How to Enter the Australian Market with Amazon Australia as a U.S. Company
If you have a U.S. company and have been wondering how to best enter the Australian market through a DTC (direct-to-consumer) or D to M to C (direct-to-marketplace-to-consumer), there are actually many pieces to this puzzle that I won’t completely cover today. However, an easy way to enter the market that I recently discovered is Amazon Global. Below, I share my answers and associated video time stamps to the most frequently asked questions I was able to discuss directly with Amazon Australia.
What does it mean for companies like my client who are looking to enter the Australian market? (00:49)
When Amazon receives a request from anywhere in the world, they’ll purchase from the merchant’s U.S. store and then fulfill to the overseas consumer.
Why are some products sold and others not, such as our top sellers? Can I change this? (1:24)
It’s data-driven based on customer keyword searches and glance views. You’re automatically opted into Amazon Global Store as a U.S. FBA seller. Super easy. It’s great if you don’t intend to proactively build your sales, but keep in mind, you have no control over pricing, branding and ability to collect data about buyers or any customer feedback.
Can I remove myself from the Amazon Global Store program? (1:57)
Yes, you can disable it. It’s halfway down the page in Amazon fulfillment settings.
If my products aren’t compliant in a given country like Australia via the Therapeutic Goods Administration, TGA, can Amazon Global fulfill this to the consumer? (2:12)
TGA which according to online description, develops and maintains approved terminology to ensure accuracy and consistency of information on the Australian Registry of Therapeutic Goods. ARTG. This provides consistent standardized methods for naming ingredients.
Short answer is YES, Amazon can sell direct to those consumers in Australia even if you’re not approved or compliant with TGA.
Can you sell direct to consumers in Australia without being compliant? (2:25)
Yes, you could do merchant fulfillment shipments with U.S. products and U.S. labels because basically the consumer assumes the risk. That’s not dissimilar to what you see in China or also parts of Europe. This is what companies like iHerb does. They’re a cross-border platform for companies that don’t want to register and be compliant. And they go direct-to-consumer. Of course, I’m sure they have hybrids of this model but that’s at least the layman explanation.
Can I fulfill direct to consumer in Australia using my U.S.A. FBA service? (3:25)
No.
What is GST? (3:30)
This is the Goods and Services Tax, which is the same as what we call the value-added tax, VAT in other regions. It’s levied on most goods and services sold for domestic consumption.
Do I need to be GST registered if I'm a U.S. seller selling direct to Australian customers from my U.S. warehouse? (3:42)
No, Amazon will remit GST for FBM or fulfillment by merchant shipments to Australia when it’s below the $1,000 de minimis value. So, you’d use Amazon’s ABN for customs documents.
FBM fulfillment by merchant shipments to Australia are required to be DDP (delivery duties paid). When you contact your shipping providers for DDP rates, which means you’re paying it up front and your customers aren’t paying it upon arrival, mention that Amazon will remit the GST and you’ll provide the ABN accordingly. You may be responsible for the additional duties and fees depending on the type of product and ship from location. Shipping providers should be able to provide a breakdown of all the applicable fees. Now if you’re setting up a shop to fulfill on your own in Australia, it looks like you do need to have GST registration, but you don’t have to have an Australian entity. You can register with the Australian tax office as a non-resident company.
How much is GST? (4:57)
It’s 10% in Australia and those taxes are placed within the final price on your listing, so be sure to put it in your products and bake it into that final pricing. It’s also customer culture to expect that it’s already baked in.
The Fulfillment By Merchant Model (5:14)
The fulfilled by merchant model for Australia or really anywhere that it’s offered by Amazon is a great first option to gauge some traction but it might be misleading because the sales results are much higher with FBA than with your own merchant fulfilled model. More than 60% higher so make sure you weigh the pros and cons before jumping in and understand that the feedback is going to be limited.
Are the FTZ or bonded warehouse option in Australia and New Zealand and is there such a model that exists where I can place inventory close to the consumer but still avoid the compliance issues? (5:45)
Yes, this is a strategy I use with a lot of clients in China, but if you also have an answer to this, feel free to leave your experience or knowledge in the comments section below.
Have any follow-up questions to the answers I’ve provided in today’s video? Comment below and I’ll do my best to answer — I may even choose your question to share as a video in a future social media post!
Update
JANUARY 25, 2021
Here’s a great follow-up question I received in response to this video:
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When it comes to FBM, or Fulfillment By Merchant, does the order fulfillment location matter? For example, must we fulfill our orders from our home country (for example, the US), or could we send our product to an affiliate in Australia to fulfill orders for us?”
