about what we call market proof first. We want to know that the dogs will eat the dog food and the owners will buy it. That’s what we say here. That’s a great service, Karen. Thank you for letting us know about that.

Obviously, there are conditions on what type of product we take on. We’re not going to take on a three-star product and try and sell it as a five-star product because it’s our listing. It’s our seller account. We would be very diligent in how we approach those products and how we work with sellers to make sure that we’re representing their products to the best that we can represent them into Europe.

Karen, I think we could talk for hours on a bunch of different areas in global selling and all of these other things, but I think we need to have you back again especially after we get some more results on Brexit and we start to see what’s going on there. I think we should have you back on regularly. I’m going to do one thing. I’m going to put in the link to Karen’s company and to her website and everything. I’m going to put a tracker code. I’m not watching you. I want to see how many of you have interest and are reading to this because I don’t know who you are. Unless you’re on my email list, I don’t know you because you’re reading passively or actively on your end passively on mine. I’m going to put a track record in there to see how many people are clicking through, so we can watch Karen and see, do we have a large interested audience? If we do, let’s have you back on a regular basis because I think there are so many questions that we can ask. I want to invite you to send us some questions that you would like us to ask Karen as well in our next interview.

I’m very happy to answer questions. We’ve all been a new seller. We’ve all been afraid of the simple question that sounds too simple to ask. Ask any question you have because sometimes the simple question that you’re afraid to ask will determine the course of your next move. Don’t be afraid to ask the questions. We will eventually get to the stage of doing where we’re asking, “What’s your most important question to ask about moving into Europe?” What we’ll do is we’ll start putting together blog posts and different contents that specifically addresses those issues. We’re at the stage of what exactly like we know there’s a need there. We’re aware of it and we’re willing to open the ears and answer whatever questions you have. Keep the questions coming.

This is what we’re all about here at Product Launch Hazzards because that’s why we give you our resources so freely every month and why we do a lot of live streams because that gives you an opportunity to interactively ask questions right at that moment. Next time we do with Karen, we’ll see if we can get a live stream organized and maybe ask some of those questions. I’ll have some prepared that came from the community. We’ll live stream and get some more people to ask even more questions live because that would be efficient for everyone, you and them included. I believe in getting these questions answered earlier because when you know the answers to them, then lots of other things that you’re going to plan won’t require you to redo. Karen, thank you so much for joining us. I appreciate it. I look forward to having you back again. Product Launch Hazzards, we will be back next time with another episode. Social media is @HazzDesign Thanks, everyone. We’ll be in touch next time.

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About Karen Codd

PLH 99 | Brexit RisksShe’s been an Amazon seller in US, UK and Europe for over 5 years. In that time, she’s grown in experience and because of that have a lot of knowledge to share. No question is too small – we’ve all had to start somewhere! Sometimes questions you have need bigger answers than can be covered in a simple reply… therefore she now provides consultancy and agency services to other Amazon sellers, just like you.


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