Being An Amazon Seller On The US Market For Foreigners: The Stuff That Holds You Back When It Shouldn’t
There are certain processes that are more complicated to go through as a foreign Amazon seller on the US market. Some of those things might make you think twice about becoming a seller in the first place. The good news is that these steps are not as complicated or difficult as you might think. It just seems that way at first. Some of these are steps all sellers must go through, regardless of where you live or are from. If you are at the point where you have doubts about connecting financial accounts, or if you are worried about customs, rest assured, it will go smoothly. Thousands have done this before you, and are currently going through it. Don’t allow big, legal-sounding words prevent you from being apart of one of the greatest arenas for entrepreneurs of our lifetime.
Setting Up Your Finances
While going through the process of setting up an Amazon seller account, it’s required to provide 2 separate bank accounts. One, for payments to Amazon; another for getting funds deposited from Amazon.
The first account is a foreign currency account (can be in Euros or USD) from a local bank or one of your choosing. Make sure this account can be connected to PayPal. Remember, put this account in your name and spell it exactly the same for all information you enter. Even if it is listed in your languages Alphabet.
Having a foreign currency account that can be connected to PayPal isn’t something Amazon requires, but prioritize it regardless. PayPal is used to pay suppliers, prep centers, customs brokers etc… This is due to PayPal’s guarantee for each transaction. If something goes wrong, you are covered by PayPal. This is one of the reasons PayPal is recommended when paying suppliers. Later, you can try other methods that are less expensive, like wire transfers. These alternative options to PayPal are only a good route when you have established trust with your supplier.
The second account (the one Amazon requires for depositing earnings) has to be a US bank account. This is a common point that sets some sellers back. In reality, getting a regular US bank account is tough for a foreigner. The good news is that you don’t have too. You can get a valid US account that serves the second account. The best option for a foreign Amazon seller is a Payoneer account. This is technically a US account and is acceptable by Amazon’s standards. Getting a Payoneer account is straightforward. But, consider the length of time it takes to receive your Payoneer card in the mail. This can take over a month, so plan accordingly. You don’t want to have to delay the launch of your first product!
The Amazon Tax Interview
One step that must be completed by every seller account is a tax interview. This seems like a serious matter. Many potential sellers get intimidated. However, the title is quite misleading and it is much simpler than one might think. First, it’s not an interview; it’s a straightforward form. Interestingly enough, it tends to be easier for a foreigner, then a US citizen. The point of the “interview” is to determine who you will pay taxes to. An American American has to enter their tax information. For a foreigner, the interview goes something like this: you put in some personal information, and then you get asked if you are a US citizen, to which you say “No.” Then Amazon basically says “Ok, have a nice day.” Since you are a foreigner, you don’t have to pay taxes to the US. Once Amazon has done its due diligence for the US government, the process is over. Even though it might sound like it’s something complicated or legally demanding, it’s really as simple and straightforward as it can be.
The Legal Entity
You might think you need to start a company in your home country, or in the US in order to run your Amazon FBA business. Although you can, it’s not necessary. Your name is more than enough for all legal purposes. You can register your seller account; you can put in on an invoice for your products when it goes through customs. Many sellers wait until they begin hiring others or sell products in retail to set up companies. There are obviously many advantages to having a company. However, it can be postponed until you grow to a point where it seems necessary.
Getting a UPC Code
Universal Product Code, or UPC, is something required for each product you wish to list on Amazon. This is just another name for a standard bar code used in the USA and Canada to track products. You can get your barcode from your supplier if you are selling products that are already on the market. If you are a private label seller, you have to get your own. These codes are issued by GS1, a non-profit organization behind the invention of the barcode in 1974. You can go to them, and be used a new barcode for a product. Getting a code also means you have to pay for a service and renewal fee that costs hundreds of dollars. Sounds complicated and expensive, right? Luckily, there’s another way. You can get discounted barcodes that have been issued and never used. These are then assigned to your product. They cost only a few dollar and can be easily found by googling “Buy a UPC code.” The process of buying and assigning is very simple. This is what a majority of Amazon sellers use. UPC code serves its purpose, and you won’t have to worry about them. It’s not possible to use UPC codes for any other purpose outside of eCommerce. For example, you can’t use them for a retail store product. The good news is that once again, a step that might have seemed difficult, can actually be fairly uncomplicated.
Dealing with Customs
Let’s say that you wish to start your Amazon business and you don’t either live in China or the US. You might be thinking you are going to have something sent from China only to enter the USA and arrive at an FBA warehouse. Just like that. But, it can’t be that simple, can it? That’s pretty much exactly what happens. If your product is a simple consumer good, and the value of your cargo is under $2500, you don’t have to pay duties. The chances of your cargo being detained is also very slim unless it requires a special permit or handling (potentially hazardous materials etc..). If it does get randomly selected, your delivery will only be a tiny bit late. Logically, consider how many goods enter the US from China daily? An understatement would be to say “a lot.” Therefore, customs officers clear cargoes in order quickly. Once you cross the $2500 threshold, consider hiring a customs broker. They’re basically insurance you get to represent you if any issues occur at customs. They also make sure your duties get paid and your cargo gets where it’s supposed to. They aren’t very expensive and usually are extremely helpful to people who know nothing about customs. It’s just one example of a type of service that has adapted to the new revolution of sellers. They’ll have all the info you’ll need.
Alibaba and Scams
We’ve all heard the stories about people getting scammed online. This is typically by ordering items from China. Someone orders a hard drive for $200 and receives a USB Drive sticking out of large plastic casing. This still occurs. So, it’s completely understandable that sellers question the integrity of Chinese suppliers. In short, there’s little need for concern. The way these suppliers are now organized favors sellers. There are too many suppliers competing for clients. If that’s not reason enough, there’s Alibaba. Alibaba has a reputation as one of the largest, most successful companies in the world. It’s where everyone goes looking for suppliers. If a factory were to manufacture goods of a lower quality than promised, they can be banned from Alibaba. In this day and age, that’s basically a death sentence for a factory. To be extra cautious, you can target suppliers that have the “gold supplier” badge. This means they have been vetted and investigated by Alibaba. There is also a trade assurance badge that automatically means you are safe in terms of transferring funds to this supplier. You are covered if anything goes wrong. Just in case, as mentioned in the financials section, PayPal has their own assurance so you are covered. The point is, it’s perfectly safe and in everyone’s best interest to not scam you. Just in case, you have backup.
VAT and Taxes in General
The VAT (Value Added Tax) is something only sellers from certain countries have to deal with. The logic behind the tax is, it’s not something a seller is paying for. It’s a tax on Amazon for providing services to someone from your country – namely you. It’s a fixed percentage that is added to any service they provide to you. VAT is a percentage of all fees you pay or the monthly membership. There is good news; there is bad news. The good news is that Amazon automatically handles everything. You are given a report at the end of the month telling you how much VAT is owed. The bad news is that they charge you. It’s a legal issue that Amazon has managed to solve the best way they could. As far as taxes, in general, are concerned, do your research on your own nation’s regulations. As a foreigner, you don’t pay taxes to the US government. But, you should seek what kind of obligations you have within your own country. It is not something you have to do beforehand since you need to reach some level of profitability before you are taxable (in most cases). It is something you should look into eventually.
In conclusion, all things related to selling on Amazon have a way of becoming simple and easily handled. The fact is, many are selling on Amazon with more joining every day. Because of this, entire industries are developing alongside it to make sure Amazon sellers can be efficient and satisfied. AMZScout is a perfect example of this growing marketplace. The longer time goes on, the easier it is to become an Amazon seller. The suppliers make money, the seller makes money, Amazon makes money and people get better and better products.
I leave you with a piece of advice: Don’t be afraid to ask people about things you don’t know or understand! A bit of a cliche? Yes. But, there will be many situations in which you think that you’ve bitten off more than you can chew. Almost certainly, someone has been in the same situation before. It might be something every sellers goes through. If concerned or have a question, ask. Ask your suppliers about customs. Ask them what their other clients are doing. You might even want to talk to those clients yourself. Ask your prep center. They work with many Amazon sellers. You will be surprised how much easier your life as an Amazon seller can be by asking questions. Good luck sellers!