Is your Amazon business growing strong and steady? Then you should consider expanding your reach beyond US borders. In the fourth quarter of 2020, Amazon announced a US$100-million expansion of its operations in Mexico. Which is why selling on Amazon Mexico is your best bet.
Over the last five years, Mexico has become a very profitable market for the retail giant. The country’s proximity to the US, the trade agreement between both nations, and its increasing customer-base have played a fundamental role in the marketplace’s development.
With this staggering investment, Amazon will create five fulfillment centers, two support buildings, two sorting centers and 27 delivery stations.
Selling your products in Mexican land will require a good amount of effort and commitment. However, you can rest assured that your hard work will reap the benefits!
Read on to learn more about how you can set up a Seller Account, shipping complexities, and some tax and duties in Mexico.
Let’s dive right in!
Setting up your Amazon Mexico Seller Account
If you want to start selling on Amazon Mexico, you will need to open a North America Unified Account. This service allows sellers to list products in the US, Canada, and Mexico.
With a Unified Account, you’ll be able to:
- Share listing information and manage your inventory across all three North American marketplaces;
- switch between the US, Canada and Mexico in Seller Central to list products and manage orders;
- access tools and services to manage your business across the US, Canada, and Mexico;
- update your account information through a consolidated user interface;
- access the Amazon Currency Converter for Sellers to get paid in your local bank and currency; and
- pay a single monthly Pro selling plan subscription fee for your Unified Account.
Newer Amazon sellers are automatically approved as North American Unified Accounts. If you see Canada and Mexico in the language switcher of your Seller Central dashboard, you’re good to go.
Image: Just One Dime
Check your account health constantly to make sure you are in good standing with Amazon ans so that your Unified Account gets approved faster. Otherwise, contact Amazon Seller Support to get approval.
Note: The Unified Account is not automatically approved when you sign in for Brand Registry; you’ll have to apply for access individually.
With your North American Unified Accounts set up, you can begin selling on Amazon Mexico.
Updating Your Inventory
The next step is to manage your inventory properly. First, update marketplace-specific SKUs to global SKUs to meet Amazon’s requirements. You can do it by following these steps.
- Select the “Existing Offer” option on the Amazon Seller Central dashboard.
- Use the Build International Listing tool to create FBM listings and select your source marketplace.
- Amazon manages pricing and shipping costs separately in each marketplace. Check the automatic currency conversion adjustments that Amazon makes to your pricing and shipping against your profit tolerance.
A Global SKU shares your inventory pool between the US, Canada and Mexico. This means your total amount of inventory applies to all three marketplaces. Global SKUs are better for FBM listings.
Marketplace-specific SKUs can be created by selecting “Unique Offer” on Seller Central. They work as a local inventory pool, meaning you’ll manage separate pools across the US, Canada, and Mexico. This makes marketplace-specific SKUs ideal for FBA listings.
Amazon Mexico: Know the Territory
Amazon US does get a fair number of Mexican shoppers, but that is not enough to break through.
A North American Unified Account lets customers from Canada and Mexico see your listings. However, shoppers always prefer buying in the marketplace of their own country.
Potential new customers are not going to visit Amazon US if they have what they want on Amazon Mexico.
You will also fare better if you speak to customers in their own language. If they cannot understand your policies and product specification, they will be less likely to buy your goods.
Consider the next key points before setting up your Amazon Mexico shipping strategy:
Crossing the border increases the risk of packages being delayed, damaged or lost in transit. Many Amazon Mexico sellers have reported lost or damaged packages, and shipping delays.
costs and fees will increase if you ship from the US to Mexico. For example, Amazon charges a 3 per cent currency conversion on every transaction, plus duties, taxes, and other fees.
3. Shipping carrier
Amazon does not recommend using USPS because they coordinate with Correos de Mexico, which does not have a good reputation for making deliveries on time. It’s better to go with FedEx, DHL, or UPS — you’ll have to make the investment more, but your customers will thank you for it.
Returns and replacements will make you go through all the international shipping obstacles again, or issue refunds without returns.
If you want to push for a major expansion, set up a physical location in Mexico, and set up a Fulfillment By Amazon (FBA) Business by enabling ‘International shipping’.
FBA vs FBM
When it comes to shipping your products to Mexico, you’ll have to choose between Fulfillment By Merchant (FBM) and Fulfillment by Amazon (FBA).
Opting for FBM means that you’ll be required to manage product deliveries on your own. Also, you will be listed as the Importer of Record (IOR; so, any shipping duties, taxes, and customs-clearance fees will be your responsibility.
FBA, on the other hand, frees you from renting storage in Mexico and hassling with shipment complexities.
You will only have to create your product listings, prepare your products, and ship them to an Amazon fulfillment center. From then on, Amazon will pick, pack, and ship your items.
Using FBA for selling in Amazon Mexico is a better option if you anticipate many sales. Plus, it simplifies shipping, and cuts down on fees and delivery time.
Additionally, you’ll enjoy these benefits:
- All your products will be automatically enrolled in Amazon Prime.
- You only have to worry about having enough product in stock at Amazon’s warehouses.
- You get better scores because of Amazon’s guarantee.
- You don’t need a Mexican tax number (also known as RFC); the shipping company will provide this for you.
- Returns can be sent to Amazon warehouses in Mexico where they can be reshipped, removed or destroyed as you see fit.
Look into your selling goals and consider which fulfillment option is a better fit for your business capabilities before setting up in Amazon Mexico.
Amazon Mexico Income Tax and Regulations
You want to be informed about Mexico’s Income tax collection policies before selling on Amazon Mexico.
Here are some key issues you need to address:
Resident sellers, acting as importer of record (IOR) on their own shipments to Mexico, must have a tax number (Registro Federal de Contribuyentes or “RFC”) in Mexico.
They must also register and be listed on the Importers’ Registry called “Padrón de Importadores” under the Secretariat of Finance and Public Credit (also known as Hacienda).
Non-resident sellers who wish to import goods into Mexico must also have an RFC, and have three importing options:
- Identify the end customer as the IOR
- Use an authorized third-party service to make imports on their behalf
- Incorporate and register a local Mexican entity to act as the importer
Keep in mind that Amazon and Amazon fulfillment centers will not serve as the IOR for any FBA shipment to Mexico.
Value Added Tax (VAT) on Digital Services
As of 2020, VAT is required on all digital services that Amazon provides to sellers. This means that companies that do not register in Mexico have to charge and collect VAT on the marketplace services.
Note: Sellers who have valid RFC IDs should enter them into Amazon, so they won’t have to pay this tax.
Importers must fill out a form called “pedimento de información” with details of their shipments to obtain custom clearance on their products. This form generally includes information on taxes and governmental fees, such as VAT and countervailing duties.
Mexican customs also charge a pre screening fee (prevalidación) to validate information in “pedimentos” before submission.
Selling on Amazon Mexico: Additional Duties
Sellers have to mark their products with a particular 8-digit Mexican tariff classification number. This will determine the duty rate and establish any applicable non-tariff barriers.
Foreign companies must meet Mexican official rules “Normas Oficiales Mexicanas” (NOM) technical regulations to sell their products in Mexico.
Mexican legislation requires Amazon to charge VAT upon entry of certain goods into Mexico.
The IEPS (Impuesto Especial sobre Producción y Servicios) tax applies to certain imports such as alcoholic beverages. It can range from 25% to 160% of the merchandise’s value.
Always consult a legal adviser and customs broker about Mexican income tax and shipping.
Expanding internationally is always a tricky task. Be sure to take your rollout into Amazon Mexico with patience.
Also, don’t forget to:
- Conduct a little market research into whether or not your products will sell in Mexico.
- Consult with a legal adviser and customs broker about the tax and shipping duties you’ll have to cover
- Do a test run with a few products before sending your inventory across the border.
- Take time to get comfortable with the logistics, duties, fees and shipping challenges.
And most importantly, research and experiment to see if your products fit into Amazon Mexico’s marketplace. If you’re certain that Amazon Mexico is a good move for your business, you’ll be motivated to embark on this exciting and profitable journey.
Esteban Muñoz is an SEO copywriter at AMZ Advisers, with several years’ experience in digital marketing and e-commerce. Esteban and the AMZ Advisers team have been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.