This article focuses on the NAV portion of launching Amazon, FBA.
Ok, so not two weeks, unless you’re only talking the NAV portion. Which lucky for us is all I’m going to talk about.
Amazon itself is a complex beast of burden that you should probably YouTube a few videos to learn more about. Or, better, hirer an expert on the matter or a consultant.
Right now, you have one very important decision to make: How will you get your goods to Amazon Customers?
1. FBM - Fulfilled by Merchant. Amazon takes the order and sends to you for fulfillment.
2. FBA - Fulfilled by Amazon. You ship to Amazon, Amazon sends to their customers.
If #1 – Congratulations! You need a heavy-duty integration. Amazon has strict policies regarding how fast you must ship. No integration means no FBM. There are a few NAV/Amazon FBM integrations on the market, including a very promising one by ArcherPoint.
If #2 – Amazing! Because now this article is worth your time.
NAV Basic Setup
- A Customer Card for Amazon. Make sure the shipping method is Internal or not an outbound freight forwarder. Then use the appropriate selections coming up next.
- Customer Price Group with Product Pricing – it is technically sub-optimal to have a different B2C price listing than Amazon, but if you do, ensure you have this setup for easy invoicing later.
- Select an Amazon warehouse, after all, this is your inventory. Don’t go crazy, Amazon has tons of warehouses and they will move your item from CA to TX without notice. Unless you’re integrated it will be nearly impossible to keep up with their transfers. One warehouse transfer order from you to your Amazon warehouse is good enough – you can pull a report from Amazon if you need more detail for an audit. Don’t forget to set up your GL accounts as well for this warehouse. On your customer card ensure the customer routes to the Amazon warehouse in NAV.
- Do you have Amazon-specific packaging and a Bin system? Ensure that inventory is in a bin that’s not pickable for your other lines of business.
- Gen Bus Posting Group – do you want to see Amazon separate from your other lines, or if possible, separate GL accounts? You’ll want to create a new Gen Bus Posting Group just for this type of business.
- Things to ponder: cash clearing accounts. Are you the type of business to have more than one? Do you need one for this line?
First, you’ll want to determine who is responsible in your company for the process on Amazon such as setting demand and getting orders out and packaging labels? Amazon will want when creating an order your box size, weight and quantity to be shipped per SKU.
Next, who will pack and ship these Amazon boxes and make a Transfer Order in NAV? You will need to use a Transfer Order to both ship and receive in NAV. Amazon will send an email when they have received the order and what quantity they received. Caution: this could be different than what you sent.
Are you a lot-based company? Ensure you transfer the correct lot(s) for your inventory management. Amazon does not care about your lots and will not tell you what lot was sold. If you have a recall on one lot, per Amazon rules and regulations all customers who purchased that SKU will be notified.
Two times per month Amazon will remit payment and generate a statement inside Seller Central. These can be a bit complicated. Watch your dates, dates don’t hold from one screen to the other in Seller Central and always default to the current open period. With these Amazon reports you will want to make an Invoice Only in NAV from your Customer Card of Amazon.
Selecting what Items were sold and qty – careful with what may appear to be a give-away of an item. If someone paid with points two lines are generated in the Amazon report, one showing the price and one showing free. Also, since Amazon does not care for your lots, you should probably assume FIFO. Using Item here will consume it against your Amazon warehouse.
Sales Tax collected not remitted, will come back as ”income”, code that to your sales tax liability account. We’ll revisit sales tax in one moment.
Freights should go against any COGS GL accounts.
Class fees to their proper GL, which could be COGS based or marketing based.
Some fees are separated different from the summary verse the data export. This can cause confusion, I tend to write off any variances against a fee account.
Post the Invoice
Amazon does tend to hold funds to ensure they can cover returns. This makes invoicing and cash application very difficult.
My favorite topic! Amazon is required in many states to collect and remit. It changes often, so I’m not going to list these states, as of writing this it was 24 states. The good news for you, nothing to do for these states even if you are nexus in them; as they will not remit the tax collection to you to remit back to the state. A little gray area here is whether or not you should report these sales as “non-taxable” to the state to ensure your revenue matches your returns; a CPA specializing in sales tax should be sought out to ensure proper tax compliance.
In states without these rules, things get a little more interesting. If you have nexus in that state, you must have Amazon collect and then you must remit. This requires some setup work in Seller Central, such as entering what states you’re nexus in and what your registration number is for that state.
However, the real work begins here. Sales tax can be parish/local/city/region/state-specific depending on the state you’re selling into and your nexus liabilities. Given the standard reports in Seller Central don’t include a tax break out for your easy filing means you need to extract each customer's information and itemize each sell for your tax returns to remit to the proper taxing authority. If you have Avalara as your tax ISV, you might be in luck, they offer an Amazon to Avalara connector that imports the transactions and the liabilities for you into Avatax. Which will flow to your normal sales tax returns and the proper taxing authorities. Then in NAV, you would only hit your sales tax accrual account for the amount Amazon gave you which should wash against what Avatax remitted. The program took about two hours to get up and running and compared to most integrations, I felt it was priced well.
Selling on an open market place such as Amazon does open you to more risk in the nexus market. From your consigned inventory being in states, you are not currently nexus in (physical presence), to additional sales in those states (economic nexus) or even additional marketing that comes with Amazon selling that could result in another Quill standard regarding marketing. Not to mention, if a consumer sees a company not charging them tax they can report that back to a state taxing authority, where that taxing authority may conduct an audit to determine if you do have nexus and should have been collecting tax. Which if the answer is yes, it results in back taxes owed and possibly fines and interest.
Amazon selling is probably not an easy task to undertake, but it can be done. The hardest part for Amazon is all the Amazon portions. Or at least, if you want to be an effective seller, have good SEO and all of those other cool marketing terms, let's be honest you and I don’t know, there’s a lot more to think about than NAV. However, a non-integrated NAV shouldn’t be a hindrance to you, if you streamline and clearly define your process and employee expectations.