How To Know If Your Amazon Business Is Ready For Global Expansion

How To Know If Your

Amazon Business Is Ready For

Global Expansion

If you are running a successful Amazon business in one Marketplace you might be asking yourself, “what’s next?” You want to expand your profits. You are looking for a new challenge, while growing your business into something you can be even more proud of.  But, how do you know when to start expanding globally? What are the signs that you and your business are ready, and what should you be comfortable with before moving forward? Decisions like this are always going to be somewhat of a leap, but we can walk you through the phases your business will face that indicate you are ready for something more.

The good news is: The current iteration of your business does not have to be perfect in order to look toward international expansion. In fact, you should always be learning, growing, and improving your business as you gain more experience. Take a look at your goals and sales metrics compared to your projections to understand when you have reached ~80% of your goal.  If you are familiar with the “80/20 principle,” you’ll know that bridging the gap between 80% of your goals and 100% can be a tough task. If you haven’t seen it before, the 80/20 principle states that 80% of your profits are likely to come from ~20% of the total effort. Refining your listing, improving your marketing, and tweaking your products to find those last 20% of customers or sales will be a disproportionate amount of work compared to the first bulk of the sales. That means when you have hit ~80% of your projections it is a good time to begin looking at taking the next step. The remaining 20% can come over time through more passive day-to-day work.

Now that we have covered the basics of when to look at expanding, let’s evaluate what you need to shift your focus to a global market:

Product Fulfillment Process Guru

One of the first things you will need to do before you can begin selling in another country is have your product shipped directly to that Marketplace. Between the costs of shipping, product lead times, customs, or import/export taxes there is a lot to cover. Ideally, you already have a good handle on how to manage this for your current products. If not, make sure to study up and document your product manufacturing and shipping process (end-to-end from manufacturer to the Amazon FBA Warehouse). You’ll still have more to learn when you begin shipping to foreign Marketplaces (especially a country you don’t reside), but that is a much easier task to handle if you aren’t also trying to teach yourself the basics of shipping to begin with.

Additionally, even though there will always be a learning curve to expanding to new markets, use your experience selling on your local Amazon Marketplace to make an educated decision on how much product to order/ship overseas.  Obviously, you may not want to order a lot of units on your first attempt at selling in a new Marketplace (to help mitigate the risk if it doesn’t perform how you want it to). You also don’t want to order too little and run the risk of being out of stock, which could tank the priority of your listing before your product even has a chance to get off the ground!

Mastering Amazon Foreign Taxes and VAT

Import and export taxes aren’t the only financial hurdles you will need to learn to overcome when selling internationally. Just like in your home country, you are going to need to pay taxes/VAT on your revenue (heads up, you are also going to need to register a new business in the foreign country where you will be based). Many countries—especially EU—refer to it as VAT, but whatever the terminology you will want to understand how much it will impact your profit margin and the most efficient ways to pay it.

Similar to shipping and product fulfillment, however, the task of understanding various country’s tax systems is much simpler if you already have experience managing business taxes generated on your local Amazon Marketplace. A few things to look into include:

 

• How to register a business, return address, and bank account in the new country

• How to manage currency exchange for foreign currencies

• How to calculate and pay VAT/taxes

  • Note: Be particularly aware of the “Double Conversion Fee” error when dealing with both foreign currency exchange and VAT. You don’t want to exchange revenue to your local currency too early only to have to pay a fee again to convert it back when paying your yearly taxes.

The best recommendation is to find a partner service that handles many of the above tasks for you (or at least can walk you through them). Having a solid understanding of how each of the systems work is absolutely helpful in managing your business, but even with that knowledge, it can still be extremely time-consuming to handle it for multiple countries and regions.

Product Listing Pro

Creating the best product listings can feel like an art and a science. You want to create a message that represents your product well and connects with your intended consumer-base, but also ranks well in search results among other listings. There are many guides and tutorials available to help you craft your listing for your home Marketplace, and it is one of the primary skill sets for small business owners that grows the most from experience. When you craft listings for your products you are setting a certain tone. You carefully select words, use bullet points, and place images that you want to paint the perfect description of your product. Now, you have to do the same in a foreign language.

If you speak multiple languages (or even just took a foreign language class in school), you already know that translation isn’t a simple one-to-one exchange of words. Sentence structure, conversational flow, and tone can all vary from one language to the next, which means you need to translate your listing into the exact message you conveyed on your local Marketplace, not just the same words. You will find many automatic translation services online (Amazon even has one in seller tools), but you want to avoid these if you are taking global expansion seriously. Instead, you should find a native speaker who you can work with to translate your listing, and who understands the feeling/tone that you wanted to instill in your original listing. When you look through listings on your local Amazon Marketplace it is usually obvious which ones have used automated or amateur translation services, and it makes the entire listing seem a bit more unprofessional. There are many different service providers that can localize your listings for each Amazon Marketplace you want to expand to, so be sure to put the time in to create the best listing possible.

In general, being comfortable with Amazon’s seller tools is going to give you a huge boost in productivity when you are working on a foreign Marketplace. Having experience using Amazon’s tools means you don’t have to put extra time or effort into learning a new tool while you are focused on other new hurdles.

Read The Numbers

Finally, be sure that you are both tracking and utilizing the metrics you have available to you. If you aren’t already capturing expense and sales numbers in a spreadsheet (or another tool) you should begin immediately to help you get a stronger understanding of the quarter-by-quarter progress of your business. Expanding to a new Marketplace is going to initially have some unforeseen expenses. Outside of your normal seller metrics found on Amazon Seller Central—such as your seller rating and page traffic—you should be paying close attention to:

• Cost of production and fulfillment

  • You need to know for each product how much it costs and ship units to the Amazon FBA warehouse (for whichever Marketplace you are selling on). This will be particularly important as you figure out initial sales so you can appropriately manage product lead time (how long it takes to make and receive the units) for various shipping methods without losing money.

• Sales projections vs actual, stock, and product-lead-time

  • Experienced sellers know that running out of stock can have a very large negative impact on your listing. Amazon doesn’t like seeing that products are out of stock, and as a result your list rankings will fall. Be sure to understand how long it takes to get your units from wherever they are to an FBA warehouse. This will ensure you can maintain a healthy-level account without overpaying for storage fees.

• VAT and taxes on current year-to-date sales

  • Another fact mentioned above is the dreaded “Double Conversion Fee,” which is when you convert a foreign currency too early and have to pay that fee again to pay it back. Keep a close eye on how much you owe in VAT and only transfer what you need into your local bank account.

You may be able to turn a profit on some products with good instincts and quick math, but when you expand globally you are introducing too many new variables to be consistently successful without the right data.

Amazon Business

Summary: The bottom line is that expanding your Amazon Marketplace business on new Marketplaces and on a global scale, there are going to be a lot of new challenges to overcome.  Bring as much experience and time with you as possible on this new adventure, and make sure that this new experience isn’t going to negatively impact your local Amazon Marketplace performance.

PingPong makes global selling easier! With an expert support team ready to help merchants receive better rates for foreign currency exchange, reduce cost of paying global suppliers, settle VAT, and more. Check out why more than 43,000 online merchants trust PingPong as their global partners.

Psst…More Amazon Guides where that came from. Always be updated with the latest tips!

How To Know If Your

Amazon Business Is Ready For Global Expansion

If you are running a successful Amazon business in one Marketplace you might be asking yourself, “what’s next?” You want to expand your profits. You are looking for a new challenge, while growing your business into something you can be even more proud of.  But, how do you know when to start expanding globally? What are the signs that you and your business are ready, and what should you be comfortable with before moving forward? Decisions like this are always going to be somewhat of a leap, but we can walk you through the phases your business will face that indicate you are ready for something more.

The good news is: The current iteration of your business does not have to be perfect in order to look toward international expansion. In fact, you should always be learning, growing, and improving your business as you gain more experience. Take a look at your goals and sales metrics compared to your projections to understand when you have reached ~80% of your goal.  If you are familiar with the “80/20 principle,” you’ll know that bridging the gap between 80% of your goals and 100% can be a tough task. If you haven’t seen it before, the 80/20 principle states that 80% of your profits are likely to come from ~20% of the total effort. Refining your listing, improving your marketing, and tweaking your products to find those last 20% of customers or sales will be a disproportionate amount of work compared to the first bulk of the sales. That means when you have hit ~80% of your projections it is a good time to begin looking at taking the next step. The remaining 20% can come over time through more passive day-to-day work.

Now that we have covered the basics of when to look at expanding, let’s evaluate what you need to shift your focus to a global market:

Product Fulfillment Process Guru

One of the first things you will need to do before you can begin selling in another country is have your product shipped directly to that Marketplace. Between the costs of shipping, product lead times, customs, or import/export taxes there is a lot to cover. Ideally, you already have a good handle on how to manage this for your current products. If not, make sure to study up and document your product manufacturing and shipping process (end-to-end from manufacturer to the Amazon FBA Warehouse). You’ll still have more to learn when you begin shipping to foreign Marketplaces (especially a country you don’t reside), but that is a much easier task to handle if you aren’t also trying to teach yourself the basics of shipping to begin with.

Additionally, even though there will always be a learning curve to expanding to new markets, use your experience selling on your local Amazon Marketplace to make an educated decision on how much product to order/ship overseas.  Obviously, you may not want to order a lot of units on your first attempt at selling in a new Marketplace (to help mitigate the risk if it doesn’t perform how you want it to). You also don’t want to order too little and run the risk of being out of stock, which could tank the priority of your listing before your product even has a chance to get off the ground!

Mastering Foreign Taxes and VAT

Import and export taxes aren’t the only financial hurdles you will need to learn to overcome when selling internationally. Just like in your home country, you are going to need to pay taxes/VAT on your revenue (heads up, you are also going to need to register a new business in the foreign country where you will be based). Many countries—especially EU—refer to it as VAT, but whatever the terminology you will want to understand how much it will impact your profit margin and the most efficient ways to pay it.

Similar to shipping and product fulfillment, however, the task of understanding various country’s tax systems is much simpler if you already have experience managing business taxes generated on your local Amazon Marketplace. A few things to look into include:

 

• How to register a business, return address, and bank account in the new country

• How to manage currency exchange for foreign currencies

• How to calculate and pay VAT/Taxes . (*Note: Be particularly aware of the “Double Conversion Fee” error when dealing with both foreign currency exchange and VAT. You don’t want to exchange revenue to your local currency too early only to have to pay a fee again to convert it back when paying your yearly taxes)

The best recommendation is to find a partner service that handles many of the above tasks for you (or at least can walk you through them). Having a solid understanding of how each of the systems work is absolutely helpful in managing your business, but even with that knowledge, it can still be extremely time-consuming to handle it for multiple countries and regions.

Product Listing Pro

Creating the best product listings can feel like an art and a science. You want to create a message that represents your product well and connects with your intended consumer-base, but also ranks well in search results among other listings. There are many guides and tutorials available to help you craft your listing for your home Marketplace, and it is one of the primary skill sets for small business owners that grows the most from experience. When you craft listings for your products you are setting a certain tone. You carefully select words, use bullet points, and place images that you want to paint the perfect description of your product. Now, you have to do the same in a foreign language.

If you speak multiple languages (or even just took a foreign language class in school), you already know that translation isn’t a simple one-to-one exchange of words. Sentence structure, conversational flow, and tone can all vary from one language to the next, which means you need to translate your listing into the exact message you conveyed on your local Marketplace, not just the same words. You will find many automatic translation services online (Amazon even has one in seller tools), but you want to avoid these if you are taking global expansion seriously. Instead, you should find a native speaker who you can work with to translate your listing, and who understands the feeling/tone that you wanted to instill in your original listing. When you look through listings on your local Amazon Marketplace it is usually obvious which ones have used automated or amateur translation services, and it makes the entire listing seem a bit more unprofessional. There are many different service providers that can localize your listings for each Amazon Marketplace you want to expand to, so be sure to put the time in to create the best listing possible.

In general, being comfortable with Amazon’s seller tools is going to give you a huge boost in productivity when you are working on a foreign Marketplace. Having experience using Amazon’s tools means you don’t have to put extra time or effort into learning a new tool while you are focused on other new hurdles.

Read The Numbers

Finally, be sure that you are both tracking and utilizing the metrics you have available to you. If you aren’t already capturing expense and sales numbers in a spreadsheet (or another tool) you should begin immediately to help you get a stronger understanding of the quarter-by-quarter progress of your business. Expanding to a new Marketplace is going to initially have some unforeseen expenses. Outside of your normal seller metrics found on Amazon Seller Central—such as your seller rating and page traffic—you should be paying close attention to:

• Cost of production and fulfillment

  • You need to know for each product how much it costs and ship units to the Amazon FBA warehouse (for whichever Marketplace you are selling on). This will be particularly important as you figure out initial sales so you can appropriately manage product lead time (how long it takes to make and receive the units) for various shipping methods without losing money.

• Sales projections vs actual, stock, and product-lead-time

  • Experienced sellers know that running out of stock can have a very large negative impact on your listing. Amazon doesn’t like seeing that products are out of stock, and as a result your list rankings will fall. Be sure to understand how long it takes to get your units from wherever they are to an FBA warehouse. This will ensure you can maintain a healthy-level account without overpaying for storage fees.

• VAT and taxes on current year-to-date sales

  • Another fact mentioned above is the dreaded “Double Conversion Fee,” which is when you convert a foreign currency too early and have to pay that fee again to pay it back. Keep a close eye on how much you owe in VAT and only transfer what you need into your local bank account.

You may be able to turn a profit on some products with good instincts and quick math, but when you expand globally you are introducing too many new variables to be consistently successful without the right data.

Summary: The bottom line is that expanding your Amazon Marketplace business on new Marketplaces and on a global scale, there are going to be a lot of new challenges to overcome.  Bring as much experience and time with you as possible on this new adventure, and make sure that this new experience isn’t going to negatively impact your local Amazon Marketplace performance.

PingPong makes global selling easier! With an expert support team ready to help merchants receive better rates for foreign currency exchange, reduce cost of paying global suppliers, settle VAT, and more. Check out why more than 43,000 online merchants trust PingPong as their global partners.

Psst…More Amazon Guides where that came from. Always be updated with the latest tips!