You’ve realized that the time has come to find new challenges and look to expanding your business, taking it to the next level. Moving into Europe is a great way to grow your business.
Amazon’s European marketplaces allows anyone from anywhere to sell on the platform so you can choose to make the move anytime you please. There are, however, a number of hurdles, and indeed, challenges that you’ll have to negotiate before you compete on the continent.
This guide is intended to help you painlessly through the process required to expand onto the EU markets.
Amazon Europe Explained
Amazon has sixteen marketplaces around the world. These markets are constantly growing. They fall into four areas – Europe, the Middle East, America and Asia Pacific.
There are currently six European marketplaces. They are as follows
The United Kingdom
Sweden – recently added
Why you should sell on Amazon Europe
Many entrepreneurs looking to expand, venture into Amazon Europe. It’s a popular choice. The reasons are many and varied and include the following:
1. Increased customers
Millions of customers use Amazon Europe. As soon as you take your business onto to these busy markets you expose your products to so many more customers.
You are not just selling on six markets but in 28 countries. The countries that don’t have markets use the six central markets to buy, and the goods are dispatched from the distribution centre closest to them.
The Amazon Europe marketplaces are easy to manage as there is a single dashboard from which to control them. Online sales in Europe are increasing rapidly so you really want to get in on the action.
2. Increased revenue
Increased sales come with increased revenue. By taking your products to new markets you’re diversifying and in so doing reducing your risk. You can take advantage of the European holiday seasons, and smooth out seasonal or economic slumps in sales when you’re present in more than one market.
3. Fewer competitors
Amazon Europe has fewer sellers than the in the US. This means that there is a lot less competition so you have a much greater chance of building a profitable business on these markets.
Many US sellers prefer not to grapple with the challenges that they know awaits entry onto the EU marketplaces, so they stay away. For the brave hearted this is a great opportunity.
4. Markets of importance
These markets offer an excellent opportunity for future growth for the intrepid entrepreneur. The UK and Germany are two of the biggest global online markets.
Amazon is the most popular online shopping platform for Spain, Italy, Germany, the UK and France.
How do you even begin to sell on Amazon Europe?
Once you’ve made the decision to start selling on Amazon Europe, it’s time to face the challenges. You’ll have to do your research before you make your move. Alternatively, you can seek the assistance of an Amazon consultant.
Here are a few of the things that you need to reflect upon.
Before you can even begin to construct your expansion strategy you have to look at your current business circumstances. You must consider how they fit in with your long-term goals and objectives. You need to understand where you’re going before you can draw the map to your destination.
2. Can you afford to grow?
You need resources to grow. If you’re already battling with resources now is not the time to expand into Europe. Entry into Europe is challenging. Unless you have the financial resources to make the move, you should wait or you’ll set yourself up for failure.
If you’re not already making a decent profit on Amazon, you should reconsider any decision to move into more complex markets.
3. Where to start in the EU
The various markets in the EU each come with their own set of complexities so it’s generally not a good idea to attempt to tackle all of the marketplaces at the beginning. By starting with one you’ll make it easier to research the legal and tax compliance issues that operate in your country of choice. Though you’re allowed to access all the markets through a unified account, you’ll still have to make one of them your home.
Before you choose which market, in which you plan to start, you should ask yourself the following questions:
Where is your target market?
Which is the best market for your product? Here you take account of the demand and the number of competitors on the market.
From whence will you distribute the bulk of your products?
Your launch pad should support your goals. If you already have a business in the EU then the country from which you operate will most likely become your choice of home market.
Due to language preferences, the UK has typically attracted the highest number of Amazon entrepreneurs. Brexit is changing that and Germany is a good choice as it has one of the biggest e-commerce markets on earth. It is also a major distribution hub so getting your product across Europe is easily achieved from Germany.
Legislation, tax and product safety
Once you’ve chosen your European springboard, it’s time to start the research. Every country in Europe has its own regulations when it comes tax, safety and legal requirements.
European exports – establishing a company or using a rep?
Before you start selling in Europe, you’ll have to decide how you plan to do this. You have two choices.
You can set up your own company based in the EU
You can hire an Authorized Representative AR to act for you.
If you decide to go with an AR be sure to scrutinize his or her credentials. This person will be responsible for ensuring that you comply with all the regulations. Make sure that your rep knows the market and can advise you wisely.
Registering your business for VAT
Value Added Tax or VAT is a tax imposed on consumer spending across the EU. All businesses transacting and moving goods into and between European countries must pay VAT.
Your VAT obligations will change according to where you buy and sell. Depending on where you sell and how your ship you may have to register for VAT in several countries. VAT is a complex matter so it’s a good idea to employ the services of an accounting firm to assist you.
Make sure that you register for VAT early in the process as Amazon Europe will not allow you to open an account until you do.
Before you can start selling your product on Amazon, you have to ensure that it complies with all the EU safety regulations. You have an obligation to inform your customers of any risks inherent in the use of your product.
The manufacturer is responsible for ensuring that the product conforms with all European safety regulations. The EU expects that sellers have performed a risk analysis. They insist on certain tests, all of which form part of their conformity assessment.
The tests required may differ from country to country. They depend on what you’re selling and where you’re selling it. Before you can start selling you must complete the conformity assessment. It is advisable to employ the services of an inspection company to ensure that your product meets the stringent regulations in force.
The labelling requirements in the EU are largely dependent on the product.
It is a legal requirement that all sellers on Amazon must supply the name and address of the importer and manufacturer. This provides buyers with product traceability should they require it.
Electrical appliances must have an energy label applied. The intention is to allow buyers to make informed decisions based on how much energy the product consumes.
CE labelling is an indication that the product conforms with EU health, safety and environmental standards.
It is not just the product that must comply with EU standards. The packaging must also comply. As with the product the packaging requirements change from country to country.
It is essential that you fully understand the stringent regulations and laws in the EU before you start to sell or you may fall astray of the authorities. That could scupper your plans for expansion.
Order fulfilment and distribution in the EU
Fulfilment and freight forwarding in the EU
If you’re importing goods for sale in Europe, you will face additional challenges when it comes to order fulfillment and freight of goods.
If, for example, you’re from the US and you’re importing from an Asian country you have two choices.
Ship your products to the US and then send them to Europe.
Have your Asian supplier ship the goods directly to Europe.
What you choose to do may be influenced by your seller status.
FBM or FBA
As you no doubt know, Amazon offers a choice of FBA – Fulfilment by Amazon where Amazon does all the work, or you can ship your own goods under the Fulfilment by Merchant program FBM.
If you choose the FBA program when you first expand into Europe you can save yourself a lot of problems. Amazon has the expertise to resolve many of the logistical problems that you may face.
There are three options under FBA
European Fulfilment Network EFN
Under this program, Amazon will distribute your goods across Europe from its fulfilment centres. Using this system, you ship your goods to a central warehouse and Amazon will distribute them for you. All these goods qualify for Prime
2. Multi Country Inventory MCI
Use this program if you want your goods in several areas around the continent. Using this program, you can have your goods sent to Amazon warehouses in various European countries. Your goods will qualify for Prime in the country where they’re stored.
The benefits MCI are:
Customers will get their orders quicker as the warehouse is closer to the point of delivery
You save on transport costs as you send larger consignments to local warehouses rather than shipping individual items.
Pan European FBA
Under this system your goods go to an Amazon fulfilment centre. Amazon then distributes the goods in line with forecast demand. All goods distributed under this system qualify for Prime.
The option you take will impact your VAT commitment. It is in your interest to hire an accountant that understands the mix of Amazon logistics on the European tax laws.
Localizing your listings and managing your accounts on EU marketplaces
Translation services for listings
It goes without saying, if you want to sell your product you have to list it in the local language. Margin Business specializes in translating Amazon listings. It is important to get such local services to do the listings and add a local slant to the descriptions, ensuring that the keywords attract the right traffic.
Local people understand the cultural, and emotional underpinnings of the local population. If you want to attract convertible traffic it’s best to hire a local Amazon PPC or SEO agency.
A professional account manager can take a lot of stress off your shoulders. They can deal with account queries in the language of the customers. They’ll also understand the culture of the people and they’re better equipped to ensure that all of the legal requirements are met.
If you plan to sell in several countries, an agency can assist with account managers across borders.
The last word
Expanding into Europe requires careful planning and consideration but it offers opportunities way beyond those available on the American continent. If you do your research, consult the relevant professionals, and employ the right people expansion into Europe could change your business forever.
The challenges are real and obstacles daunting but they are in no way insurmountable.
Our Margin Business Team of Amazon professional and Translation knows exactly what you need to successfully enter the European marketplaces. Simply book your free consultation call today and we will give you the best advices based on your individual needs.
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