Editor’s note: This is a guest post by Nick, director of eBusiness Boss
I’ve been a full-time Amazon seller for over two years now and I’ve loved every minute. That’s me in the picture above holding the first product we ever sold on Amazon!
Last year we surpassed the seven-figure mark—a huge milestone for us.
A lot of our business expansion has been thanks to Amazon’s pan-EU program, but that’s not to say it’s been straight forward. In fact, if I was to join Amazon’s pan-EU program again, I would do things a LOT differently.
This was one of the main reasons we decided to start eBusiness Boss. By documenting our journey, we hope others can learn from our triumphs as well as our mistakes.
A lot of Amazon sellers start off selling in their native country before expanding – a sensible move in my opinion, given the problems we’ve had as a result of trying to do things too quickly.
When we started out, our business quickly grew. Even though we were only selling in the UK, our monthly sales were increasing rapidly, and we soon received a call from an Amazon account manager introducing us to the pan-EU program.
We ran the numbers and by adding France, Italy, Germany and Spain to the mix we could potentially increase our gross sales by 300% – 400%!
Here is a short video I’ve made to highlight some of the main things we struggled with when joining the program:
There are three different fulfillment options when selling items across Amazon’s EU marketplace:
Here, we’ll cover the differences between the EFN and pan-EU fulfillment networks, which mainly relate to the cost of fulfillment and the tax implications for you as a seller. For a detailed overview of all three networks, see here.
The EFN network gives you access to other EU marketplaces, without the complicated tax implications (and trust me, they are complicated) involved with storing inventory in the countries in which you are selling. Instead, your items are stored in your native country.
For example, when we receive an order from a German customer using Amazon.de, the item is picked, packed and posted out to the German address from the UK (FYI – the product can still qualify for prime delivery).
The downside of the network is the comparatively higher fulfillment fees, making it difficult to price your items competitively.
Still, I will say that the EFN network is not a bad place to start if you want to test the water and gain access to Amazon’s EU marketplaces (Germany, France, Italy and Spain). The tax implications aren’t complicated, BUT you will pay for this privilege with higher fulfillment fees.
When you join the PAN-EU network, your logistical operations won’t change too much. As usual, you’ll ship your goods to your native fulfillment centers and Amazon will take care of the rest. You don’t have to worry about cross-border fees, but you’ll need to consider the marketplace referral fee along with the local fulfillment fees.
The local fulfillment fees are lower than those of the EFN network. The chart below details fulfillment fees in different EU marketplaces:
If you want specific guidance on your own product, you can use Amazon’s handy Pan-EU FBA fee wizard.
While lower fees are fantastic, it does come as a cost when dealing with the tax implications of selling on this network.
Before getting started, I need to point out that I am not a tax expert. I can only provide guidance based on my experiences. Before you make any decisions, I’d recommend you take tax advice from a relevant professional.
If you decide to join the pan-EU program, be aware of the tax implications from the beginning.
Before you press the PAN-EU button you will need to ensure you have a VAT number for the following EU countries:
We decided to get VAT numbers for the Czech Republic and Poland too because of the amount of volume we do within these countries. By obtaining VAT numbers for these two additional countries, you can benefit from lower fulfillment fees too.
To give you an idea, it took us around three months to receive all our foreign VAT numbers, as each country is different and some are quicker than others.
It will also take time, money and expertise to obtain all the documentation you need to apply for each of the vat numbers. I think the total cost of our initial VAT set up worked out at around £4000.
Obtaining VAT numbers is one thing – dealing with the specific tax return requirements for each country is another. Please make sure you take advice from a professional before you jump in.
Other costs associated with the pan-EU program include:
Now I don’t know about you, but I don’t speak five different languages. Remember that you’ll need each of your product listings translated for the five core marketplaces.
You’ll also need to think about your foreign customer service and how you can best reply to a customer within 24 hours. Ignore customer service and you’ll be putting your account at risk.
We have a separate VA for each marketplace – they’ll need to be trained according to your customer service standards.
We all put a lot of work into the marketing of our products, and it’s worth remembering that you will need to do this for every Amazon marketplace you wish to sell in. Success will come from you ensuring that each of your listings is at the top of the Amazon search engine for each of your target keywords.
I’m not in the business of guessing, so we use software to ensure we are targeting the right keywords. It’s a process, but in the long run, it’s one of the most important investments we make.
Anyway, I think that’s enough from me.
I really hope you’ve enjoyed this article. Sharing experiences like this is exactly why we decided to start eBusiness Boss.
If you have any questions jump in the comments and let me know.
Thanks for reading and I hope you’ve found it useful.