Amazon Logistics Tips in Seller Central
- Use Case Pack instead of individual items
- Max # of pallets per shipment is 26
Amazon Logistics Tips in Seller Central
One of my good friends Tyler Jefcoat runs an accounting business for Amazon sellers. He’s been following the supreme court case that will impact all online sellers in a big way. With his permission here is his take on the court case in an article he published today, which can be found originally published here at SellerAccountant.
The Supreme Court issued a landmark decision on 6/21/18 in South Dakota v. Wayfair, INC siding with the State and overruling two prior Court decisions (Quill & Hess) to redefine what constitutes “nexus” in a given state. This has huge future implications for e-commerce sellers and we want to unpack this landmark decision for you.
Let’s start with a summary of the case and its core arguments. When consumers make purchases, the consumer’s states often impose a sales tax. This case requires the Court to determine when an out-of-state seller can be required to collect and remit that tax. All justices agree that taxing e-commerce sales is lawful and constitutional. The question is whether a previously held rule called the physical presence rule is a valid test for either including or excluding sellers from a given state’s tax law.
According to the old Quill ruling, a state only had the right to require sales tax compliance IF a company had a “significant physical presence” in the state. The court had defined “significant” as a company having a location, employees or inventory housed in that state. For e-commerce sellers, this was great news and created an advantage. It meant we only had to worry about collecting and remitting sales tax in states where we literally had a physical location.
Amazon FBA complicated things since Amazon moves inventory to any of its fulfillment centers across a growing number of states, therefore, giving a seller nexus in those states. Amazon’s extra confusion meant that sellers were at most on the hook for the 26 states where Amazon had an FC. Sellers had a hard time determining whether to file in a particular state and recent MA, PA and WA rulings have made this risk management decision even harder.
Back to South Dakota v. Wayfair, INC: It is impractical to collect a use tax from each citizen and the result of non-compliance is estimated to cost the states between $8-33 Billion a year(the Court opinion cited multiple studies). In response, South Dakota enacted a law in 2016 to try to correct this issue by asserting authority to require all sellers who sell into their state above a minimum line to collect and remit sales tax regardless of whether they have a physical presence in SD.
When Wayfair and other large sellers Overstock and Newegg decided not to comply with the new law South Dakota filed suit. The defendants asked for a summary judgment thus combining their cases into this one case, South Dakota v. Wayfair, INC. The lower courts sided with the companies against the state because of the precedent established by Quill and Hess (the 2 prior landmark Supreme court cases).
The Supreme Court decided to weigh in on the case and heard arguments in April of 2018 and have now issued an opinion on 6/21/18.
The Justices ruled 5 to 4 in favor of the states. In Kennedy’s words: “Held: Because the physical presence rule of Quill is unsound and incorrect, Quill Corp. v. North Dakota & National Bellas Hess v. Dept of Revenue of Illinois ARE OVERRULED.” Check out the actual 40 page Supreme Court Opinion here.
The South Dakota v. Wayfair, INC opinion means that the physical presence rule no longer applies and that the states have the right to enforce sales tax laws on any seller above a “reasonable” minimum regardless of whether that seller has any physical presence.
In an effort to protect small sellers and startups, South Dakota established minimums of $100,000 per year in revenue OR 200 distinct transactions. This means any seller who doesn’t sell at least these minimums into South Dakota in a year is exempt from collecting sales tax. Since the population of South Dakota is very small these minimums will likely exempt almost all out-of-state sellers who sell less than $10,000,000 per year unless their products are particularly popular in SD.
We aren’t 100% sure yet if this is good news or bad news for 3rd party sellers because this ruling doesn’t at all address whether marketplaces like Amazon should have to collect taxes for its 3rd party sellers.
This is a major question that South Dakota v. Wayfair, INC doesn’t settle. Will Amazon respond by using its existing sales tax infrastructure to make this compliance headache disappear from the plates of millions of 3rd party sellers? Although this ruling doesn’t address platforms like Amazon it does appear to be one more logical step down the path toward Amazon owning the sales tax problem for its sellers.
Since this ruling most directly gives states the right to create and enforce sales tax legislation against sellers without addressing Amazon things may get more complicated before they get a lot easier. In other words, unless Amazon voluntarily steps up to the plate many sellers who have ONLY had to file in the fulfillment center states may now have to file in additional states since physical presence isn’t required any longer.
Although the fate of Amazon and its sellers is somewhat up in the air this is definitely bad news for Wayfair, eBay, Newegg and other large sellers and marketplaces who aren’t already collecting and remitting sales tax. These companies took pretty strong stock price hits when this ruling came out on Thursday as you can see on the following chart via Bloomberg:
Amazon suffered the least because the effect on Amazon and its 3rd party sellers remains to be seen. Just as importantly Amazon is already collecting sales tax in all required states on products that Amazon directly sells and Amazon already collects and pays sales tax on behalf of 3rd party sellers in two states (Washington and Pennsylvania). This means that Amazon has the infrastructure to make a move and has already proven in WA and PA that sales won’t be radically harmed by adding sales tax.
Each state is now going to present and pass a new sales tax law (at least 16 are already in process or completed) and will follow South Dakota’s law as a template in an effort to collect those billions of dollars that have been slipping through the cracks. We hope states set volume minimums that are higher than South Dakota’s and therefore proportionate with their population sizes (i.e. South Dakota makes up a quarter of a percent [.27%] of the US population while California makes up 12.14%). So if California’s minimums were to be 45 times more than South Dakota’s since the population is 45 times more then California’s minimums would look like this:
If this trend held true for all states then only sellers selling more than $25,000,000 a year would even need to worry about sales tax in most states. Our suspicion is that states like California that have a much stronger appetite for regulation won’t be nearly as generous as South Dakota has been. So don’t expect the final outcome to be this rosy but our guess is that states will compromise depending on the political climates and that most of the newly taxed sellers will be 8-figure sellers. If we are correct then this is great news for 95% of all e-commerce sellers. Oddly enough this is also great news for large traditional retailers like Target, Walmart, Best Buy, etc… who already had to pay sales tax in all states that have one.
South Dakota v. Wayfair, INC should immediately make sellers do at least two things:
First, you don’t need to use the physical presence rule to determine if you should file, collect and remit sales tax in states since this new ruling has eliminated the physical presence rule.
Second, It is critical to stay on top of where you sell your products to and to stay up to date as states enact new sales tax laws over the next 12-18 months. Make sure your accounting and compliance partners really understand the ins and outs of this evolving landscape. Our accounting clients have had a good experience with TaxJar as a sales tax filing software. If you don’t have a good software partner check them out.
Seller Accountant will keep you updated as we see things unfold. Feel free to reach out to Seller Accountant if you have questions about your specific situation.
This post was co-written by Seller Accountant CEO, Tyler Jefcoat, and Accounting Intern, Christian Joseph.
Amazon continues to change how you do shipments for FBA. In the last year alone they’ve added the following options:
Amazon has even started forcing categories like Beauty to all use Amazon labels, tracking all inventory back to root seller instead of commingling.
In this video I walk through a basic shipping plan. If you’ve never made an FBA shipment before, or you’re rusty, it’s a great tutorial to navigate the ever changing Amazon ecosystem.
Getting a trademark is more important to your business than ever. A trademark protects your products and your brand. Without it, you have no recourse to another person or company ripping off your stuff.
Today it’s never been easier to order something off Alibaba Express and start selling an item. We live in the Amazon private label age. If you spend time and money investing in a new idea and don’t get a trademark or patent in place, someone can start selling your exact product and piggy back off your success.
Sometimes even on your own Amazon listings they’ll show up with knockoffs. That not only damages your brand and product, but it could put pressure on your pricing and hurt your margins.
Having a trademark allows you to get brand registry on Amazon, and you can report products and the sellers of those products for infringing on your trademark. The Amazon brand registry also allows you to build enhanced content, advertise headline ads, open a storefront with a vanity url of www.amazon.com/(your_brand_name_here), and better control your data.
It’s easier to get a trademark than a patent, so at bare minimum get a trademark in place for your brand. Trademarks currently heavily impact success on Amazon. In the near future they could impact other marketplaces and websites as well.
This video walks through how to look up a trademark with the United States Patent and Trademark Office. Which is a starting point for figuring out whether a trademark is in place for your brand name.
You will need to do this if you’re trying to figure out if a brand has a trademark, whether you want to create a trademark, of if you have an Amazon account and want to file for Brand Registry but are unsure if a trademark exists.
This video walks you through how to add a user to a Seller Central account.
Seller Central uses an invitation model to manage user accounts. First, you, as the account manager or administrator, send an email or SMS to other users, inviting them to create an account on Seller Central. Next, you need to configure the permissions for each user.
When you invite users into the system and then configure their permissions, you can be sure that the appropriate user accounts are linked to the right owners, and that the correct permissions apply to the intended users. The invitation model also helps you to fully manage user accounts without assistance from Amazon Seller Support.
Step 1: The account manager (you) invites new users
Follow these steps to establish accounts for additional users:
Step 2: The new user accepts the invitation
Note: As a security measure, if the email or phone number associated with the user account is different than the one the invitation was sent to, there will be an additional approval step before the new user can start using Amazon Seller Central.
After the user accepts the invitation, the account manager can assign additional permissions to that user.
Edit a user account
Coupons are new to Seller Central accounts. Tricky thing is, you have to enable this permission on your account if you are not the main account holder. Watch this video to learn more.
Manufacturing Event to Learn How to Sell on Amazon:
Tuesday, May 22nd, 2018
7:30 AM – 9:00 AM
The 1818 Club
6500 Sugarloaf Parkway Media Room
Duluth, GA 30097
In this video I sit down with Jason Moss, CEO of Georgia Manufacturing Alliance. We announce a new partnership where I will be helping GMA members launch their products on Amazon. Come to the event to learn the basic process and apply it to your own business, or hire me to help.
Georgia still manufacturers! There are 10,000 manufacturers in Georgia!
Steven Pope, “My Amazon Guy”, will teach you how to launch products on Amazon and accelerate your sales growth through advertising, listing optimization, and logistics. He has helped more than 50 brands obtain their goals. He grew his own business, Fine Occasion, to 500k annual sales and has extensive corporate experience working as an eCommerce Director and Marketing Manager.
With know-how on multiple fronts he specializes in growth hacking. Execution is what sets “My Amazon Guy” apart from other consulting agencies, and he will give you a guideline to get started. Steven will cover these important topics with plenty of Q & A to address what is important to you!
Topics that will be covered:
How to launch products on Amazon
Marketing on Amazon to increase sales
Overcoming the complications of selling on Amazon
How you can get started today
7:30 – 8:00 am Registration, Breakfast, Buy From Georgia Initiative
8:00 – 8:30 am How to Launch & Sell Your Products on Amazon
8:30 – 9:00 am Wrap Up and Q& A
Howto & Style
Standard YouTube License
I sit down with Tyler Jefcoat, CEO of Seller Accountant, which does ecommerce bookkeeping. As both an Amazon business owner and Amazon consultant I ask Tyler about several important areas that impact Amazon sellers and business owners.
1. How to calculate profit
2. When you should you start paying yourself, take profits?
a. Is it pie in the sky? Can you do both?
3. Importance of quality books
4. What is the best way to manage cash?
5. How to make investment decisions? Weather storms vs investing in growth and automation efficiency and profitability of business.
6. Sales tax properly
Important accounting questions to ask yourself: Will it increase my sales/save me time?/speed velocity to collect money/improve quality of life?
Measure every quarter with every expense for each of those questions.
https://www.taxjar.com/ – automatically file tax quarterly/monthly. Where are the states you have nexus in?
You can reach Tyler for a free ecommerce accounting consultation at http://selleraccountant.com/
Follow step by step process shows how to remove negative feedback by on Amazon, which will help your seller score and increase sales on Amazon. It can impact your buy box percentages and conversion rates.
The first time using this guide it is recommended you review the last 365 days of feedback and remove all negative feedback going from most recent backwards: https://sellercentral.amazon.com/gp/feedback-manager/view-all-feedback.html/ref=fb_fbmgr_vwallfb?ie=UTF8&dateRange=&descendingOrder=1&sortType=Date
Following catching up negative feedback removal, this process should be completed once a week ongoing by customer service. Especially to help customers who are not happy!
Keep removing feedback as it comes in once a week.
Seller feedback is public facing. Shoot for a 98% or better rating.
Enhanced content is the “From the Manufacturer” section on Amazon. It displays toward the bottom of the detail page of an ASIN. Enhanced content can help improve conversion rates, and branding.
My favorite examples of enhanced content are Qwest Chips and Crafthouse. Qwest Chips uses one of the templates Amazon provides, and they go well in depth. Crafthouse used a custom template and just loaded 3 banners. You can do anything you want with enhanced content, images and descriptions.
Design tip: You can copy enhanced content from another sku.
4. Publish. It takes Amazon 3-4 days or so to accept your enhanced content.
There are many things to be aware of when making enhanced content. Do not include trademark symbols, your website information, or violate any typical Amazon T&C.
Hire a consultant today to help you get your brand registry and enhanced content live.