From Cart Abandoners Metric to EU VAT Changes: Amazon’s Newest Seller Updates

In this week’s post, we’ll delve into the new Cart Abandoners feature, designed to tackle the persistent challenge of customers failing to complete the checkout process.

Next, we’ll explore the updated Feedback Manager tool in Seller Central, which now offers insights into seller-fulfilled customer service performance through metrics like contacts, response time, and buyer sentiment.

We’ll also cover the AWD storage promotion, providing sellers with a 100% discount on storage fees for their second month if their first shipment is received within the promotional period.

We’ll discuss the upcoming changes in VAT collection for UK and EU sellers, effective August 1, 2024.

Finally, we look at the new FBA Inventory Age & Excess Analytics page that offers valuable trends and key metrics to help sellers manage aging and excess inventory more effectively.

1. Amazon Tackles Cart Abandonment with New Feature

Potential revenue is slipping away daily. Baymard Institute reports 70.19% of online shopping carts are abandoned. Imagine the boost in sales if you could convert even a fraction of those lost opportunities.

Enter Amazon’s Cart Abandoners feature!

This tool enables you to re-engage customers who have left items in their carts, presenting a significant opportunity to boost sales and enhance the overall customer experience.

Leveraging Cart Abandoners for Increased Sales

The Cart Abandoners feature could be a game changer for your business. Here’s how you can utilize this new tool:

• Craft Special Offers: Extend exclusive discounts to cart abandoners to entice them back. These targeted promotions can be the nudge needed to convert hesitant shoppers into buyers.
• Employ Display Ads: Using Sponsored Display Views Remarketing Campaigns, you can target audiences that have visited your product pages but did not buy within the next 90 days. This strategy keeps the products in front of potential buyers, reminding them of their interest and encouraging a return visit to complete the purchase.

What This Means for Your Business

The introduction of the Cart Abandoners feature is a key development for Amazon sellers.

By leveraging this tool, you can fine-tune your marketing strategies and improve your listings. Understanding which products are frequently abandoned can provide insights into potential areas for improvement, such as pricing, product descriptions, or images. Recognizing these pain points is the first step toward resolving them.

More importantly, the ability to re-target potential customers who have shown interest in products but have not yet completed their purchases can lead to higher conversion rates and increased sales. This feature not only enhances the customer experience by offering personalized incentives but also empowers you with actionable data to drive performance improvements.

Amazon’s Cart Abandoners feature is a valuable tool for optimizing your operations, engaging customers more effectively, and boosting your sales amid increasing FBA costs and competition.
To get started, go to Brand Analytics > Customer Loyalty Analytics.

Related: 5 Proven Strategies for Boosting Sales with CVR Marketing and Targeted Personalization

2. Monitor and Optimize Your Customer Service Performance

Amazon recently unveiled an update to its Feedback Manager tool in Seller Central, offering you deeper insights into your seller-fulfilled customer service performance. The update enables you to track three critical metrics:

• Preventable Contacts: This metric refers to customer inquiries or order issues that could have been avoided with better processes, information, or support from the seller. These are interactions where the customer needed to reach out due to a problem or a lack of information that ideally should not have arisen in the first place. For example, customers contacting you because they did not receive their order on time, or the order was incorrect or damaged. Improving order accuracy and ensuring timely deliveries can reduce these contacts.
• Average Contact Response Time: This refers to the average time it takes for a seller to respond to customer inquiries or messages.
• Buyer Dissatisfaction Rate: This key metric measures the percentage of customers who express dissatisfaction with their interactions or experiences with a seller. Calculated based on customer feedback, the BDR includes factors such as negative feedback, customer service complaints, and return or refund requests. This metric helps Amazon ensure high standards of customer service and satisfaction.

With these insights, you can identify areas for improvement in your customer service practices, ultimately enhancing the overall shopping experience for buyers. The tool provides trends for the prior four-week period on a rolling basis, allowing you to stay proactive in addressing customer concerns.

According to Amazon, your account health won’t be affected by these insights, emphasizing their educational purpose.

In response to the update, sellers have expressed mixed sentiments. While some welcome the enhanced visibility into customer service performance, others reported that they were not immediately able to see the changes in their account. Some sellers also suggested additional features for gathering actionable feedback from customers.

Despite the varying feedback, the consensus among sellers is the importance of continuously monitoring and improving customer service practices to maintain a positive reputation and drive success on the Amazon platform.

With access to comprehensive performance data, sellers can refine their customer service strategies and bolster their competitive edge in the marketplace.

Go to Customer Service Insights on Feedback Manager for more details.

Related: Tips to Improve Customer Experience and Reduce Returns

3. Save on Storage: AWD’s Special Second Month Promotion

To incentivize greater AWD adoption, Amazon introduces the Amazon Warehousing and Distribution (AWD) Second Month Free Storage Promotion.

This enticing offer provides sellers with a 100% discount on storage fees for the second month following their first-ever shipment to AWD so long as it is received between May 1, 2024, and July 31, 2024. 

How it Works

The promotion’s eligibility criteria are straightforward.

If your first-ever shipment lands at AWD during the specified promotional period, you automatically qualify for the discount on your second month’s storage fee. This initiative aims to incentivize you to leverage AWD for your inventory storage needs, offering significant cost savings and enhancing profitability.

The discount will be applied automatically and reflected in your monthly fee report.

Suppose your initial shipment reached AWD on May 15, 2024; you’d qualify for a complete waiver of storage fees for June 2024. This discount will reflect in the subsequent fee charging cycle, scheduled for July 2024.

Additionally, you can run the AWD Monthly Storage Fee report from Seller Central to track the dollar amount of the promotional discount.

Promo Runs for a Limited Time Only

Note that the promotion is time-limited, running from May 1, 2024, to July 31, 2024.

To ensure eligibility, you must have your first-ever AWD shipment received at an AWD facility within this period. The promotional discount applies solely to AWD storage fees and cannot be combined with other offers.

While offering these benefits to sellers, Amazon emphasizes adherence to the promotion’s terms and conditions. Any violation may result in the invalidation of the offer, forfeiture of incentives, and potential reversal of applied discounts.

Overall, the AWD Second Month Free Storage Promotion presents an attractive opportunity for you to optimize your inventory management, reduce costs, and maximize profitability.

By taking advantage of this limited-time offer, you can unlock significant value and further enhance your success on Amazon.

Related: Brace for Higher FBA Fees in 2024, Amazon Enters the 3PL Space with AWD, Supply Chain by Amazon

4. Amazon Announces Changes to UK and EU Seller Agreements and VAT Collection

Amazon has announced a pivotal change effective August 1, 2024, impacting its European sellers’ VAT handling.

The transition from Amazon Services Europe S.à r.l. (ASE) to Amazon EU S.à r.l. (AEU) will see sellers invoiced by AEU, with VAT now collected by Amazon and remitted directly to tax authorities. As of this writing, the standard VAT rate in the UK is 20%, while rates across EU member states differ, with a minimum standard rate of 15%.

Under this adjustment, sellers in the UK and select EU countries will see VAT charged on their Amazon fees as some local VAT rules require. This will require sellers to potentially have to recover any overpayment of VAT via their VAT return process. 

Concerns arise among sellers, particularly those on the UK flat rate VAT scheme, who fear overpayment due to the standard VAT collection rate. 

Amazon charges UK sellers VAT based on the location from which the services are billed and the nature of the services provided. Here’s how it works:

1. Advertising Fees

• Previously: UK VAT-registered sellers paid VAT on advertising fees billed from Amazon’s office in London.
• Now: This remains the same, but from August 1, 2024, all other fees will also be subject to UK VAT.

2. Other Fees (Selling on Amazon, FBA, etc.)

• Previously: These fees were billed from Amazon’s office in Luxembourg (ASE) and generally fell under the Reverse Charge Mechanism, where sellers self-account for VAT in their VAT returns.
• Now: Starting August 1, 2024, Amazon will bill these fees from within the UK. As a result, Amazon will charge VAT directly on these fees, and sellers will have to reclaim this VAT through their VAT returns.

Impact on UK Sellers

• VAT Collection: Amazon will collect 20% VAT on all applicable fees and remit it to the HM Revenue & Customs.
• VAT Reclaim: Sellers will need to reclaim the VAT charged by Amazon on their VAT returns, which adds an additional administrative step and stifles cash flow. 

Sample Calculation

Previous Method (Reverse Charge Mechanism)

• Seller receives an invoice for £100 from Amazon Luxembourg (ASE).
• Seller accounts for £20 VAT in their VAT return (Reverse Charge).
• No VAT payment is made to Amazon.

New Method (Post-August 1, 2024)

• Seller receives an invoice for £100 from Amazon UK.
• Amazon charges £20 VAT, totaling £120.
• Seller pays £120 to Amazon.
• Seller reclaims £20 VAT in their VAT return.

Concerns for Small UK Businesses on Flat Rate Scheme

For small businesses on the flat rate scheme, Amazon’s VAT update can result in overpaying VAT because the applicable VAT percentage may be lower than the standard 20% VAT. The discrepancy between the flat rate percentage and the standard 20% VAT charged by Amazon will reduce cash flow and potential profitability if the VAT is unrecoverable.

For example, a seller on a 7.5% flat rate scheme collects £10 from sales and owes £0.75 VAT. Under the new rule, Amazon collects £2 VAT, creating a disparity where the seller is charged £1.25 per sale. 

This poses a significant threat to the viability of small UK businesses, especially when compared to larger companies benefiting from bulk order discounts. Such changes jeopardize the advantages traditionally enjoyed by startups and smaller firms, posing challenges to their sustainability and growth.

Potential Impact on VAT Reclaim Processes

VAT reclaim refers to the process by which businesses can recover the VAT they have paid on goods and services purchased for business use. 

While Amazon’s transition from ASE to AEU aims to streamline VAT collection, concerns loom over the impact on small businesses, especially regarding VAT reclaim processes across multiple countries and the strain on cash flow.

For instance, sellers operating in multiple EU countries may now face more complex VAT reclaim processes. Each country has its own VAT regulations and reclaim procedures, which they must navigate. This could add administrative burden and require a thorough understanding of each country’s VAT system.

Additionally, VAT reclaims in some countries can be slow and cumbersome. France, for example, has a reputation for lengthy reclaim processes, causing cash flow issues for businesses.

But according to Amazon, if your business is registered in the UK, invoices will be issued by the AEU branch located in your country of establishment. This means the invoices will include local VAT charges and you’ll be able to recover that VAT from the HMRC the standard way.

Still some sellers urge for clarity and support, emphasizing the potential financial strain and operational challenges posed by the VAT adjustment.

Amazon’s new VAT collection rules may help streamline the process of VAT collection and remittance but potentially at the cost of increased complexity and financial strain for some sellers specifically in the reporting and recovery processes. Those operating in multiple EU countries may find this especially cumbersome.

Understanding these changes and preparing for the administrative challenges ahead will be crucial for sellers to maintain compliance and manage their cash flow effectively.
Visit Update to Amazon UK and EU seller services entity and VAT treatment to learn more.

5. New Tool for Aging and Excess Inventory Analysis

Amazon has introduced a new tool, the FBA Inventory Age & Excess Analytics page, designed to assist you in analyzing your aging and excess inventory effectively. This feature offers a summarized view of past aging inventory trends, FBA sales, and historical aged inventory surcharges.

Additionally, it provides recommendations for managing excess inventory. With access to one year of historical data, you can make informed decisions to optimize your FBA operations.

Sellers are encouraged to provide feedback to further enhance this tool’s effectiveness in Seller Central.

Related: Amazon Excess Inventory: Why It’s Bad and How to Reduce It, Navigating Amazon’s Increasing Fee Stack