You might be wondering how to expand the reach of your product and brand in order to boost sales volume and, in turn, increase your profits.
Or maybe you have found a market opportunity to sell in a less competitive niche in Europe that is otherwise fiercely competitive or oversaturated in the US.
Or maybe you are from the UK, and while you could sell your private label product in the US, you want to start closer to home.
No matter your scenario, if you have run the numbers and done the necessary market research, you have discovered an opportunity to sell your private label product on Amazon FBA in European marketplaces.
Let’s get to it:
There are some procedural differences to selling in Europe or the EU as compared to selling on FBA in the US.
First, while we often use the terms Europe and EU interchangeably, note that not every country in Europe is in the EU. For the purposes of this article, we are talking about Amazon FBA in the EU.
Did you know?
There are FIVE Amazon Marketplaces in Europe and over 28 countries you can sell to in the EU.
The EU is the second largest online shopping market in the world, business to customer, worth approximately $800 billion in sales and with over 340 million buyers. Amazon: Start Selling Across Europe.
Now there is Amazon’s European Fulfillment Network (EFN) whereby your goods are kept in one country. For this example, we are going to say the UK. As most of us are in the US or Canada or native English speakers, there’s a distinct advantage to starting a business in a country where you already speak the language.
With the EFN, if a customer buys in, for example, Italy it will be shipped to them from your inventory in the UK. Amazon offsets the cost by charging the seller a higher fulfillment cost than the same sale taking place in UK marketplace.
Your product will not be Prime Eligible outside of the UK and your customer may have to wait some additional time to receive their package.
With EFN, your VAT filing requirements are limited to the one country your inventory is stored. We will touch more on VAT shortly.
With “Pan-European FBA” you will have faster access to European customers as Amazon distributes inventory across its European marketplaces to fulfill orders in less time.
Your inventory will become Prime Eligible in the additional marketplaces. You will pay lower fees as you will pay the local fulfillment fee of the marketplace where the order is placed.
Selling Pan-European is a box check and free to you as the seller. However, as soon as you have inventory, even if no sales, you will need to register for VAT in that country.
You will be required to register for VAT in all additional marketplaces. If you wish, Amazon provides a service for assisting you with this, but it is not free. It is additional bookkeeping, paperwork, and cost to sell in all these marketplaces. You will want to ascertain your revenue and profits offset the cost of the accounting and filing fees.
You really need to examine your sales volume to effectively sell across Europe using this method. For new sellers and others with lower sales volume, it is certainly cheaper (and easier) to sell solely with the EFN.
A third option exists…
Multi-Country Inventory, MCI
With MCI, you choose what additional country or countries your product will be fulfilled from. You are still on the hook for VAT in that country but only the countries you choose to fulfill from, not all of the European marketplaces.
So if your product is stored in one country, but is selling very well specifically in another marketplace(s), you can elect to have inventory distributed there to reduce your fulfillment fees, become Prime Eligible, and reach your customers faster.
Value-Added Tax is an indirect tax (like sales tax in the US) that is collected at each stage of production and distribution including customs clearance at import.
VAT in the EU is around 20% but varies from 17-25% of the good’s value depending on the country. We are looking at you Scandinavian friends!
You can avoid paying VAT by enrolling in a duty deferment program. VAT processes are transparent and streamlined compared to the complicated and byzantine organization of the US.
Amazon also offers VAT services inside Seller Central should you choose to use them for registration, filing, and submission.
Both Air and Ocean freight exist and remain viable for bringing your goods West for sale. However, when importing to the EU from China, an additional option exists for getting your product there.
Shipping Overland by Rail. A “New Silk Road” is changing trade patterns and challenging airlines and shipping firms with increased tonnage being pulled by train to European markets.
The current trans-Eurasian rail system is what it is today because of tech giants with massive production in Chinese inland cities. The need to modernize an existing system came when these manufacturers were faced with moving heavy electronics goods thousands of kilometers east to seaports just to ship them back west again.
In the last decade, the price and transit time of rail has fallen while linking more cities in China with Europe’s largest industrial centers.
What this means for you and your business: You will still want to get quotes by air and sea for getting your product from China into European markets, but you may find that rail is only slightly more expensive than ocean freight while being measurably faster.
Depending on your product, you may have to pay customs duties, but unlike VAT they are the same across the EU. This is usually 5-10% of shipment value including freight cost, but check to see if your product is duty-free like many goods that are also shipped to the US.
You’ve probably seen this without knowing what it is, it’s a stylistic CE logo located next to other certifications like the FCC.
The European Health and Safety Standards requires CE Marking for certain products such as electrical appliances and devices to certify conformity with health, safety, and environmental protection standards for products sold with the European Economic Area.
Economic Operators Registration and Identification, EORI
This works like the Importer of Record (IOR) in the US, and it works across all countries in the EU. Businesses and people who wish to trade must use the EORI number in all customs procedures. You should request the number assignment before you start importing.
Should I Sell on Amazon in Europe?
You will need to do your preparation. Part of that is making sure you use a freight forwarder with extensive experience in Europe. Additionally, Amazon will provide a good deal of online support.
While it seems complicated, it’s not impossible. Many US e-commerce sellers are selling on Amazon Europe as well.
Keep in mind, every hurdle you must jump is a barrier to entry for all sellers. Those with the tenacity and determination to move forward will leave other would-be sellers behind at every new challenge.
Pros and Cons
Less Competition, usually, in European marketplaces than in the US for the same products and categories. Less saturation leads to more growth opportunities.
More Opportunities, to serve new customers who otherwise wouldn’t have access to your product. Use the US markets to determine the long-term success of EU markets.
Explosive Growth, EU consumers are increasingly turning to online shopping as it gets easier for them to find and receive products. Thanks, Amazon!
Access to 5 Marketplaces and over 28 Countries with One Seller Central Account
Rail Transport, competitively priced shipping faster than ocean freight to deliver your goods to market
Sponsored Ads, PPC, are cheaper to run on the other marketplaces
VAT Filings. Time and money we’d rather spend elsewhere, but a necessary part of doing business in Europe
Listings should be Optimized in Multiple Languages. This will require a native speaker if you do not have the language as a mother tongue. Amazon will provide some assistance but a colloquial use of language with the correct keywords will be key to beating out the competition.
After you have carefully considered your business and the market in Europe, you may decide it is the right opportunity.
How Do I Get Started on FBA in Europe?
Apply for a VAT number. As we mentioned earlier, this will be easiest to do in the UK, https://www.gov.uk/vat-registration. You can apply in other countries and may choose to do so if it is your home country or native language.
With your VAT number, you can apply for a new seller account. This is a separate account from the one you use to sell in the US.
To apply, you will need your financial and tax details then you may enroll in FBA in your chosen marketplace.
You will also need an EORI number in order to start importing.
If you haven’t already, consider getting your product packaging and inserts translated into the language of the destination marketplace. While not required this is best practice for customer service and reducing returns from confusion or misunderstanding of product instructions.
Getting your listed translated can be as simple as going to Upwork, but as always the quality of the work you receive will vary. When you outsource content in your native language, it’s a whole lot easier to assess the quality of what you received.
You are going to need another set of eyes to evaluate the translation you received. If you are fortunate, you may be able to find a European FBA seller who has that other language as a native language.
For all the guys and gals in the digital nomad community, this might be the easiest step for you. Tap into your community. Consider attending a skill share event at a local cafe or restaurant.
You may not, or likely won’t, have a physical presence or residence in the country of the fulfillment center. You still need to set up a plan for product returns and decide if you want Amazon to repackage and resell returned items for you or dispose of them.
For additional information about Amazon FBA, check out our blog page here: Gorillaz Tribe Blog