Missed your chance to get rich with Bitcoin? It’s not too late.
Just start selling on Amazon FBA in Europe and watch the money roll in while you drink Pina Coladas in your Star Trek pajamas!
Joking, of course. Any real business is going to take a lot of time, effort and work. But with Amazon in the U.S. becoming increasingly competitive less saturated markets like Amazon FBA Europe offer interesting opportunities.
John Cavendish joins me today to share his experience growing an FBA Amazon Europe business and discuss the ins-and-outs of what you need to consider if you want to be successful.
(With your host Andrew Youderian of eCommerceFuel.com and John Cavendish of FBA Frontiers)
Welcome to the eCommerceFuel Podcast, the show dedicated to helping high six and seven figure entrepreneurs build amazing online companies and incredible lives. I’m your host and fellow eCommerce entrepreneur, Andrew Youderian.
Andrew: On the podcast today is John Cavendish and we talk about selling on Amazon FBA in Europe. There’s a lot of nuances to sell to Europe and we talk about the logistics, including shipping, managing different countries and where opportunities lie.
Getting Into Amazon FBA Europe
Andrew: What’s your experience with Amazon and how did you get into this?
John: I started selling on Amazon at the start of 2015. I started trying to source products in December 2014 and went live in February 2015. I really didn’t know what I was doing .I got a few review friends from and family and gave away products to people in my crossfit gym. Soon enough I was shipping 8 to 10 units a day so I though I can make something of this. So I got more products to sell in the UK.
Andrew: Did you start from scratch on Amazon?
John: I just started on Amazon, I was listening to Steve Chou’s podcast and they were talking about selling on Amazon US and I thought I would try to do it in the UK. After about 10 months I realized I could sell to the EU and it just grew from there. My business doubled every month for about 5 or 6 months from there.
Andrew: What are the other big stores within Europe for Amazon with their own URLs?
John: There are five major marketplaces. There’s the UK, Germany, Spain, France and Italy. From those marketplaces it actually fulfills to 26 different countries around Europe which gives you like 700 million plus potential buyers.
Andrew: Can you handle all those? Let’s say you’re in the UK and you have your Amazon Central seller account. Can you run all of those other five Amazon portals and by extension rest of Europe from one login?
John: Yes. It’s basically like the American and Canadian account. So you login and see each marketplace individually by selecting from the dropdown menu.
Andrew: When you launched you were living in the UK. Have you ever lived in the US before?
John: I lived in Canada for a year.
Andrew: What’s the demand relative to the US? I know we’re pretty saturated here, but what does it look like in Europe as far as demand goes relative to how popular it is in the US? Where are we on the adoption curve?
John: I’d say in the UK and Germany the adoption is pretty behind, it still has a way to go. It’s still growing in France, Spain and Italy. But that’s definitely an advantage to you as a seller because if you launch something that’s doing well or ok or good volume now, it’s going to do an amazing volume by the time saturation point reaches somewhere near the States.
Andrew: Do you know your growth rates in terms of revenue are for each country?
John: No, Amazon doesn’t separate each country like they do in the USA.
Andrew: And how is the trust factor in Europe? I know that in the US there’s seems to be this trifecta of prices, trust and convenience in terms of shipping and selection. In our culture it’s almost trusted and respected. What is like in Europe? Was it like it was for us 5 years ago when people looked skeptically at Amazon?
John: They’re pretty trusted. Some European countries have ecommerce platforms which are pretty successful. For example in Holland they have BOL.com which is a separate entity and Amazon is launching their own platform at the moment. Amazon is actually investing heavily in Europe, like hiring extra 2,000 staff in the UK to help with European expansions. You can actually take advantage of these European countries because they’re advertising offline, on billboards which in the states they don’t need to do anymore.
Competition in Europe
Andrew: What about competitiveness relative to the US? I see the life cycle of Amazon in the US as in the beginning you could resell products and make a profit, and then move into white labeling a product then now making products with small tweaks. Where in Europe are they at for Amazon FBA as far as the life cycle goes?
John: You can definitely resell existing products to be profitable at the moment. But as with the States, and as more people move over from the states, it’s going to get more competitive very quickly. If you can get in there now with a tweak product, something that’s unique then you’re going to set yourself up for a lot more longevity in your Amazon business. I was doing research this week for some brands I’m launching and it’s amazing how many Chinese sellers are doing well even in Europe and they’re actually selling their own product from the factory. They’re even dominating some categories. So if you come in there with a differentiated product with better marketing and branding then you’ll 100% be able to sell very quickly.
Andrew: Walk us through your marketing research techniques if you’re starting from scratch. I’m assuming the best way to get started is to move your existing catalog over to Europe, but is the research techniques going to be the same as in the States?
John: You need to think of the EU as a different beast than the US. These five different marketplaces are like five different states but they don’t interact with each other so you’d want to start out in one of the bigger marketplaces like UK and Germany. You can do it the same way you’d do it in the States. Look for things like sales volume, what you think you can compete with, target sales price. You want to find something that sells well in three of the five marketplaces. Each of these marketplaces is like having a different Amazon.com account, the reviews are separate. So you can launch a product in the UK that you think will sell well but maybe it does. It could take off in France or in Italy. So you’re diversifying your risk by making sure it’s going to do ok in three to five of the marketplaces. It could be a dud in the UK but it could take off in other places and push 500-1,000 units a month.
Andrew: On the review side, it looks like you have to build up three, separate and unique review banks so you don’t get the benefits of having them all together?
John: That’s fair, but because of the common language, American reviews do carry over to the UK, at least until you have your UK reviews. They will show up below the UK reviews once you’ve got those. For every other marketplace it’s separate. As well as being a disadvantage at having to get them but if you get a negative review in one marketplace it doesn’t translate into negative reviews in another one.
Doing Research for Amazon Europe FBA
Andrew: What do you use for research to try to figure out what’s doing well right now? Are you using traditional things like Jungle Scout to be able to see what’s selling well?
John: I use Jungle Scout to lift data because it’s a great tool for pulling data on a page of you can get your VA to do it. To be honest I just choose what niche I’m just going to go into and want to deep dive personally into it. Because it’s your business and your brand. It’s you that’s going to see these products all the time. There’s opportunities in every niche and I think too many people just look at Jungle Scout and see a product that’s selling well and doing a “me too” product. That’s not a way to build something that’s going to last in the long term.
Andrew: So what I’m hearing is that you’re more focused on a more qualitative approach rather than a quantitative approach. Maybe you’re using the quantitative approach to do initial research but then you’re less focused on the sales per skew and you’re going to dive into to look and see where you can add value via a broader catalog offering or issues with a current product?
John: Definitely. I’m quantitive to start with because that’s for background. Then you really want to see how you can change it in terms of quality or if you can have separate products together or you can try to dominate several categories.
Getting Translations of Product Descriptions
Andrew: Let’s say you’ve got things listed on Amazon. You’ve got a separate listings page for all these five marketplaces. How do you deal with that? Do you write it in English then get translators?
John: That’s exactly what I do to be honest. I always write the one in English, optimize for the English listing and then I get some to translate it.
Andrew: Do you get someone on Fiverr or do you have a recommended place where people can go to get things translated for good quality and reasonably priced?
John: I would definitely recommend the service that we’re launching, obviously. But you can use UpWork and Fiverr but the quality varies massively. I mean, you can’t get a good translation for $5 especially for a language like German where there’s no other company that speaks German other than Germany. Translators for that are expensive. We’re launching a service called FBA Translations where there’ll be professional translation services optimized for Amazon so you just send us a link to your listing and we’ll send you back a translation 10 days later.
Andrew: Perfect. Where have you used in the past?
John: To be honest I’ve just done outreach to my network. It’s the easiest way to find quality translators that work. I’ve tried UpWork and other places but at the end of the day I talked to other European sellers.
Shipping and Profit Margins
Andrew: What are the differences between someone who might be experienced in Amazon FBA coming to Europe? Anything they may be surprised by or need to be aware of?
John: Because you’re selling across multiple countries, you’ll need to be aware for the long term are your packaging and pricing. You’ll have different competition in different marketplaces so you want to price each product differently. You should launch in the marketplace simultaneously but you can tweak everything after you launch. Europe is so open that you want to be there as soon as possible and you can start working on all these optimizations as you go along.
Andrew: What about shipping products in? You’re living in Saigon now selling in Europe, but I’m assuming you’re ordering from China. How does someone who does not live in Europe think about this? When I think of shipping it directly from China to FBA or the other is maybe paying double shipping where you ship from China to Saigon then to Europe. What are your thoughts on that?
John: It depends on whether you have established skews you want to bring across, being new or skews or a new supplier. I mean, do you trust the supplier? There are many international sellers who are not based in the States and selling in the states. The way they get around it is to either get it inspected in China or to use a prep service. So there are prep services in the UK as well. You could do that or you should oversee your own inspections from China, like seeing the factory before ordering and inspecting the product after ordering. Personally, I ship directly from the UK and I’m not in the UK. I trust my suppliers and I’ve been working with them for two and half years.
Andrew: Do you then have a prep services that moves it onto Amazon warehouses or us it right into Amazon?
John: It depends. I’ve been trying out some big products recently, like £50, 3 feet long. We got them fully inspected in China and then when they arrive in the UK we got photos done of the boxes to make sure they weren’t damaged then forwarded to Amazon. We actually used a freight forwarder for that and that was a cheaper way of sending it than using a prep service then reloading it into containers.
Andrew: Interesting. We’ve done many surveys with merchants and one of the things we’ve talked about was profit margins. On Amazon and even in your own store it was pretty close to 17%-18% profit margin. If someone is going to start selling in Europe right now would they plan on seeing the same margins or it may be higher given it being a newer marketplace?
John: My average margin for last tax year was about 23% I think. Our margins are being slightly pushed down this year. It might be 20% to 21%. I think too many people when they’re doing their calculations they overestimate what they can sell a product for and they underestimate the costs it’ll be to get it into the country. You should be looking to charge the minimum sales price if you’re looking to be undercutting your competition. When you’re doing your initial calculations aim for 30% margin. When you’re aiming for 30% margin after sales tax, after everything then you should be able to take home that 25%.
Getting Reviews For Your Listings
Andrew: We talked a little bit about getting reviews before. Whereas in the EU you have all these different marketplaces and in the US there’s been a grey hat around that. Of course Amazon has cracked down on that more the last year or so. I’d say the difficulty for most people is getting a good base of quality reviews, even more so now that Amazon’s allowing customers to opt out of follow up emails. What’s the situation with that in Europe? Are they just as hardline with their approach with reviews in Europe and what are your suggestions on how you get those baseline reviews?
John: In Europe, Amazon changed the rules like they did in the US last year. I know because it was my birthday and I woke up and read the news and was like everyone was saying the world was ending. And the world didn’t end. They changed the rules again a few months later but they haven’t started the opt out function yet, which I’m sure it’ll be coming, because everything in the US will get rolled out to Europe. Most of your follow up emails will go through when you sell in Europe. This is amazing as Europe is still like Amazon 3 to 5 years ago of the Wild West, in terms of you should be able to choose the number 1 bestseller who’s got like 20 reviews. SO your aim is to get three reviews and turn on PPC, using all the modern PPC techniques that people have been working on in the states. Just throw money at it and you should be able to rank. A really good example of this is I launched a product about a month ago and surprisingly in Italy it got 10 reviews now, which is a really good review rate. It averaged 4.7 stars and I was really surprised it took off in Italy. That’s why you want to get your listing live in every marketplace straightaway and start throwing PPC at it as soon as possible.
Andrew: And these are just coming organically from people seeing your follow up emails?
John: Yeah, so that was surprised we got ten, because that’s like a 4% or 5% conversion rave, because that’s like usually 0.5% if I’m lucky.
The Opportunity in Amazon Australia and Beyond
Andrew: Wrapping things up here, let’s talk about Amazon in Australia. There was a thread in eCommerceFuel getting early access to that. You actually have an Amazon Australia account. Just talk about quickly why you’re getting into Australia, your thoughts and plans for that market.
John: Our product is called FBA Frontiers and we’re working out into all the new frontier markets. We see Australia as one of the next markets. Australia is a much smaller country. It’s about a third the size of the UK but there’s going to be a lot of opportunities at the start for people to move quickly to launch there. But it seems to be at the moment that FBA might not be going live for a while so it’s going to be more difficult to do business outside unless you ship long distance. So it’s just something we keep our eyes out for, trying to get into it then we can hope to bring it to our clients.
Andrew: You mention other markets too. What other markets do you think where there are opportunities outside of Europe, Australia and the United States in terms of Amazon marketplaces that are either growing quickly or coming soon?
John: The biggest established marketplace outside of that would be Japan. We don’t personally sell in Japan yet but it depends on what your products. But yeah, Japan would be the next one to go for if your product suits the market. Japan’s a massive marketplace.
Andrew: What about India and China given just how big they are. Are those places you’re looking at?
John: So in China it’s really interesting. The slight issue in China is that you need a local partner and you need a local company to get into it. It’s something we’re looking at but it’s not on the low hanging fruit at the moment. The low hanging fruit is for USA is to get to Europe.
Andrew: Are there any places for opportunities in Central American or South America?
John: My friends who are sellers in the US who are doing very well are moving towards Mexico. So far nobody I know of has runaway success with Mexico with all the issues with exporting products and getting it there to sales not being very good. But I also have friends who are doing pretty well in Canada so if you’re in the US that would be another move that I would make.
Andrew: You’ve alluded to FBA Frontiers is a course and website that really talks about all this kind of stuff. Can you give an overview about what FBA Frontiers is and what people can learn if they check it out?
John: Cool. So it’s basically just a course for sellers that are already selling to help them launch in Europe quickly. It goes over evaluating your current aims, research and bringing across the product from the US that’s going to take off more quickly with the least competition. Also, getting set up for VAT and sales tax registration. Then we talk about Pan-European registration versus single registration which is another huge topic because you want to decide whether you want to register in many countries or one country and where you want to hold your inventory. We talk about packaging for the European marketplace and logistical options of which packaging is best for which country. We talk about launching and marketing in Europe, which covers basic PPC strategies to rank quickly in Europe. Anyone who signs up through FBAFrontiers.com/fuel gets a free 30 minute call with me as a thank you to you for having me on.
Andrew: So if you’ve decided you want to launch over there after listening to this head over to FBAFrontiers.com/fuel and check out the training. Before we sign off here, let’s shift gears to a fast lightning round here. We’d love to get your quick 5 second reactions here to these questions. If you’re ready I’ll dive in.
John: Sure, fire away.
Andrew: If you had to identify the number one thing you’re trying to optimize your life for right now, what would that be?
John: I would say balance and health. I just moved from a new condo which is 10 minutes from the pool and the gym and I’m just trying to get work done and get healthy.
Andrew: Who’s someone you strongly disagree with?
John: This is a hard one because I’ll get pushed back very hard on this but recently I would say Gary Vaynerchuk because all of his stuff is about working 24/7 and having no life outside of it. I don’t agree with that.
Andrew: Who’s your favorite author?
John: When I was younger I was really into fantasy and my favorite author was an English guy called Chris Wooding. He wrote a young adult series called “Broken Sky” and one called “The Braided Path”.
Andrew: How much money is enough? What would be your number? And this is money in the bank, where if you had an X amount in your bank account, where you’d still work if you want to but you wouldn’t feel the need to unless you were interested in something.
John: If this over the next 50 years to spend and invest, then I’d say $10 million. But not in USD, it’d be a mixture of all currencies and spread out because going after Brexit and your money just gets devalued 25% in a month, then I would never keep my money in one currency again.
Andrew: What’s the worst mistake you’ve made in the last decade?
John: In terms of loss? Of money? Having my money all in British pounds.
Andrew: Interesting. I’m sensing a theme here John.
John: That’s ok.The pound went up against the dollar like 3% last week. In general any investment I get nothing out of is bad, is a waste.
Andrew: What’s the best investment apart from your business that you’ve made in the last 10 years?
John: I can’t think of anything that wasn’t a cliche. So travel, seeing the world.
Andrew: I’ll take it. And finally, what was the first CD you’ve ever owned?
John: Nickelback. I remember sitting in the school bus for a trip and listening to it in a Sony Walkman CD player, when I was 14 or something like that.
Andrew: How cool was that that you got a CD player. Was it just Sony?
Andrew: Yeah I remember that. You thought you were on top of the world. John this has been phenomenal. I really appreciate you diving in and giving us into a window to the FBA in Europe and taking the time to talk to us.
John: Thanks a lot for having me.
Andrew: Want to connect with and learn from other proven eCommerce entrepreneurs? Join us in the eCommerceFuel private community. It’s our tight-knit vetted group for store owners with at least a quarter million dollars in annual sales. You can learn more and apply for membership at eCommerceFuel.com Thanks so much for listening, and I’m looking forward to seeing you again next time.