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How will Brexit affect product liability regulations?

As the Brexit transition period draws to a close, businesses and retailers must ensure that they are prepared for the regulatory changes surrounding product safety which will come into effect from 1 January 2021.

Until now, much of UK law surrounding product safety has been in line with EU regulations, but once the Brexit transition period is complete on 31 December 2020, new or replacement legislation will come into force. The new rules will have significant implications for businesses when it comes to ensuring product safety and the need to secure appropriate product liability insurance.

These changes to product safety and other regulations will affect all online retailers, particularly those that import into the UK from the EU, and businesses will need to take action promptly.

So what should businesses be aware of as the Brexit transition period comes to an end?

 

What are the existing laws that protect customers?

Customers are legally entitled to seek compensation if they are injured by a defective product that they have purchased from a UK retailer. The rules apply whether you are a sole trader or an established national brand.

Before Brexit, the two key pieces of legislation that outlined a retailer’s duty of care to its customers were the Consumer Protection Act 1987 and the General Product Safety Regulations 2005:

 

The Consumer Protection Act 1987 (CPA)

This Act gives people the right to claim compensation against the producer of a defective product if that product causes personal injury or death.

The CPA introduced the principle of strict liability to defective product injury claims, meaning that a producer is automatically liable for the damage a product causes. The ‘producer’ includes the individuals or businesses who imported that product into the EU, so under the CPA, the injured person can seek damages from the importer, rather than attempt to take legal action against a manufacturer based outside of the EU, which could be a complicated and costly process.

If you currently import from outside the EU to sell in the UK, then the CPA applies to your business.

 

The General Product Safety Regulations 2005 (GPSR)

All products for sale in the UK must be safe to use, so businesses must ensure that the items they sell comply with GPSR by taking “reasonable steps”. The definition of “safe to use” depends on the nature of the product.

Products such as towels or Christmas cards are unlikely to cause injury and therefore will require a lower standard of due diligence. However, retailers should carefully consider the hazards that could be posed by all products, even ones which appear to be low-risk.

 

Chris Salmon, Director of Quittance said, “Products must not only be safe for their intended use, but must also be safe in a more general sense. Clothing, for example, must not be flammable even though ‘setting clothes on fire’ obviously isn’t intended use. Breaching GPSR safety regulations is a criminal offence, for which penalties can include statutory fines, or even imprisonment.”

 

Quality control

 

How will product liability regulations change in January 2021?

Online retailers who import products from the EU need to be aware of the changes that will come into force in January 2021.

Both the CPA and the GPSR will become subject to amendments, as the Product Safety and Metrology Regulations 2019 come into force to bridge any regulatory gaps in product safety that occur once the Brexit transition period comes to an end.

From January 1 2021, the CPA will apply to anyone importing into the UK from the EU. Distributors who import products into the UK will be subject to strict liability rules for defective products sourced from anywhere abroad. Previously, liability for damages only applied to EU-based manufacturers or importers into the EU.

Furthermore, UK importers will now be responsible for carrying out product safety checks, which would previously have been conducted by an EU supplier.

 

The changes to GPSR safety rules will also require importers and retailers to put measures in place to protect customers, including:

 

  • Receiving notifications of product recalls from non-UK distributors or manufacturers
  • Conducting safety testing
  • Notifying customers and distributors about product risks and defects.

 

Electrical standards

 

Is your insurance policy fit for purpose?

 

From January 1 2021, many more UK online businesses will be liable for injury caused by products sourced from the EU, and this, in turn, is likely to lead to an increase in product liability insurance claims.

Retailers and businesses should check their current product liability insurance policies to check that they will be fit for purpose when the transition period is over, and amend them if not. The increased exposure to liability may cause the cost of insurance premiums to increase, and new policies may require retailers to take additional steps to ensure the safety of their products.

If someone is injured as a result of a defective product, the subsequent compensation claim can be costly for a business. Claims can also take years to resolve. If a person sustains permanent or life-threatening injuries, damages awarded can run into £100,000s.

Your level of insurance cover should take into account the risks posed by your products, as well as who may be likely to be affected by an injury (e.g. members of the public, a buyer’s children or family).

 

Recalling products post-Brexit

Another change will be the way in which defective products from the EU are recalled from sale.

Previously, an EU-wide product recall was made using an alert system called ‘Safety Gate’, which allowed countries to share information with one another and recall unsafe products.

From January, the UK’s involvement in Safety Gate will come to an end, and UK-based importers and distributors will no longer be required to withdraw defective products that are recalled through Safety Gate alerts.

Although the UK plans to adopt a ‘Safety Gate’-style system, the exact details of this have not yet been made available. Therefore it is advisable for UK businesses to subscribe to EU safety notices until the new system rolls out.

 

Replacing the CE mark with the UKCA mark

ce vs ukca

 

The CE mark is a European safety indicator that certifies that a product complies with health and safety regulations within the European Union. This will be replaced by the UKCA mark (the ‘UK Conformity Assessed’ mark) for products sold in the UK.

Currently, low risk products only require self-certification that safety standards are met. The certification process could change once the details of any UK-EU trade agreement become clear, and as the UK’s own safety standards regime develops.

 

What to do now

The changes that will come into force in January will have significant implications for all online retailers in the UK, so it’s important to consider how your business may be affected and make sure that you are prepared for any changes.

Some businesses may wish to review how and where they source their products, given the increased liability that will now come from importing from the EU.

Even if your products are manufactured and distributed within the UK alone, it is worth taking the time to assess your safety protocols to ensure that you will be compliant with the new regulations. This could include reviewing your labelling and marketing materials to ensure that warnings and safety notices are clear and that product descriptions are accurate.

You should also review your product liability insurance policy to ensure that you will be covered once the new regulations come into force, as you may be exposed to additional liability.

If a product you sold or imported causes serious, life-altering injury, an appropriate insurance policy will help to protect your business financially. More importantly, insurance cover ensures that the injured party can receive the full compensation award required to support their recovery.

 

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The top four alternatives to FBA for eCommerce sellers

Amazon sellers haven’t had the best 2020, leading many to consider alternatives to FBA.

First, FBA halted receipt of all non-essential products, then there were delivery delays of up to a month, and finally, there was that shocking Brexit announcement.

This is causing a significant increase in sellers looking for FBA alternatives – a method to continue selling on Amazon, generating sales and brandishing that Prime badge without using Amazon for fulfilment.

But, in a world dominated by Amazon, what are the alternatives to FBA, and how do they compare?

 

Rewind – the problems with FBA

Love it or hate it, FBA is a popular fulfilment method for many Amazon sellers, especially those new to selling online. Once you get started with FBA, it’s easy to stick with FBA, using their multi-channel fulfilment capabilities to assist growth.

However, seller interest in FBA alternatives has peaked this year, owing to two unfortunate FBA blunders.

 

Amazon’s pandemic response

Back in March, when supply chains were dry and panic buying was rife, Amazon dropped a big bombshell. All in-bound deliveries of “non-essential” items were suspended, and Prime delivery estimations increased from next-day to one-month.

Understandably, this was to help Amazon cope with the phenomenal demand for essential items at the beginning of a global pandemic. However, this move caused significant problems for sellers during a very challenging time; a time when other fulfilment providers were seemingly running as normal.

 

Amazon Brexit announcementAmazon brexit plans

In July, Amazon announced that from 1 January 2021, Pan-European FBA inventory transfers will cease and there will be no more EFN (European Fulfilment Network)

According to Tamebay, this reduces your selling opportunity from 446 million EU consumers to 66 million Brits, unless you send stock to a European FBA warehouse or find an UK-EU fulfilment solution who splits your stock for you.

 

FBA’s existing disadvantages

While these are just two responses to highly unusual situations, unfortunately, they join a long list of existing frustrations with FBA, including:

1. Extra fees and hidden prices

While FBA is cost-effective for small, fast-moving and lightweight products, sellers are stung by extra fees for long-term storage, inventory removal, unplanned prep fees, labelling and returns processing.

2. Multi-channel fulfilment

Using FBA to fulfil orders from other sales channels is considerably more expensive and restrictive, making eCommerce growth difficult.

3. Control (or a lack of)

FBA exerts considerable control over what you ship, when you send it and what packaging you use. For those looking to build an independent brand, this lack of control can be fatal.

4. Performance

Amazon might be the fastest shipper around, but sometimes this comes at the expense of oversized packaging, missing items and damaged deliveries – all damaging your reputation as well as Amazon’s.

Fortunately, you can still sell and perform well on Amazon without using FBA.

 

The alternatives to FBA for online sellers

Fulfilment by Amazon offers two main benefits:

  1. Order fulfilment; and
  2. Automatic Amazon Prime qualification.

 

Therefore, you need an alternative method of fulfilment and an alternative way to qualify for Prime.

 

Fulfilled by amazon

 

1. Fulfilment by Merchant (FBM)

Fulfilment by Merchant (shortened to FBM) is the term used for sellers fulfilling orders themselves, instead of using FBA. This involves storing, picking, packing and shipping items in-house or using an outsourced fulfilment provider (we’ll come onto these).

There are many benefits of FBM, the primary ones being:

Control

Fulfilment by Merchant gives you control over the entire fulfilment process. This includes where you store items, how you label items, what packaging you use and with which shipping carrier you partner.

Cost

FBM sellers have a tighter rein over their fulfilment overheads. Rather than being tied to FBA’s fees, you decide where to invest money and where to save it.

Relevant reading: How fulfilment services can save you time, money and stress

 

Expansion

Finally, FBM makes it easier to expand to multiple marketplaces or your own eCommerce platform, without worrying about excessive FBA fees or running a multi-provider fulfilment operation.

There are considerations, too, including:

  • Expertise – you need to know how to fulfil orders or partner with someone who does.
  • Resources – you must have the resources to fulfil orders in the UK or internationally.
  • Capability – you need to match Amazon’s shipping speeds and standards, even during peak periods such as the holiday season.

 

The extent of these considerations depends on how you fulfil by merchant – specifically are you fulfilling orders in-house or using an FBA-like fulfilment partner.

 

FBA costs

 

2. In-house fulfilment

In-house fulfilment involves fulfilling orders yourself, using your own storage space, warehouse team (or willing helpers), packaging materials and shipping carrier.

The benefits of fulfilling by merchant in-house include gaining a first-hand insight into the fulfilment process, being able to cut costs by fulfilling orders yourself and having immediate access to your inventory.

However, in-house fulfilment is incredibly resource and time-intensive – taking you and your budget away from business growth activities. It’s also challenging to meet Amazon’s fast shipping speeds in-house, especially when order volumes spike.

 

3. Outsourced fulfilment

Outsourced fulfilment involves using a third-party fulfilment partner to fulfil your orders. They disburse, store, pick, pack and ship your orders for you, in the same way that FBA does.

Outsourced fulfilment is a popular option for sellers leaving FBA because of benefits, including:

Expertise

eCommerce 3PLs know shipping like the back of their hand. They’re experienced in providing the fastest and most cost-effective delivery service, which can boost your delivery speeds while saving you money.

Resources

A third-party fulfilment team has the resources to match Amazon’s shipping speeds, even during peak retail periods. You can scale your requirements throughout the year, so you’re never paying for space you’re not using.

Top tip: compare fulfilment prices using our fulfilment pricing and cost page

 

Expansion

A 3PL grows with your business, providing more space, locations and resources when you need them. They also have economies of scale to increase your delivery capacity at the lowest cost possible.

What are the considerations of using an external fulfilment service? Some providers don’t work with branded boxes, others don’t ship internationally, and of course, it is a business outgoing. However, the best thing about using a 3PL is that you don’t have to settle – take the time to find a partner who fits your needs, budgets and aspirations.

 

Seller fulfilled Prime4. Seller fulfilled Prime (SFP)

As mentioned, SFP is the alternative method to FBA for earning your Amazon Prime status. You get all the perks of Amazon Prime without the disadvantages of FBA.

Recap: Amazon Prime is a fast shipping program that provides shoppers with next-day deliveries for free, and sellers with increased visibility and buy box eligibility.

 To become an Amazon Prime seller via SFP, you must be an FBM seller using in-house or outsourced fulfilment. You must also meet the SFP eligibility requirements:

  • Ship over 99% of your orders on time
  • Have an order cancellation rate of less than 1%
  • Buy shipping labels through Buy Delivery Services or Amazon Shipping
  • Deliver orders with supported Seller Fulfilled Prime carriers
  • Agree to the Amazon Returns Policy
  • Allow Amazon to handle all customer service enquiries.

 

As you see, these requirements are stringent and may be difficult to achieve and maintain in-house, especially at Christmas. When deciding between in-house or outsourced FBM, this is a crucial factor that could sway you towards using an outsourced fulfilment provider who already meets the SFP requirements.

 

A note about Amazon FBA vs Amazon Shipping

You may have recently heard about Amazon Shipping and wondered whether this is an alternative to FBA.

Amazon Shipping is a premium, next-day shipping service that provides sellers with collections and deliveries seven days a week. In short: Amazon Shipping is not a fulfilment service. While you or your fulfilment partner can use the service to deliver items, this would be part of “fulfilling by merchant” as opposed to an alternative in its own right.

 

When to consider FBA alternatives

So, you’re using FBA, and you’re either happy, frustrated or at your wit’s end – when is the right time to consider alternatives?

You can and should reassess your options regularly, but five strong signs you’re ready for an alternative are:

 

Expanding to multiple sales channels

FBA becomes restrictive and less cost-effective when selling on non-Amazon channels. If you’re expanding to channels such as eBay, or opening your own Shopify store, use it as an opportunity to refresh your fulfilment strategy and consider a multi-channel fulfilment alternative.

 

Significant growth on Amazon

Sellers experiencing significant growth on Amazon sometimes find they’ve outgrown FBA. If you’re becoming frustrated with the restrictions FBA places on your development, consider your options.

 

Selling internationally

Following FBA’s Brexit restrictions, anyone selling or intending to sell internationally must find alternative arrangements for European orders. Use this time to analyse alternative fulfilment providers who accommodate national and international orders, by shipping internationally and distributing stock to European warehouses.

 

Watch this space for a big European fulfilment announcement soon.

 

Want to grow your brand

Any brand looking to grow and establish a name for itself should always analyse their fulfilment strategy against their current and future needs. FBA is ideal for small, first-time Amazon sellers, but if you’re a growth brand, is FBA supporting that growth?

 

Starting selling online

Finally, just because you’re new to eCommerce and fulfilment, doesn’t mean you have to fulfil with FBA or do it all yourself. By using an FBA-alternative like Huboo, you get the benefits of Fulfilment by Amazon with the benefits of Fulfiled by Merchant.

 

 

Outsourced fulfilment and warehousing

 

Final thoughts

FBA is a great service for online sellers, but there are many comparable and better alternatives out there – it all depends on your business vision and goals for growth.

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How to Advertise on Amazon?

 

Amazon isn’t just a great marketplace to sell on; it’s a powerful platform to market on too.

Amazon PPC advertising helps sellers increase product visibility to gain more views, clicks, sales and repeat customers.

But, with more sellers using Amazon advertising to do the same, it’s crucial that you implement a solid and defined Amazon PPC strategy that helps you realise your goals in the most cost-effective way possible.

 

This eCommerce guide to Amazon PPC covers:

  • What is Amazon PPC?
  • How Amazon PPC works?
  • The benefits of advertising on Amazon
  • How to set up your first Amazon PPC campaign?
  • How to boost your Amazon advertising results?

 

Let’s jump straight in.

 

What is Amazon PPC?

Amazon PPC is an advertising program where Amazon sellers pay to promote their products across the platform, rather than relying on organic visibility only.

Amazon Advertising Tips - Amazon product ads

 

There are three main Amazon PPC formats/ad types:

 

1. Sponsored Products

Sponsored product ads push individual listings to the first page of the search results and include them on product pages, along with a “sponsored” tag.

 

2. Sponsored Brands

Sponsored Brands ads feature your brand logo, a custom headline and multiple products in advertisements on the search results page, along with a “sponsored brand” tag.

You will need to enroll/register your brand with Amazon (which can take a while to get approved). Once this is done you will be able to create a great brand landing page where these ads will drive to. You can show off your key products, subcategories to your different ranges or even a story about who you are.

 

3. Sponsored Display (Including Video)

Sponsored Display ads feature your product below the “add to cart” button and on the product details page.

Amazon uses keyword targeting to match your PPC advertisement with customer search queries. When a shopper enters a search term relevant to your keywords, your advertisement enters an auction, based on a default maximum bid.

The winning bidder wins the advertisement placement and, if someone clicks the ad, pays $0.01 more than the next highest bidder. For example, if your default bid was $1.20 and the next highest bid was $1.05, you’d win the advertisement placement and pay $1.06 if the shopper clicked your ad.

This ad type also requires brand enrolment.

 

Why is it important to advertise on Amazon?

Amazon is a lucrative marketplace to sell on because it attracts millions of shoppers from around the world, but it also attracts sellers, too. This makes it challenging standing out on Amazon, especially if you’re a new seller, introducing a new product or just struggling to top the organic results.

 

Amazon PPC gives you a competitive advantage by:

  • Creating awareness of new products not yet ranking on the first page.
  • Boosting the visibility of existing products that aren’t top of the organic results.
  • Driving customers to specific products, such as seasonal or underperforming products.
  • Reaching new audiences and different shoppers.

 

By increasing the visibility of your listings across Amazon, you naturally generate more interest and clicks, which generate more sales and reviews, helping you grow your organic ranking to generate further sales. You may have heard this referred to as the Amazon flywheel effect.

 

How to set up your first Amazon PPC campaign

Setting up your first Amazon PPC campaign is easy.

 

1. Select your Amazon PPC campaign type

For this walkthrough, we’re going to concentrate on Sponsored Products, but you can choose whatever campaign type you want to promote your product with.

 

2. Set your campaign name, budget and duration

Give your campaign an easily identifiable name, maximum daily budget and start/end date.

 

Amazon advertising camaign settings - sponsored products

 

Note that your maximum daily budget averages out over one month, meaning some days your ad spend will exceed the budget and other days it will come under budget.

 

3. Select a targeting type

Targeting determines where and when your ads appear on Amazon. There are two different targeting methods:

 

  1. Automatic: Amazon automatically targets keywords based on product information, campaign data, and multiple default matching strategies.
  2. Manual: you set keywords based on keyword research as well as setting negative keywords and different keyword match types.

 

Definition: negative keywords are keywords that prevent your ad from appearing. For example, if you sell wine glasses you might add “sunglasses” as a negative keyword.

If you’re new to Amazon PPC, we recommend starting with an automatic campaign and then using the results and data to inform a manual campaign when you become more familiar.

Amazon Negative Keywords

 

4. Select your product

Choose the product you want featured in your first Amazon PPC campaign by entering the ASIN or product name into the search field.

5. Set a default bid

Set the maximum amount you’re willing to pay when someone clicks your ad by entering a figure or using Amazon’s suggested figure. Remember, Amazon deducts winning bids from your daily total, so set a figure that is competitive but doesn’t immediately drain your daily budget upon one or two clicks.

6. Review and launch

Finally, review your sponsored product ad and set it to live.

 

How to monitor your first Amazon PPC campaign

 

Amazon Campaign Ad Group - Sponsored products - Automatic targeting

 

It’s good practice to let your first Amazon PPC campaign run for at least a week before you monitor the results.

Log into your Campaign Manager to download the performance data of your PPC campaign. The main KPIs to monitor are:

 

  • Click-through rate (CTR): The percentage of shoppers clicking your ad after seeing it.

 

  • Conversion rate: The percentage of shoppers buying a product after clicking your ad.

 

  • Cost per click (CPC): The average cost paid per shopper clicking your ad.

 

  • Advertising cost of Sale (ACOS): The percentage of product cost spent on advertising.

 

The goal is to have a high CTR and conversion rate while maintaining a low CPC and ACOS. Any discrepancies between figures highlight a potential problem with your ad targeting or product listing.

For example, a high CTR and low conversion rate suggest that while you’re targeting the right keywords, your listings aren’t compelling shoppers to convert.

ROAS (Return on ad spend) is another term used similar to ACOS (shown as a percentage), which refers to the amount of sales revenue returned for the amount of money spent on your ads.  In the above image example you will see the ROAS was 2.31 – meaning the amount in sales (£14.49) was 2.31 times more than the amount you spent on ads (£6.26). You will need to work out what your own return KPI’s are in order to make a profit or include what other benefits you get from advertising your products.

 

How to boost the ROI from Amazon PPC advertising

You can further boost the return on investment from Amazon PPC advertising by maximising clicks and sales through tactics including:

 

1. Optimised listings

Using high-quality images (at least 5 with a video if possible), persuasive content (A+ pages and manufacturer info) and competitive pricing to encourage customers to convert after landing on your product pages.

2. Social proof

Increasing the number of positive reviews (take a look at Amazon’s Vine review program) and the amount of user-generated content by providing exemplary customer service throughout the shopping journey.

3. Amazon Prime

Providing customers with free and fast shipping by qualifying for Seller Fulfilled Prime (SFP). With SFP you can join the Amazon Prime fast-shipping program by meeting specific delivery speed metrics and KPIs in-house or by using an outsourced fulfilment company, such as Huboo. Once you meet the program requirements, Prime shoppers receive free and fast shipping across your products, making them more likely to convert and return.

 

Final thoughts

There’s no doubt about it, Amazon is one of the most competitive places to sell online, but that doesn’t mean you can’t stand out from the crowd and beat the competition.

By using Amazon PPC to increase your visibility and reach new customers, you can boost your sales, review numbers and organic ranking at the same time.

 

Happy advertising!

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