Systems that scale - Preparing your FBA business to enter new markets
Sep 8, 2018

Systems that scale - Preparing your FBA business to enter new markets

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This article is the third and final post in our three-part series of tips and tools for people that are thinking about selling on Amazon. In the following paragraphs, we take a look at the differences between analytics and accounting, the importance of getting the right tools and software in place before entering new markets, and things to consider when entering new markets. We are living in an increasingly globalized world, where the internet has broken down many of the barriers to trade and entry into foreign markets. For merchants and retail businesses, this provides access to large groups of people that were hard to reach in the past. It also increases local competition in every area where eCommerce propagates and provides consumers with more choice. When you’re starting an online business, accounting and analytics are probably one of the last things on your mind. However, it’s important to remember that we’re more reliant on data than ever before, and the purpose of accounting and analytics is to take data and turn it into useful, relevant information. By getting your systems set up properly, and looking at the right details, it is possible to make informed decisions that are guided by real-world data like never before.

Analytics vs. accounting

Accounting and analytics are very complementary. They were never meant to replace each other. “An accounting system is a 50,000 foot view… but if you wanna zoom in and look at a very narrow part of your business and try to get detail, granular detail, then that’s where analytics come into it. So they are very complementary.”

Analytics tends to focus on specific metrics. With analytics systems, we have a powerful set of tools that can be used to help provide the right information for making decisions. 

Get the right tools and software in place

There are a wide range of tools that Amazon sellers can use to make life easier. In the context of accounting, A2X simplifies the process of data entry and helps to reduce the chances of human error by automatically entering transactions and financial information into your cloud accounting system. Learn more here. By having the right systems in place, and automating away tasks wherever possible, you are future proofing your business - making it more robust and easier to scale. Here’s what Scott Scharf from Catching Clouds recommends: “For alot of sellers, they could do their accounting in 30 minutes, an hour a month. Which, a few years ago just wasn’t possible.”

In the beginning, you will need an accounting hub and a revenue recognition side. While you are still getting established and don’t own large amounts of stock, it probably isn’t worth using inventory management software. Some of the analytics tools made for Amazon do a great job of inventory management. Ideally, your systems should free you up to look after more important things. Like finalizing your ideal tech stack! 

Make sure that you’re recording the right information in your accounts

Once every fortnight, Amazon pays sellers the amount owing on their account - after fees have been deducted. FBA merchants often make the mistake of recording this net settlement amount as gross revenue, which creates problems with understanding the figures and analyzing margins. When sales are made on Amazon from inventory stored in FBA warehouses, there are lots of different fees (FBA fees, selling fees, storage fees etc.) that are taken before settlements are paid out. This creates lots of added complexity in the accounts. To simplify things, you can use A2X to post summary invoices that record all of the correct information without being confusing.

 Things to consider when entering new markets:

Once you have the right accounting tools and systems in place, and business seems to be going well, you might consider selling your products on a new sales channel such as eBay or entering a new market like Australia. When you expand to a new sales channel, you need to recalculate your margins, and alter your approach to fit the specific needs of the market. Whilst it is important to diversify into new markets as you grow, you don’t want to do it too soon either. In the early days of any business, getting sales and making things happen is vital to ensure survival. However, as you grow, it is important to put standard operating procedures in places to ensure that the basics are still being done properly - regardless of who is doing the job. Rules and regulations differ widely between different countries. Before expanding your Amazon FBA business to a new market, make sure that you are fully compliant with the local regulations. Also consider whether your products are a good fit for the local market - do you need to change specifications such as power plugs to make your products suitable, or are they fine as is? Tax law is a world unto itself, with different rules in every jurisdiction on earth. When you’re expanding into new markets, it can be tempting to continue using your existing accountant. However, it’s important to find a local accountant that understands the local laws inside out. They can liaise with your existing accountant if required. When you’re looking for an accountant, make sure that the person doing your books really understands the local market Good luck! We hope that you’ve learned some important points from our three-part series on tips and tricks for people getting into FBA. Although there is a lot to learn, the potential for success in this space is enormous. Amazon is a monster company, that occupies much of the online retail real estate. By devoting resources to succeeding in the Amazon marketplace, you are able to position your products in front of millions of willing buyers and increase your chances of success. Our free eBook “how to sell your Amazon FBA business” by our content team at Hypergiant is packed full of insightful knowledge to help with growing and automating your Amazon FBA business. By beginning with the end in mind, you are more likely to prioritize what matters over what is easy, and act with a vision towards the future. We hope that A2X can support you towards succeeding as an Amazon FBA seller - all the best!


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