For cross-border enterprises, cost accounting is an important basis for evaluating the profitability of enterprises. Through cost accounting, cross-border sellers can understand where costs are high and need to reduce costs; it also provides important data support for subsequent product procurement, transportation, warehousing, and pricing.

However, Amazon Europe is actually a collective name with multiple independent market sites, currently including the United Kingdom, France, Germany, Italy, Spain, the Netherlands, Sweden, Poland, Belgium 9 countries. The inventory data in Amazon's background is shared for all European stations, and various expenses related to inventory are also shared. Some cross-border enterprises, when calculating the cost of Amazon's European site, in order to save trouble, do not distinguish between sites and over-count or omit the cost, or spend a lot of time, and cannot accurately calculate the inventory cost of each site, which is ultimately useless for the European site. Operation of the store.

So how should finance calculate these costs to help cross-border companies adapt to local conditions and improve the benefits of different sites?

Composition and calculation of European station fees

The European station is a relatively special site on the Amazon platform. When calculating the cost of the European station, compared with the American station, the biggest feature is that each store has independent expenses, such as purchase fees, advertising fees, etc., as well as shared inventory. And the FBA fees that are generated and scattered in different reports.

Therefore, when the finance calculates the cost of different sites in Europe, it can be divided into independent costs and shared costs to calculate separately:

1. Independent cost

(1) Purchase cost

Product purchase costs are fixed expenses, generally including product purchase costs, logistics costs, loading and unloading costs, insurance costs, etc.

Calculation formula

Purchase cost = order cost + material cost + inventory cost + out-of-stock cost

(2) Amazon sales commission

media products

For products in the media category, such as books, music, film and television, software, and video games, Amazon will calculate a percentage of sales commission, or based on the sales price (excluding any taxes collected through Amazon’s VAT calculation service), per The minimum sales commission for each item (whichever is higher) is deducted from the sales commission.

Calculation formula

Total amount deposited into seller account = selling price of item + shipping – referral fee (applicable percentage of item selling price) – transaction fee – fee of $0.99 per item (for "individual" sellers only)

non-media products

For non-media items, Amazon will use the applicable sales commission percentage, or based on the total sales price (the total amount paid by the buyer, including the item price, and any shipping or gift wrapping fees; but excluding VAT calculated through Amazon Services, any taxes charged), the calculated minimum sales commission applicable per item (whichever is higher), minus the sales commission.

Calculation formula

Total amount credited to seller's account = selling price of item + shipping + gift wrap – referral fee (applicable percentage of total sale price including any shipping or gift wrap, excluding any levied through Amazon's tax service tax) – $0.99 fee per item (for "Individual" sellers only)

(3) VAT value-added tax

To sell goods on Amazon Europe, sellers need to register for EU Value Added Tax (VAT), which is simply a consumption tax. Most imported products from Europe will have VAT.

VAT is one of the taxes levied after the seller's products are imported to the European site countries. It should be noted that [VAT value-added tax] and [Tariff] are two different taxes.

Calculation formula

Import duty = customs + VAT

(4) In-site promotion fee

The advertising fees of the European station are distributed in the expense reports of each Amazon site, and the financial personnel need to sort them out manually before apportioning them. In the initial stage of operation, the investment in on-site advertisements may require a part of the budget first. After the operation enters a stable period, the advertising will be optimized according to the cost ratio of different products on each site.

2. Shared fees

(1) FBA order delivery fee

FBA shipping fees, depending on the packaged weight and size of the item ((segmented by product size).

It should be noted that the principle of confirming the first process and confirming the purchase cost is the same. Regardless of whether there is sea or air transportation in the month, the unit price of the first journey into the warehouse is calculated according to the weighted average of SKU (perspective according to the SKU code).

Calculation formula

The cost of the first journey = (the amount of the first journey at the beginning of the period + the amount of the first journey in this month) / (the amount at the beginning of the period + the amount of the stock in this month)

(2) FBA inventory storage fee

FBA Storage Fee – Monthly Inventory Storage Fee

Amazon generally charges the monthly inventory storage fee for the previous month between the 7th and 15th of each month. For example, to view the inventory storage fee for January, please refer to the transaction information from February 7th to 15th. Payment report.

It should be noted that Amazon's storage fee during peak season, that is, from October to December, is 1-2 times higher than the usual fee.

Calculation formula

Monthly storage fee = (quantity of goods requiring 6-month long-term storage fee) x (unit volume of goods) x (monthly storage fee per cubic meter)

Monthly Inventory Storage = [Price per cubic centimeter/ft for a certain period of time] x [Item size (cubic centimeters)]/(10cm x 10cm x 10cm) x [Storage days]/[Month days]

FBA Storage Fee – Long Term Inventory Storage Fee

Amazon conducts inventory counts at a fixed time every year. For products that have been in an Amazon fulfillment center for at least 12 months, Amazon will assess long-term storage fees based on the total volume of the product in cubic centimeters.

Calculation formula

Long-term storage fee = (quantity of goods subject to long-term storage fee within a certain period of time) × (unit quantity of goods) × (long-term storage fee per cubic meter during the same period)

Items that have been in the fulfillment center for 6 to 12 months (Long Term Storage Fee) = (Number of Items subject to 6 Month Long Term Storage Fee) x (Unit Volume) x $11.25

Items stored in fulfillment centers for 12 months or more (12-month long-term storage fee) = (quantity of items subject to 12-month long-term storage fee) x (unit volume) x $122.50

(3) Removal order fee/stock handling fee

Removal order fee. For defective products that are generally unsalable by sellers, damaged by buyers, or products to be moved to overseas warehouses, a removal order needs to be established. The cost of these orders, the removal fee, is charged per item removed.

Inventory processing fee, the inventory processing fee is 10% of the selling price of the product, of which the seller accounts for 90% of the revenue and Amazon accounts for 10%.

Calculation formula

Removal order fee = Shipping weight * Removal fee per item

(4) Return processing fee

Return Processing Fee, which refers to the total shipping fee for a given item. This fee applies to items that, after being sold on Amazon, offer return shipping to buyers for free and are actually returned to an Amazon warehouse.

Difficulties in Calculating Fees for European Stations

When doing cross-border e-commerce, sellers often know the importance of profit calculation, but unfortunately Amazon's profit calculation logic is too difficult. Where is the difficulty in manually calculating the cost of European stations?

1. There are many accounting categories and the processing is complicated

There are so many Amazon back-end reports, and the complexity of post-export processing is almost every Amazon's financial nightmare.

Compared with the North American station and Japan station, each store report in the European station needs to be downloaded separately, but also needs to be translated into a unified language in different languages; shop.

It is difficult to operate, and it cannot be refined to the dimension of each product or even SKU, and it is difficult to achieve refined operation of different sites.

2. The data has a lag and cannot accurately reflect the gross profit situation

Amazon's payment cycle is basically about 14 days, but the payment cycle in Europe is different from other sites. According to the credit status of the seller's account, you can choose to pay back in advance. Many European sellers will choose to apply in advance, after all, the money is more secure in their pockets. This results in inconsistent timeliness when Finance summarizes the store profits of all sites on a monthly basis.

In peak season, it is impossible to accurately reflect the gross profit of a single product in the current period. For example, on the eve of Black Friday, the goods are sent to the FBA warehouse in September and October, and only sold in November and December. This will lead to abnormal gross profit in September and October.

European station fee calculation coup

In fact, with the help of Leading Star ERP, all these problems can be solved at one time.

1. Accurately obtain profits the next day, helping sellers gain insight into profit and loss in a timely manner

Leadstar ERP has opened up the API interface with Amazon, automatically pulls Amazon report data such as Transaction and Summary, and synchronizes the integrated data of procurement, inventory, logistics, etc. in the system in real time.

You can view the profits by day and compare the profits horizontally across the days. In the daily updated profit data, you can see the profit and loss of the business at a glance. The boss can also detect problems in time and take measures to stop losses.

2. The cost of the European station is automatically apportioned to improve the financial efficiency

In addition to quickly obtaining accurate data, Linkstar ERP supports different sites to display European station fees, and automatically completes the allocation of FBA-related expenses such as European station storage fees and return fees that are difficult to calculate and easy to miss, no longer need manual summary calculation. The problem of sharing the cost of sharing is all over the place.

Cross-border sellers mainly check the proportion of inventory costs in different sites, improve inventory turnover, reduce unsalable rates, adapt to local conditions, save expenses and increase income.

For European sellers, it is necessary to consider more refined operations, control the cost of different sites in a targeted manner, and grasp their own European battlefield.