After successfully launching a product or business across the US, international expansion might be an attractive option for you.
Reaching beyond your domestic market opens up a whole cornucopia of new options and allows you to tap into a much broader pool of potential customers.
Amazon FBA presents a comfortable method of growing your customer base in Europe. This article will explain how Amazon FBA works for you as an American seller and how you can best prepare your expansion.
Why choose Amazon FBA to expand to Europe?
Expanding internationally: the challenges - a drama with a potential fairytale ending for those willing to roll up their sleeves and put in work!
These challenges include taxes and import charges and logistic and infrastructural problems that need to be solved.
Moreover, the traditional manner of expanding internationally (by establishing a local presence) can be costly and only justified by a certain volume of sales made abroad.
But modern eCommerce has created modern solutions for these challenges.
Amazon FBA - short for fulfillment by Amazon - solves some of these challenges for you and simplifies some of the other aspects.
The advantages of Amazon FBA
Amazon FBA provides the infrastructure and platform for you to reach European customers. They store your goods throughout Europe and take care of shipping them. You benefit not only from Amazon's reach as a platform, but your products also ship with the "delivered by Amazon" label. If not obvious, this detail has gained credibility with customers.
So, instead of setting up a local copy of your website, renting storage and trying to make your website visible within a specific local market, you ship your goods to Amazon's storage centers, and they store and deliver them on your behalf.
If you are already familiar with Amazon FBA in the States, you'll significantly profit from this experience because many European FBA processes are similar to those in the US.
VAT, Import VAT and distance selling thresholds
Some things that you need to keep in mind: LOCAL TAXES
If your sales volume in the European Union surpasses the annual distance selling threshold of 10,000€, you need to register for VAT (value-added tax) in every country where you store products.
Beginning July 1st, 2021, merchants should understand the new regulations to the One-Stop-Shop (OSS) as it still applies to inventory stored via Amazon FBA. In addition, for products imported from outside of the EU, you also need to consider import VAT. While items valued below 150€ are exempt from customs, import VAT still needs to be paid by the customer or the seller.
You must research your VAT duties to avoid being surprised by additional fees and taxes.
The European Amazon marketplaces
Amazon currently operates six European stores only - meaning all of Europe isn't accessible via Amazon FBA. These are the six European stores:
- amazon.co.uk (United Kingdom)
- amazon.nl (The Netherlands)
- amazon.fr (France)
- amazon.es (Spain)
- amazon.it (Italy) and
- amazon.de (Germany)
However, this does not mean that merchants can only sell to these six countries. Some of these stores offer delivery in neighboring countries, though the full product range that can be shipped across borders varies due to fluctuating delivery costs.
Due to Brexit, online sellers and eCommerce merchants need to be familiarized with the EU and the new UK import regulations.
Because the United Kingdom decided to leave the EU, they can now set their own tariffs and thresholds. So you are now basically accessing two markets instead of a single European market.
How to get started with Amazon FBA in Europe
Amazon recommends researching local marketplaces and import restrictions to ensure there is a demand for your products in Europe while simultaneously checking that the product you intend to sell is a permittable product.
For example, some ingredients and materials permitted in the US are forbidden in the EU or the UK. So check the legalities of your products before anything.
Depending on the scenario, you might create or modify a version of your product, particularly for the European market or opt-out of selling in Europe entirely if a compliant product is not feasible.
Once you have decided to sell to European customers via Amazon FBA, you need to create your Amazon FBA account in seller central if you do not have an account already.
If you already have an Amazon FBA account in the US, you can sign in with your existing login credentials and access your data. However, only a single account to manage your European sales is required - even though you have access to all six markets.
As soon as you are set up, you must send your inventory to a European fulfillment center and choose a fulfillment program. Amazon offers three different fulfillment programs that each have its unique advantages.
At this stage, you'll begin managing your new European Amazon FBA business. Helpful tips:
- Restock products on time
- Fulfill all your tax duties requirements to remain compliant, and
- Promote your products on the platform to increase sales.
While Amazon takes care of returns and customer support, there are still some tasks that you have to manage personally. One of these is VAT compliance.
VAT Compliance for Amazon FBA
VAT compliance, especially in the EU, can be a bit tricky.
The process was updated in 2021 with a standardized distance selling threshold for all EU countries. However, this threshold is significantly lower than the previous, country-specific, distance selling thresholds. As a result, sellers now need to charge VAT sooner.
Also, each country has its specific VAT rates. Depending on the type of product you are selling, the VAT rate also varies. All these details can be a bit overwhelming to track. Thus, VAT automation tools like Hellotax can effectively manage the taxes for your European FBA business.
Such tools not only monitor thresholds but can automatically apply the correct VAT rates. Additionally, you can register for VAT and file your annual VAT reports with these tools.
Conclusion
Amazon FBA for Europe presents an easy way for US-based eCommerce sellers to access European markets. With a bit of preparation and additional tools for VAT automation, money management and more, you can successfully expand to Europe and profit fully from optimized processes.