Amazon EU Metrics Are Wrong: Why Your ACOS is Lying

Hi, so as the title suggests, Amazon metrics in EU are wrong. So this is something that you have to have in mind whenever you are advertising in EU or UK because when you look at the metrics in campaign manager, that's something completely different from what you'll be seeing on your invoices for the ads. So stay with me. This doesn't only apply to what you're seeing in campaign manager, but also applies to how you're calculating your break even a cost. If your margins are not that tight and you have enough of the room to play with the ads, then you're not that endangered. But if your margins are tight, then this is something that you really have to take into consideration and maybe even redo your numbers. Just as an example, when you open up your campaign manager, your ad spend is shown without VAT. But then again, the ad sales are shown with VAT. So let's say your a cost can be shown as 20% and in reality is 24%. Easy as that. That means that 4% difference in margin that can be a make or break for some. So this is something and by the way when you get the invoice you get the invoice with ad spend with VAT. So that's additional layer of complications that you may experience in expand when expanding into EU or already selling and you I'm not telling you that you shouldn't be expanding your business from US to EU. I'm just saying there are some things that you have to consider and think twice about your metrics or even hire somebody who's much better than than you in that area. Another thing that you should consider is that in business reports you're seeing gross sales. So that's fine. But also many people combine these two reports. So they take business reports and combine them with advertising reports. But you have to to take that into consideration especially if you're calculating the the total a cost and stuff if that's your main metric you have to take into consideration the VAT where the VAT is applied where it's not applied but majority of cases where people go wrong is when they calculate their break even a cost and as I said if margins are tight this is something really really important I cannot emphasize this enough so let's take one example let's say in Italy where the VAT is 22% believe it or not take this scenario in as as shown over here. So 500 reported it ad sales and ad spend for the sake of simplicity let's say 100. So your a cost should be 20%. But if net sales are without a cost then it means that your net sales are 4 409 something then your real net sales a cost is 24.4%. This 4% can be a gamecher for some of you unfortunately and if you calculate this correctly then again you could be also gaining additional 4.4% if your calculations are fine. So the biggest takeaway is not to go into panic. Use your a cost numbers in your campaign manager in your tools to optimize campaigns. But once you calculate your profitability, that's where you need to factor in the VAT as well. So those are two different areas to focus on. Unfortunately, we cannot change anything in in campaign manager. But there are some tools out there available which can mitigate the risk by having these already included. Sellerboard is really good with that and there are few others. So for profitability, make sure to calculate VAT proper properly. But for daily optimization, stick to what's shown in the campaign manager, but have in mind the actual number. Let me know if this was clear and see you tomorrow in the next video.