The UK vs. The EU: Differentiating Europe's biggest Amazon markets
Brief History Lesson
The United Kingdom’s decision to leave the EU significantly shook the Amazon market. Before Brexit, the UK could freely move goods between countries without customs checks, import duties, or tariffs. The VAT rules aligned with the rest of the EU and Amazon’s European Fulfillment Network allowed for easy FBA fulfillment that was faster and cheaper. Sellers and consumers alike enjoyed the seamless Amazon experience across borders.
After Brexit, new trade agreements were created which added further hoops sellers needed to jump through to tap into the EU market, which has discouraged some sellers from expanding. Despite this, Brexit has also opened up a new realm of opportunity for sellers willing to tackle the challenge.
How did this affect UK Amazon sellers?
Regulations and costs changed almost overnight which significantly changed how sellers operated. New policies and requirements were put into place which had both positive and negative effects on sellers. Instead of Amazon NA or Amazon EUROPE, it became its own entity, Amazon UK. On the one hand, with a specific focus on shipping within the UK, many more sellers became eligible for Prime Shipping. However, it also made shipping and selling in the EU much more difficult, cutting off a potentially lucrative revenue stream.
Adding the EU to your Amazon arsenal
Unlike adding the United States, adding countries in Europe does not require creating a new Amazon account with documentation. You simply indicate on the Amazon platform that you are adding a marketplace. This makes the process of adding the marketplace much easier once other important information has been completed.
Five key takeaways when moving into Europe
Bigger market, bigger rewards
When Brexit came into effect, it dramatically changed the landscape of the Amazon market. Now sellers based in the UK are targeting a market of only about €31B compared to the old system where the UK and EU occupied ~30% of the market generating a combined €96B in sales. Many EU-based sellers have left the UK market creating a vortex of opportunity, but many UK sellers have also avoided the expansion into the EU due to new regulations. Germany alone boasts a market nearly equal to that of the UK.
VAT - Value Added Tax
Just as one has to file for VAT in the UK, it is necessary in most cases to be VAT-registered when selling in the EU. However, for each country a business sells in, a separate VAT registration is required. You must register and file for VAT separately from Amazon which will cost you a fee. Local VAT registration is required for the Fulfillment by Amazon (FBA) program, although the good news is that VAT compliance can be outsourced to third-party service providers, making the process smoother.
EORI - Economic Operators Registration and Identification number
The EORI number is mandatory for importing goods into the EU or the UK. It is required for customs and import tax purposes and can be obtained free of charge. However, carriers often handle the registration on your behalf, typically for a fee.
EPR - Extended Producer Responsibility
EPR (Extended Producer Responsibility) aims to make producers responsible for the entire lifecycle of their products, encouraging eco-design and promoting recycling. Sellers are required to register with national EPR schemes (specifically in France, Germany, and Spain), report the quantities of materials they place on the market, and pay corresponding fees to support recycling and waste management systems. Amazon assists sellers by providing information and tools to comply with these regulations, ensuring that environmental impacts are minimized and legal requirements are met.
FBA system
In the EU, Fulfillment by Amazon (FBA) operates differently across countries. Each country has its own separate FBA operations. To store products in a specific country, you must have a local VAT number for that country. When shipping products to countries where you do not have storage, cross-border and local tax rates apply, leading to higher fulfillment fees.
To start, it's advisable to use storage in one country, such as Germany, through the European Fulfillment Network (EFN). As your business grows, you can expand to multiple countries with Amazon’s Multi-Country Inventory (MCI) system, covering up to five VAT registrations. The ultimate goal is to have storage in each country and obtain VAT registrations in seven countries, creating a Pan-European FBA (PAN-EU) setup. Once at this level, cross-border taxes are minimized.
Intellectual Property Protection: Amazon Brand Registry vs. Trademarks -differences you need to know
Since Brexit, UK trademarks are no longer valid in the EU automatically. They must be filed as a separate trademark. EU trademarks are governed by the European Union Intellectual Property Office (EUIPO) and require a separate filing and processing period. It is important to note that existing EU trademarks held by UK businesses were automatically converted into comparable UK trademarks by the UKIPO to maintain protection in the UK, but only in the UK.
Trademark Registration
A registered trademark provides formal legal protection for your brand at the national governmental level. It grants you exclusive rights to use your intellectual property and marks, providing a basis for taking legal action against infringers. For each country you wish to sell in, you must get the additional trademark approval. The only exception is the EU, which governs the trademarks of all countries in the EU.
Amazon Brand Registry
Amazon Brand Registry provides brand protection within the Amazon ecosystem. It offers tools to help brand owners manage their product listings and protect their intellectual property from misuse on Amazon. To enroll in this program, you must already have a valid trademark for the brand. You can sign up for the Amazon Brand Registry with a trademark not specific to the Amazon region you are protecting. As long as you have a trademark registered with either the UK or the EU, you can join the Amazon Brand Registry for Amazon UK, Amazon Europe, or both. Importantly, this only will protect your brand on Amazon.
We highly recommend getting both a trademark and an Amazon Brand Registry for anywhere you sell on Amazon.
Example: Lisa’s Handmade Jewelry
Trademark Registration: Lisa registers her brand as a trademark in the UK to protect her brand nationally. She does this through UKIPO because she is selling in the UK.
Amazon Brand Registry: She uses her registered trademark to enroll in Amazon Brand Registry UK, allowing her to control her listings and report counterfeit products on Amazon UK.
Combined Benefits: If a third-party seller on Amazon infringes on her brand, she can use Amazon’s tools to remove the listing. If someone infringes her brand outside of Amazon, she can take legal action based on her trademark registration.
Currency
When selling in Europe on Amazon, consider where your bank account is based and what currency is being used for sales. Amazon will do the exchange rate to the bank account based on the currency of the country where the bank is located regardless of what currency the product is purchased in. Amazon determines this through the first two letters of your banking information regardless of what currency the account is in. This exchange rate is often high and can generate avoidable losses. In certain extreme circumstances, the loss can be as much as 3-8%. To avoid this, use a third-party service to create virtual bank accounts at a much better rate.
I want to sell in the EU - what's the process?
1. See if selling in the EU is viable for your product. Research is key to understanding which markets suit your best interests. Tools like Helium and Jungle Scout are great for understanding how your product will perform in the EU. The overall analysis does not vary, just the markets. EXPANDO offers an expert consultation to assess your product’s opportunities. Sign up for a free consultation today.
2. Collect the information needed for VAT registrations. This VAT registration process can take anywhere from a few weeks to a few months. It is best to get this step done first to expedite the process.
3. Apply for the necessary Extended Producer Responsibility numbers. Doing this early will ease the administration process.
4. Next, officially add the European country of your choice to your UK Amazon account.
5. Finally, it's time to begin shipping your product around the EU and unlocking new opportunities for your company’s growth.
This article was created in collaboration with EXPANDO, one of the top five Amazon agencies in Europe.
Are you considering expanding your business to Europe through marketplaces? Fill out the form or contact Marian Joza, Sales Account manager at EXPANDO, at marian.joza@expan.do.
Special offer for readers: Get started with EXPANDO for free! They'll waive their fees until your sales hit €3,000.
