Some sellers on Amazon Middle East website have feedback that they have received an official email from Amazon requesting FBA sellers on Middle East website to upload their VAT tax number. The email mentions that FBA mode sellers are obliged to submit their VAT application to the tax office within 30 days after the FBA order is made, and that late application or non-compliant sales without a tax number may result in the accumulation of penalties by the tax office and the deactivation of the account.
So how to register a tax ID at a low cost? Currently, many tax service providers offer Amazon sellers a special price for registering a tax code + filing a return! And most of the tax agents now support ID card instead of passport to register tax ID! The material is simplified and the number is fast!
What should I do if I accidentally overstayed and triggered a penalty? Don't panic! The Saudi Revenue Authority (SRA) has issued a tax penalty waiver policy for the period June 1, 2022 to November 30, 2022, which will be valid from June 1, 2022 to November 30, 2022, with a 6-month extension. The penalty waiver policy has been extended for a period of six months, ending on May 31, 2023, which means that Saudi Arabia's penalty waiver policy has been extended for a period of six months, ending on May 31, 2023, which is the same as the penalty waiver policy. This means that the Saudi penalty waiver is about to expire! Therefore, sellers should seize the opportunity and consult their tax service provider to apply for the penalty waiver!
Amazon Middle East station since the launch of the seller's attention, some sellers are still confused, watching from the other side of the river; some sellers have been eyeing, ready to go, staring at this piece of traffic "cake".
In 2017, Amazon officially entered the Middle East market through the acquisition of Souq, the No. 1 e-commerce site in the Middle East, and then opened two major sites, the UAE site and the Saudi site, to Chinese sellers in 2019 and 2020. In 2021, Amazon also opened the Egyptian site in the Middle East, and gradually launched advertising, Prime membership and other services in these sites.
In the past few years, Amazon has been developing rapidly in the Middle East, and has always been the top 1 e-commerce site in the Middle East. 2020, Amazon UAE sales volume was $162 million, ranking first in the UAE e-commerce sales, which has laid a foundation for the brand to enter the Middle East market in terms of traffic.
According to the Amazon gas pedal Pattern is expected to serve the seller customers into the Amazon Middle East site will grow 50% this year. in Europe and the United States market is gradually saturated under the trend, more sellers are looking for new growth battlegrounds, and the potential, less competitive Middle East market has become one of the hot choices.
I believe many sellers have the following questions about the Middle East website:
The profits of mature stations such as those in the US, Europe and Japan are gradually stabilizing, what is the profit situation of the Middle East stations?
New to the Middle East and only have 100,000 dollars start-up capital, can I start in the Middle East Station? Is the entry threshold high?
Do I need to pay a monthly fee to open a Middle East store if I already have a European and American store?
Can we do FBA on Middle East website? Is the logistics cost expensive?
I heard that the commission of Middle East station is lower than other mature stations, is there any detailed comparison?
......
Now, the Green Circle will come to answer your questions and explore the mystery of the new blue sea in the Middle East!
Part.1 Geographical Location of the Middle East
The Middle East refers to the part of the Mediterranean Sea that stretches from the southern part of the eastern Mediterranean to the coast of the Persian Gulf, including some 23 countries and regions such as Saudi Arabia and the United Arab Emirates, and covers an area of more than 15 million square kilometers.
(The map shows the area of the Middle East)
What countries are covered by Amazon Middle East?
Middle East = UAE + Saudi Arabia
Since Amazon acquired Souq, the No. 1 e-commerce site in the Middle East, in 2017, it has opened two major sites, the UAE site and the Saudi site, to Chinese sellers in 2019 and 2020.
It can also be expanded to many countries in the Middle East!
That's right! Through the Amazon Logistics Export Program, sellers are able to expand their business to countries/regions such as Oman, Bahrain, and Kuwait without having to deal with the complexities of international sales at no additional cost.
Part.2 Is the Middle East suitable for e-commerce?
Suitable! Good e-commerce environment and high potential
1. The population is large, young and rich!
Growing Population
◾ UAE: Total population expected to reach 106 million by 2024
◾ Saudi Arabia: total population expected to reach 425 million by 2040
Youthfulness of the population
◾ UAE: 40.41 TP3T Population Less Than 30 Years Old
◾ Saudi Arabia: 46.31 TP3T population less than 30 years old
Wealthy buyers, high GDP per capita
2、Excellent e-commerce environment
Internet penetration rate exceeds 74%
More than 74% of people in the Middle East have access to the Internet, with 95.4% of people in the UAE using the Internet, followed by Saudi Arabia with 88.1% of penetration.
High e-commerce penetration rate
Saudi Arabia's e-commerce penetration rate reaches 90%, and the UAE's is 69%.
Strong per capita spending power
As one of the most affluent regions in the world, the Middle East has high per capita spending power, a young demographic, higher margins on goods and more room for sales growth. In addition, McKinsey reports that in the UAE and Saudi Arabia, the number of people who shop online at least once a week has doubled in two years, and that e-commerce sales in the UAE are expected to reach $8 billion by 2025.
Consumers in the Middle East place special emphasis on festive celebrations and religious culture. Ramadan, Eid al-Fitr, and White Friday are all peak holidays for online shopping, and festive items are quite popular, while traditional cultural clothing and accessories are also in high demand in this market.
3. High growth potential of e-commerce
The number of online consumers has skyrocketed
According to the data, the Middle East ranked first in the world in terms of online consumer growth over the past year, reaching 5.2%, outpacing Latin America and Asia Pacific.
High growth in e-commerce volume
◾ Saudi Arabia's e-commerce volume grows by 19% YoY in 2021. ◾ UAE's e-commerce volume grows by 25% YoY in 2021. ◾ Amazon UAE ranks No. 1 in terms of net sales growth of 35% YoY in 2020
◾ Epidemic boosts Middle East e-commerce growth, which is expected to reach $50 billion by the end of 2025, a growth rate of 141 TP3T
4、High clearance efficiency
The efficiency of customs clearance in the UAE and Saudi Arabia is higher than the average level in the West Asia region, which ensures that different types of cross-border commodities can complete the customs clearance process quickly without incurring additional costs, thus enhancing cross-border competitiveness.
Customs efficiency
Time required for export
Time required for importation
UAE
4.5 hours
12 hours.
abbr. for Saudi Arabia
11 hours.
32 hours.
Southwest Asia
64.8 hours
67.9 hours
Part.3 Why is the Middle East station's profit high?
There is a lot of feedback from sellers, the same product, the Middle East station sells a piece of profit can offset the mature site to sell three pieces! Is this true?
First of all, let's look at the logic of gross margin calculation and cost components. Costs are mainly composed of eight major components: production / purchasing costs, headway freight, category commissions, FBA warehousing fees, FBA distribution costs, discounts, returns and exchanges, advertising costs.
As a matter of fact, different products, different time periods and different operation methods will lead to different profit performance. The profits of the Middle East station is indeed very substantial, there are many sellers said that there are really more than 3 times the profits of the mature site! But small K also want to remind sellers friends: do not blindly believe that a product must have a super-high profits, the need to combine market research, rational analysis.
However, as long as you understand the eight major factors that make up the costs in the above chart, and combine them with the real concessions and benefits given by the Middle East Station, you can effectively help you control and reduce operating costs! Doing the Middle East website is actually not as difficult as imagined!
Part.4 What can be done to reduce costs at the Middle East Station?
1、0 Monthly Fee
Amazon Middle East has not charged a monthly fee since it opened for Chinese sellers, and compared to the $39.9 monthly fee of other mature sites, Middle East is very friendly to sellers!
2、First-trip freight is getting more and more favorable.
The Amazon Middle East Headway Logistics benefits are many and the costs are lower, as well as the Pre-S program (Middle East only) and the Amazon Cross Border Carrier Program (SEND) program benefits!
3. Low sales commission
Amazon's Middle East site commission for major categories is cheaper than some mature sites by 2~3%. the same product, in the Middle East site and other mature sites at the same time on the shelves, the Middle East site can generally sell higher prices, while the commission ratio is lower than the mature sites, greatly increasing the profit margin!
4、Low storage fees
Amazon Middle East station's warehousing fees are much lower than the other mature site's warehousing costs, in the cost of warehousing fees without pressure! Amazon provides free monthly storage and removal services for new FBA products that meet the requirements, helping you to try new products at low cost.
✦ Standard sizes and large new selections: 3 months free storage
✦ Exclusive for new items in the Apparel and Shoes & Boots categories: 4 months of free storage!
Example of Warehouse Fee
5、Low FBA delivery fee
The most important thing in online shopping is the "last 1 kilometer" delivery, which is also one of the most important aspects of the online shopping experience. For the Amazon Middle East station, not only has realized the next day delivery, at the same time, compared to the mature sites, delivery costs are also "really good", the overall delivery costs are much lower than other mature sites charges.
6、Low promotion cost
Compared with the fierce competition of other mature sites, Amazon Middle East is the "virgin territory" for marketing and promotion, and the smaller peer competition makes the cost of advertising and promotion significantly reduced. At present, the cost of marketing on the Middle East website is even less than half of the cost of other mature websites.
In summary, the secret to Middle East Station's high profitability is this:
✦ The category gap on the Middle East station is still very large, with a lot of opportunity potential for sellers to explore;
✦ The Middle East market is not yet saturated, with relatively little competition and lower promotional costs;
✦ Amazon Middle East station support is strong, each section has benefits and preferential policies, profits naturally rise!
Part.5 Capturing Middle Eastern Culture is Seizing Opportunities
With this, Amazon has taken stock of the key festivals in the Middle East in 2023, helping Amazon sellers to find more marketing opportunities that can't be missed while learning more about the culture of the Middle East!
The yellow markings are the key promotional points, which help sellers and friends to sail to the Middle East more smoothly!
If sellers encounter difficulties in Saudi VAT & UAE VAT registration or want to change agents, welcome to contact us, the green circle focuses on cross-border enterprises to provide one-stop services, professional team, professional accountants, can provide sellers with Saudi VAT & UAE VAT from registration to reporting and other one-stop services, to ensure that you are in compliance with the tax aspects of the operation. If you have any questions about Saudi VAT & UAE VAT or other countries' taxation, please feel free to contact us.
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