5 Most Common Questions On Scaling Your Business with Amazon FBA

Amazon_Box__MikeBlogs__CC_BY_2_0_.pngAt my Amazon consulting firm, AMZHelp.com, we have found there is no definitive step-by-step way or “cookie cutter” approach to building a successful business. Everyone has different capital limitations, time constraints, and competitive advantages. Our approach is to learn about you, your business, and your goals so we can gear our answers to your specific questions and situation. That being said, there are certain questions that continue to come up time and time again.

Here are the top 5 questions we receive about growing your business with Amazon and the  answers we offer clients.

1. How much capital should I start with?

The answer to this question should be based off of the goals you are trying to accomplish. With greater capital, you are able to purchase more inventory, expand into more product lines, and have a greater marketing budget. You should develop a goal on the size of the business you are trying to build and develop a financial model based on the fixed and variable costs. As long as you have an understanding of your level of capital you are working with, you can build a successful business.

2. Should I sell on other marketplaces besides Amazon?

Yes, you should exercise a multichannel selling strategy. By selling on multiple marketplaces you are taking advantage of having your product where your customers are. Some customers prefer the convenience of one-click purchases of Amazon, while another may prefer the bidding style of eBay. Whatever channel your customer prefers, your product will be listed on the site and be in front of the traffic of each of the different channels. If you utilize the Amazon FBA program, it easy easy to create a fulfillment order from your seller central dashboard.

3. Do I need a custom package to sell on Amazon FBA?

No, you do not need a custom package to sell on Amazon FBA. The minimum viable package is a polybag because it entirely encloses your product at the cheapest cost. If you are just testing your product, to see if there is a market, go with just a polybag. However, having a custom package helps develop your brand and serves as a way to differentiate yourself from other products. You can use your package as a way to tell your brand’s story or share more information about the product.

4. What are UPC codes and how do they work with Amazon?

A UPC (or Universal Product Code) is a machine-readable bar symbol with a 12 digit number. Each product has a unique, readable UPC code. It allows businesses to track inventory and process orders at an increased rate.

Every listing on Amazon has a unique UPC assigned to it. Amazon will automatically convert the UPC into their own internal SKU (Stock Keeping Unit) system called an ASIN (Amazon Standard Identification Number). You will need a UPC for every unique product you sell. When creating a listing, it is entered in the last required field on the first page. When you print the barcodes during the a shipping plan for sending products into Amazon FBA, your unique ASIN will be on the sheet to uniquely identify your product from someone else’s.

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5. How do I handle sales tax compliance for my Amazon FBA business?

Sales tax can be a challenging task to tackle. Luckily there is software that makes this daunting task more manageable. We recommend TaxJar to our clients to save time and manage the complexities. Here are the steps you need to take to manage tax compliance for your Amazon FBA business:

  • Determine where you have sales tax nexus
  • Register for sales tax permits in those states
  • Collect sales tax from buyers in states where you have registered for sales tax permits
  • Figure out how much you owe in those states
  • File sales tax returns

As I said before, there is no “cookie cutter” approach to building your business. Especially in the growth stage, there will be no shortage of work to do. Using the expertise of third-party software and industry experts will help you overcome roadblocks, and allow you to focus on the core parts of your business. 

This blog was originally posted on Tax Jar.

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