Amazon 2018 Prediction of Massive Seller Acquisition & Mergers MyAmazonGuy + Seller Accountant

Steven Pope (MyAmazonGuy) teams up with Tyler Jefcoat (Seller Accountant) to discuss their prediction that here will be a massive amount of acquisitions and mergers in the Amazon Seller world in 2018 and in the next 3 years. Investors are starting to gobble up brands selling on Amazon, typically brands that are 80-90% of their sales specifically on Amazon.

Amazon is entering the maturity phase.

Image result for maturity phase cycle

Amazon is entering the maturity phase.  Amazon has grown grown grown and now it’s maturing. What happens when a company like Amazon matures is they make it harder for sellers to participate as a seller on Amazon. Barriers and additional rules like Hazmat reviews, gating, higher threshold metrics that accounts have to adhere to, and increasing fees. It’s now ripe for sophisticated sellers to gobble up competition and bring additional resources into the same house. Investors can bring 5-20 different Seller Central accounts into the same company and have on person to run the following areas just like a single company:

  1. Marketing & Sales
  2. Accounting & Finance
  3. Merchandising & Product Growth
  4. Customer Service

By bringing multiple brands together, you can have deeper expertise focused in these areas. You can have a rockstar (who you pay exceptionally well) run all the accounts in any of those specific job function. As a single account you wouldn’t be able to afford that expertise. But as a group, you have one person over each of those areas.

So watch our discussion so you can learn what it means for you as an potential investor, or a seller (regardless of whether you are selling your business):

What the South Dakota v. Wayfair Case Means for your Amazon E-Commerce Business

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.

What the South Dakota v. Wayfair Case Means for your E-Commerce Business

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.

So What Is South Dakota v. Wayfair, INC?

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.

What is The Physical Presence Rule?

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.

South Dakota’s Response to Not Collecting Enough Revenue

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.

What Was The Supreme Court Opinion?

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.

What Does This Mean?

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.

How Does South Dakota’s Law Protect Small Sellers?

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.

Is This Good News or Bad News?

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.

Will Amazon Take the Compliance Burden Finally?

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:

Thursday’s Blood Bath For E-Comm:

  • Wayfair: -9.5%
  • eBay: -12.1%
  • Amazon: -1.9%
  • Etsy: -5.7%
  • Overstock.com: -7.8%
  • and more

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.

The Bottom Line:

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.

So… In Summary:

  • Bad news: all 50 states can now create new laws enforcing sales tax compliance on all sellers regardless of location as long as the minimums are “reasonable”. The ruling doesn’t clearly define “reasonable.”
  • Good News: South Dakota chose to define “reasonable” pretty generously given their population. If this trend were to continue among all of the states then only 8-figure sellers would need to worry about sales tax. This would be unbelievable news for 95% of all sellers.
  • Unknown: Will Amazon respond in the next few months by biting the bullet and just collecting and remitting sales tax for all 3rd party sellers? Maybe they will but this ruling doesn’t require them to at all. In fact, if anything this ruling provides a cleaner path to enforcement for states against individual sellers. Now we just have to hope that most sellers are too small to be considered targets by the new sales tax laws in each state which leads to the next point.
  • Unknown: What will each state decide is a “reasonable” minimum in order to protect the smaller sellers? Some states will be more aggressive than others and the most aggressive states will be challenged in court until “reasonable” is more clearly defined either via federal legislation or by future Court rulings.
  • Timeline: Our guess is that this is the very beginning of a long trajectory and that nothing dramatic will happen until each state has had time to create and pass its own laws.

What Should I Do Now?

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.

We’ll Keep You Posted

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.

How to create a FBA shipment in Amazon Seller Central

Amazon continues to change how you do shipments for FBA. In the last year alone they’ve added the following options:

  1. Prep services
  2. Labeling services.
  3. Hazmat roadblocks
  4. A new shipping index score that impacts storage limits July 1, 2018

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.

How to look up a trademark with United States Patent and Trademark Office

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.

Trademark leads to Brand Registry on Amazon

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.

  1. Go to https://www.uspto.gov/trademarks-application-process/search-trademark-database
  2. Click “Search Trademarks” (lands you at http://tmsearch.uspto.gov/bin/gate.exe?f=tess&state=4810:tt6qdr.1.1)
  3. Click “Basic Word Mark Search (New User)”
  4. Type the name of the brand or trademark in, it is case sensitive.
  5. Find the live trademark in question to find the needed information.

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.

Georgia Manufacturing Alliance Partners with MyAmazonGuy – How Manufacturers can Sell on Amazon

Register to learn how to sell on Amazon for Manufacturers event here.

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!

https://buyfromga.com/
https://www.georgiamanufacturingallia…
http://myamazonguy.com/

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
AGENDA

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
Category
Howto & Style
License
Standard YouTube License

Amazon Accounting – Interview with Tyler Jefcoat CEO of Seller Accountant – Profit, Taxes, Books

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/

How to Remove Amazon Seller Feedback Negative Ratings and Reviews to Increase Conversion Rates and Buy Box Percentages

Customer Feedback Check Guide

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!

 

  1. Create a weekly calendar reminder to check Amazon feedback.
  2. To check feedback click here on Amazon Seller Central front page
  3. Click on the order ID of any negative customer feedback.
  4. (Optional) Research customer issue, respond to customer privately.
  5. (Mandatory) Ask for Amazon to remove feedback by submitting an FBA ticket. Remove any 3 star, 2 star, and 1 star reviews. (4 star reviews and 5 star reviews are good and should be left alone)
    https://sellercentral.amazon.com/cu/contact-us?ref_=ag_contactus_shel_xx
  6. Type order ID In select next
  7. Regardless of what the customer wrote in the feedback, submit a request to remove it to Amazon.


  8. Select reason for removing feedback, most likely “product feedback” and hit send
  9. Most of the time Amazon will simply remove the feedback and it will cross it off your seller score.

Keep removing feedback as it comes in once a week.

Seller feedback is public facing. Shoot for a 98% or better rating.