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Going Global? 4 Reasons Pan-European FBA Might Be Right for You
Creating a deeply personalized, convenient shopping experience for customers through the Amazon marketplace is one of the pillars of success for high-volume Amazon sellers.
If you have taken your online business overseas, or have plans to do so in 2018, implementing Pan-European FBA as a fulfillment method can help you create a better experience for your European customers. The program enables you to sell across Europe by helping you place inventory closer to your European customers, and by fulfilling and delivering orders at lower costs and in less time.
If you aren’t already selling overseas, Pan-European FBA will grant you fast access to European customers and all orders will be Prime-eligible in all five European marketplaces (the UK, Germany, France, Italy, and Spain). Sellers must be eligible to sell product in each of these Amazon European marketplaces in order to enable Pan-European FBA.
The program also allows existing European Amazon sellers to reap the convenience and cost-saving benefits of FBA. With over 100 million Prime users globally, increasing visibility to that audience is essential, for they are more than twice as likely to shop online daily than non-Prime customers. The four reasons below detail why Pan-European FBA might be a good fit for your business.
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1. You will experience lower fulfillment costs than when selling via the EFN (European Fulfillment Network).
With Pan-European FBA, Amazon distributes your products across Europe at no additional cost. When a product is sold in one of the Amazon European marketplaces, you will only pay the local fulfillment free from that marketplace, versus when you sell via the EFN and are required to pay a cross-border fee for each order shipped. Pan-European FBA inventory is currently subject to monthly storage fees, long-term storage fees (after 12 months), and removal fees if the stock needs to be moved back to the country of your home marketplace.
2. You have the capacity to reach millions of Prime customers regularly.
According to Feedvisor’s Amazon User Study 2018, a whopping 85 percent of Prime shoppers visit Amazon at least once a week and nearly 50% make a purchase at least once a week. Pan-European FBA grants sellers access to these Prime users, Amazon’s most loyal customers across Europe.
3. Faster deliveries increase customer satisfaction.
With inventory being stored close to customers, orders are fulfilled and delivered in less time than non-Pan-European FBA orders.
4. You will have more time to focus on further expansion.
With Amazon handling the stock management and delivery logistics, you will have more time to focus on achieving your business goals and growing your operations. With the Pan-European FBA method, Amazon also facilitates customer inquiries, returns, and refunds, which is a major advantage to sellers as it saves time and boosts seller performance metrics.
With Pan-European FBA, you will have access to a Cross-Border Stock Movement Report in Seller Central, which will detail information associated with sales, refunds, returns, and fulfillment center movements that impact your inventory in an Amazon European fulfillment center. You will easily be able to track ASINs movement, stock departure dates, and stock destination countries so that you have visibility into your product in motion but aren’t responsible for the details and logistics.
The Role of Value Added Tax
One important element of Pan-European FBA for sellers to consider prior to jumping in with the program is VAT compliance. VAT, or Value Added Tax, is a tax that VAT-registered merchants add to the price of the goods they sell and pass on to the national tax authorities when filing their tax returns. In order to avoid unforeseen issues down the road, it’s important for sellers to quantify their VAT costs prior to engaging in Pan-European FBA, in order to make sure that they can price competitively in the markets where VAT compliance is required.
The main factors that determine if you are required to register for VAT are your business’s country of establishment, the location of your inventory, and your sales level. If Amazon stores your inventory in all seven countries that have fulfillment centers, you will need to be VAT compliant in all seven countries, which may trigger additional reporting requirements and VAT invoicing, another step of registering for Pan-European FBA that often gets overlooked.
However, with the added product exposure that you receive in all of Amazon’s European marketplaces, Pan-European FBA is a great route to consider if you are selling on amazon.com and looking to expand to Europe, or are an Amazon European seller looking to capture more conversions in neighboring countries.