Brexit is well underway and is expected to have far-reaching consequences for all sectors, retail included. Retailers are bracing for trade restrictions that may be imposed once the cut is made completely, and are finding ways to retain profits and keep selling in a market that makes up for 45% of all of UK’s external trade.
In this context, is it possible to sell through Amazon all over the (now) European Union while being a seller in the United Kingdom? In early 2016, Amazon announced that it would be opening several new fulfillment centers in the UK. In May the same year, they also introduced the Pan-European FBA system so that sellers can sell across the EU while paying the fee of only the local marketplace.
While new trade fees would certainly impact how much more sellers and buyers have to pay for products sold from the UK, it is safe to assume that these fees would not be so prohibitively high that they prevent people all over the EU from buying from Amazon UK sellers.
Selling in the United Kingdom: In the country of your business, it is best to operate as a third party retailer. Since you understand the local laws and are in a position to evaluate your shipping options and inventory logistics, signing up with Amazon as a third party retailer lets you save immensely on the commission you would pay as an FBA seller.
Selling in the European Union: Since the European Union includes close to thirty countries, and each of them would have separate laws for import, sales, and customer service, it is best to serve customers in these countries through Amazon’s Pan-European FBA model. In the FBA model, you hand over all of the storage, shipping, returns and replacement aspects to Amazon, and only focus on sending the right product assortment to Amazon’s warehouses. While you would be paying higher fees than you would as a third party seller, you can make profits by choosing products that have a high margin and low competition.
Once the process of UK’s separation from the EU is complete in its entirety, the retail community will have greater clarity on how sales across these new borders will work. Based on the new legal framework, you can choose whether you want to continue as an FBA seller or as a third party retailer selling in select European countries.
The primary purpose of the Pan-European FBA model is to hold inventory closer to the country of sale, thus making fulfillment faster. As a seller, you will only be paying a fee on the particular local marketplace you make a sale on, over and above the FBA fee. What this model is doing for you is opening up new countries without the financial risk associated with doing so. You can see how this account can lower your selling costs here.
So how can you create an Amazon Pan-European account?
- Sign up for an Amazon European seller account. With this, you can currently sell on Amazon UK, France, Denmark, Italy and Spain. While signing up for this account, choose the FBA option.
- Choose which products are eligible for sales across all of these regions. You have to do this manually by checking for import restrictions in each country.
- Match your products with Amazon’s catalog with the ASIN for each product.
- By default, Pan European FBA is enabled on all European seller accounts.
Here’s a bit more about the Pan European FBA account.
Selling In The European Union: The Fine Print
Since the EU is comprised of so many different countries with slightly different trade regulations, you need to keep a few things in mind.
- Different expectations
When it comes to shipping and delivery, customers in several EU countries have very different perceptions. For example, Italy values being able to choose the time and day of delivery, while France isn’t as sensitive to these conditions. Nearly 80% of European customers have abandoned their shopping carts because the delivery date was much further off than they wanted.
- Emphasis on returns: Germany and Italy will shop more from a retailer who offers a hassle-free returns policy. These conditions make it that much more prudent to sell through Amazon FBA. Since you’d be a prime eligible seller, and you only ship products to their warehouse, you can be sure of shorter delivery times and easy returns, which in turn drive a better seller reading for you.
- The monster that is VAT compliance: VAT rates are extremely non-uniform throughout the EU. Different countries, and different products sold within the country, have very different VAT rates. Add to this the fact that there are also reduced VAT rates for different sub-products within the same product range, and you’re almost looking at accounting rules for each product separately. It therefore helps to have a tax compliance person in place to ensure you’re charging the correct VAT on each product.If Amazon is only present in five EU countries and the UK, isn’t it sufficient to follow VAT regulations for these specific countries? In reality, customers from neighbouring Switzerland and Poland also shop from Amazon’s Germany site, and since those countries have VAT laws of their own, the process is a lot more complicated than you’d like.
- Registering your company: For companies registered in the UK, relevant documentation is required from the HMRC. Likewise, for companies registered in the United States and wanting to do business in Europe, a certification of good standing obtained from the State Secretary office is mandatory for your Amazon seller account to be approved.If you’re doing business from outside of the UK and EU, you need to authorize a primary contact person to conduct business on your behalf in this zone.
- Accounting after Brexit: Since accounting laws are set to change after the new split, you may want to maintain records separately for future reference.
Other Aspects Of Selling In The EU
Once five other countries apart from the UK come into the picture, you are surely going to need a good inventory management software. Amazon’s FBA account can handle inventory for you from their end, but on your end, you will still need a product that can consolidate Amazon with all your other channels of sale.
Also, keep in mind that reporting in this scenario becomes extremely important. It can help you gauge the value of selling through a Pan-European Account, by keeping an eye on sales across all Amazon channels. An integrated retail management software may just be what you need to drive your Amazon EU sales seamlessly.