Amici e Natura: -60% Out of Stock and Margins Under Control

Interview with Amici e Natura

Who is Amici e Natura?

Amici e Natura was founded 30 years ago as a traditional brick-and-mortar shop selling pet food and accessories. Based in Grosseto, Italy, it's well known for its long family business history, which has evolved into a tight-knit team of 12 people.

How did you get started with e-commerce?

To expand our business beyond local boundaries, we started testing online sales on various marketplaces like eBay 5-6 years ago. We then developed the Amazon channel, which quickly overtook all the others in sales.

Today Amici e Natura retails over 8,000 items, listed both on the Amazon catalog and on our own website, selling 99% pet food and accessories.

How did you grow on Amazon?

E-commerce progressed organically. At first we'd bring one package at a time to the post office, then once we got to 20-30 packages at a time we structured things better, and from that point on we'd call the courier who'd arrive to load all the orders with the truck.

Then with Covid we had a sales boom, because customers truly understood the convenience of having 15 kg pet food packages delivered straight to their door, without having to haul them back from the shop, and they appreciated the great prices we offer.

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The First Challenge: Manual Shipping and Restocks

In the beginning the work was very manual, there was very little automation, we did everything on Excel spreadsheets. To complete all the shipments we'd start in the morning at 8am and go until 9 or 10pm — a real disaster!

For restocking we used an Excel sheet and worked by hand. I'd see the sales by downloading the reports from Amazon, cross-referencing them with other inventory reports, then entering the product quantities in Seller Central. Really cumbersome!

We couldn't manage logistics and restocks in a structured way, and many times we'd run out of products in the warehouse, not making it in time to replenish them on Amazon, leading to the dreaded stock-out.

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Without ZonWizard: from 8am to 10pm

every day spent managing shipments and restocks from Excel sheets, and we'd still end up running out of stock.

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With ZonWizard: -60% Out of Stock

We know when to reorder with certainty and clarity so we never go out of stock. Running out of stock simply doesn't happen anymore.

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Fast, precise, custom-tailored restocks

We picked ZonWizard precisely to solve the problem of managing logistics and reordering. Since we started using ZonWizard's Inventory Tool we've cut Out of Stock by 60%. Amazing! Every day we get notifications reminding us to reorder products that are running low, so we have a double check.

A feature built for us

We download the inventory report from ZonWizard to do our restocks. I remember I asked you to exclude products we no longer wanted to list on Amazon from the report (for various reasons), and since you implemented it, I avoid additional spreadsheet formulas, saving time.

On top of that, since you added the ability to set the maximum stock days I want to keep in the warehouse for each product, I do even fewer calculations: just set 30, 60, or 90 days of warehouse stock and the software does the math for you.

And cash flow thanks you too, especially in a retail market like ours with lots of competitors and thin margins:

avoiding the wrong cash outlays is strategic, also because another competitor can pop up, or even worse Amazon enters the category. Calibrating each restock is fundamental.

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The Second Challenge: Understanding what we were really earning

Once shipments and order management were structured, what remained was the problem of understanding how much we were actually earning, what margin we had from all these orders. It wasn't at all easy to weigh up all the expenses, returns, refunds together…

Revenue was high, but we had no idea how much profit all this product flow was bringing in. I certainly couldn't compute profits by hand, item by item…

Then through a community I came across ZonWizard, and from there the profit hunt for Amici e Natura began.

Amici e Natura was born with traditional FBM warehousing. FBA logistics came in about a year ago when I joined, built on the products we already had on hand. What we lacked was an overview, a dashboard like the Profit Table one that tells me at a glance how much we're taking home from all this product flow.

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The Margin Turning Point: -20% assortment, profit on the rise

Thanks to ZonWizard's Profit Table we managed to drop some products that weren't actually bringing margin and add others that brought more. It was a turning point! We discovered super high-rotation products that weren't bringing any profit at all.

In that same vein, the Balance view was the key for us. We analyzed every SKU in a new way, working out which items brought a lot of profit, which brought little, which actually generated a loss.

And honestly, we felt a bit sick seeing how many items were running at a loss, ahah! But a whole new world opened up!

We started dropping products that weren't profitable, concentrating our assortment more and more on the ones that were. We cut our assortment by 20%, removing items that weren't bringing profits, while keeping the business's margin steady.

This let us redistribute liquidity that was getting lost on pointless restocks, onto other products with high margins. It also reduced the complexity of managing many warehouse items that were spinning around for no reason.

2-3 months after this optimization we're consistently growing the overall margin by adding entire lines of new products. And since the low-margin product alert was introduced, no underperforming item slips past us.

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The hidden VAT charged by Amazon

We came face to face with a problem we had never even thought of. We discovered that Amazon was charging us a different, higher VAT than the VAT on our product purchases. This was a huge problem! Many items were running at a loss for no apparent operational reason.

From the Profit Table I could see that for these loss-making products, the prices were right, the purchase costs were right — the only thing off was the VAT. We were being charged 22% VAT on products that had a 10% or even 4% VAT rate!

From there a project kicked off to update the VAT rates in our Amazon Seller Central account to fix every single product. We've now fixed almost all of Italy, then we'll do the rest.

A bitter but revolutionary second discovery for us!

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A tax alert that saved us from an Odyssey

I don't handle tax matters directly. We sell across almost all of Europe, and just being able to search and check the invoices Amazon issues across Europe is important on its own.

Another important thing that happened is that at one point Amazon, through its own mistake, stocked goods in a country where we didn't have a VAT number, and even worse, it actually sold them! Try explaining that to the tax authorities… That time, years ago, we didn't notice right away — only months later. I won't even tell you what we had to do to sort it out with the tax office. An Odyssey.

The Evolution:

• Before ZonWizard: "We only noticed months later that Amazon had stocked and sold goods where we didn't have a VAT number. An Odyssey to sort it out with the tax office."
• With ZonWizard: "Immediate alert for goods stocked in Spain. We notified Amazon, which shipped them back without any sales. This time we avoided the whole mess."

I don't know how you do it but it's amazing.

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A door opened to the United Kingdom

The Inventory Tool is where I work the most! I remember I asked you whether we could see where our product orders were coming from geographically.

Since you added the ability to see the origin of individual orders in the analytics dashboard, we realized there was huge potential for some of our products on Amazon UK, that was however blocked by very high shipping costs that fell on the consumer.

So we decided to expand with some products in the UK: we opened a VAT number, opened customs clearance and logistics in the UK, and just yesterday the first 7 pallets arrived at the warehouse.

We can say we opened that door thanks to ZonWizard!

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Refunds and feedback: ZonWizard pays for itself

When you released the Refunds Tool we were really happy because we were using another tool that was a pain to use and very ambiguous. With this Tool, ZonWizard easily pays for itself many times over.

Doing the math, with very little time spent on it and zero learning curve, I've recovered €400 in refunds for lost merchandise, damaged merchandise, or items lost on the way in. And I still have many more to process.

And on feedback?

For a retailer like us, having good seller feedback is hugely important. We used to use another tool. Since the automatic review request feature was added, we turned it off and now use only ZonWizard.

Even though I haven't yet configured the feedback request rules per individual item, we're getting even more feedback: there's been a real bump in reviews.

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The Future of Amici e Natura

Amici e Natura always wants to expand. We started reorganizing all the logistics less than a year ago, and that definitely needs to keep growing given the developments of recent months.

• Extra-EU markets: we've opened the UK and we're eyeing the US, since we've figured out how to handle customs clearance etc.
• Private label: we want to move into private label, into niche markets.
• EU market: we want to grow it further. The bulk comes from Germany and France. In Spain we don't have a VAT number due to documentation issues.
• FBA vs FBM: we do 65% of revenue in FBM (pet food, for instance, is impossible in FBA) and keep more profitable products in FBA.
• Product count: we're interested in growing the number of products.

We've also opened another company for FBA, which we'll use only for that channel.

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Thank you Amici e Natura

Thank you for sharing your story.

Seeing how 30 years of family history have turned into a structured e-commerce operation across multiple markets is inspiring. Keep challenging us with requests and ideas: that's often where the features everyone ends up using are born.

Thank you! Keep it up, talk soon!