Not taking the proper precautions to safeguard your business can have a drastic and sometimes permanent cost.
Your blood pressure spikes a few numbers. You spotted that lovely red flag in the upper left corner of your screen and you hold your breath as you click on performance notifications in Seller Central.
The message from Amazon’s seller performance team says your product is under risk of being deactivated because someone claimed it’s “inauthentic.”
Amazon goes on:
“Include the following information for each ASIN: Copies of invoices or receipts from your supplier issued in the last 365 days. These should reflect your sales volume during that time.”
You happily submit your PI (proforma invoice) because it seems legit enough. Within a few days, Amazon responds stating that they need real commercial invoices.
Commercial what? Where do I find this?
So you message your supplier and ask them for it. And they happily resend you the proforma invoice.
What now? Your entire Amazon venture is at risk and no one seems to have an answer.
Today, I’m going to show you exactly how to not only get a commercial invoice but how to fill one out, when you first order your products from an international supplier.
This will not only protect you in case any entity questions the authenticity of your products, but it will serve you in case customs or any government agency decides to take a closer peek into what you are selling. What is a commercial invoice? A commercial invoice provides several uses, but primarily, it is a document that serves as a formal request of payment from the supplier to you, the buyer. The document itself will vary on look and design depending on the company supplying the invoice, but a basic format looks something like this:
First of all, it is physical proof of your transaction with the supplier. Now hopefully you also thought to get samples [link], which are nice especially for testing out the quality of the product, but the commercial invoice is actual documental proof that your products are in play, they are ready to be shipped, you are ready to begin to prepare your store to sell them.
It’s concrete, and most importantly, it’s legally binding. Which brings me to my second point.
If somebody comes after your products, this serves as a shield against your competitors who will try to challenge or claim that your products are not legit.
The commercial invoice proves that your products come from so and so supplier who is in fact legit. Your products are legit. You can see what is being shipped, how many, the value of the products, and signatures of those who are involved in this transaction.
Look at this way, Amazon’s storefront is a battlefield. You are a warrior and part of your responsibilities as a warrior is to safeguard these products to your base. You wouldn’t risk these goods into battle without something to protect yourself. You would be wide open to your enemy’s attacks. You need tools, weapons, and shields to guard you against those attacks.
This commercial invoice is just one of those things. Insurance is another (more on that here).
It may not seem like much but it can make all of the difference.
Introducing the Commercial Invoice
There are roughly 18 fields on a commercial invoice. I am going to walk you through each one and break down for you the important fields you need to know.
Now it is noteworthy to mention, usually, your exporter will fill this information out for you.
The exporter is the supplier who is managing the shipment for you.
Still, it’s important to know what these fields are and what kind of information is going to be on them, because you are going to want to go through each field and make sure it’s accurate.
Remember it is likely that customs agents may look at this, and if the information is not accurate, YOU, not the exporter, are responsible.
1. Seller Name and address of the principal party responsible for exporting from the country of the supplier. Note that suppliers who export large amounts of product must have an export license. This is also called the exporter. Make sure they have an export license.
Sometimes the box will say “consigner” instead. This is an alternate term for the entity shipping out the products.
2. Sold to This is the buyer.
3. Ship to This is the entity where you want your items shipped to. Often, it’s the same entity as what is in the “sold to” box. The “ship to” entity is also sometimes referred to as the “consignee.”
If you are shipping directly to Amazon’s fulfillment center, then create a shipping plan in seller central for your products to be shipped FBA. When you create the plan, Amazon will provide you with shipping destinations for the boxes of your products to be shipped. Send this info to your supplier or freight forwarder so they can ship it indirectly for you.
If you are shipping it to a third party like an intermediary, such as another freight forwarder who will then ship it on to the final destination, then you put in the name and address of the party responsible to receive the product and forward it on to its final destination. This is often an authorized forwarder also referred to as an “intermediate consignee.”
4. Commercial Invoice number This is the invoice number created by the exporter (the supplier). This is easily the tiniest field in the form, but it’s important because Amazon loves this number. It’s one of the numbers they absolutely need with this invoice if they ever ask you to submit invoices to verify that your product is legitimate. It’s generated by an internal system from your supplier.
5. Customer reference number This is a unique number assigned by the supplier to you the customer. This is purely for your supplier’s internal system to identify you. Customs and sellers don’t really care about this information, so don’t worry about it too much unless your supplier asks for it for some reason.
6. Terms of sale Terms of sale define the obligations, risks, and costs of both the buyer and seller involving the delivery of goods that make up the export transaction. Terms of sale are also called “incoterms.”
Usually, it’s just a short little phrase and the exporter and freight forwarder understand what it means. For example, if the terms of sale box says, “Delivered Duty Paid (DDP),” this means that the supplier (consigner) is responsible for making sure customs forms are filled out, both for export out of the country and into the receiving country, and that the goods reach their final destination. We offer a complete list of incoterms and what they mean here.
7. Terms of payment This is the terms for your payment to the supplier, any conditions for payment, and the currency agreed on by the supplier and purchaser (you) per the pro forma invoice, customer purchase order and/or the letter of credit.
Terms of payment is very similar to terms of sale, and often overlap.
8 Currency of settlement The currency for payment agreed upon between the seller and the buyer. For example, will you be paying in American USD, Chinese RMB, or Argentinian ARS?
9. Mode of shipment Mode of shipment indicates the agreed-upon mode of shipment: air, ocean, surface.
Shipping by ocean is good for a large number of items. There is a wait time of three to five weeks, but the cost savings is worth it.
If you are just testing an item or doing a fast launch followed up by larger orders of inventory by sea later, than air express is perfect. “Surface” means a shipment by land or sea (surface of the earth) and not by air.
Air express takes about 5-7 days to ship whereas air freight has a wait time of about 10 days.
10. Quantity Simply the total number of units being shipped.
11. Description This is a full description of the items being shipped, the type of container (carton, box, etc.), the gross weight per container, the quantity, and unit of measure of the merchandise.
Sometimes a supplier will offer to change the name of a product to get through customs quicker. While there was a time when that may have worked, over the last few years customs have made it a point to be more aggressive in checking that the products described in the invoice, match the actual items. If they do not, you risk heavy fines, and at worse, your rights to import.
12. Unit of measure This is the total net weight and total gross weight in kilograms per description line.
13. Unit price This is the per-unit price for the goods being shipped.
14. Total price This is the total price of all the goods in the shipment. We talk about this in another blog (Declared value), but just to reiterate it is supercritical.
15. Total commercial value This is the total value of the invoice. It's the same as the total you paid for the products. It does not include the shipping fees.
16. Package marks All marks on the packages are included in this field. This includes, for example, “1 of 12,” “2 of 12,” etc. telling you how many which box is which among the entire count of boxes. Package marks can also include the shipping company's name, the country of origin (e.g., Made in China), the destination port of entry (e.g. Port of Long Beach), package weight in kilograms, package size (length x width x height) and the shipper’s control number (this is an identification number for the shipper).
17. Miscellaneous charges This includes any miscellaneous charges such as packing fees, insurance fees, export transportation, etc.) that are to be paid by you, the buyer.
18. Certifications This includes any certifications or declarations required by the receiving country that you the shipper are responsible for. This is important because these can allow special products to be sold on Amazon. Examples include a child’s product that need a CPC certification. It will make the importing process so much easier to have these beforehand. Otherwise, your goods could be stopped and you may end up waiting months to get everything in order before receiving your goods. This is also why we teach our students exactly how to do in the Amazon FBA Mastery membership.
Protect your business. The commercial invoice plays a powerful role in protecting your Amazon store, as it legitimizes you in the eyes of Amazon.
Other purposes the commercial invoice can serve:
The destination country needs it before it can release the goods through customs.
If your goods are damaged or lost in transit, it serves as a supporting document for your insurance claim.
A bank may need to see it before reimbursing funds under a letter of credit or documentary collection.
Exporters can use it to support foreign credit risk insurance claims.
Commercial invoices are so important that U.S. export regulations require that exporters retain it for five years from the date of shipment.
And here is a little nugget that can save you a ton of time and heartache: before you pay that final payment to your supplier, require them to send you the commercial invoice. Request it in English. If they send it in Chinee then have it retyped in English, using a translator.
If you require it, they will send it to you. They want to get paid.
When months later Amazon asks for your commercial invoices, you will have them ready to go.
Success is within reach I learned all of this the hard way.
I lost $20,000 on one order.
I had half my products show up and the other half disappeared.
I remember a delivery driver showing up at my house with hundreds of customs fees that my supplier told me I had already paid.
Married a pearl. Fathered 4 miracles. Fired his boss. Turned a single dime into $104,857. Today, a self-made millionaire, Seth and his team of 8 badass coaches teach entrepreneurs how to build passive income on Amazon.
Dead serious about building income on Amazon with eight successful coaches in a community of badass Amazon sellers? Join the Amazon FBA Mastery membership.