The UK vs. The EU: Differentiating Europe's Biggest Amazon Markets
The landscape of the Amazon marketplace has shifted dramatically since Brexit, presenting both challenges and new opportunities for sellers. While some may feel hesitant to expand, there’s a significant chance for those ready to navigate the changing dynamics.
A Brief Overview
The decision of the United Kingdom to leave the European Union had a considerable impact on the Amazon market. Prior to Brexit, the UK enjoyed seamless trade with the EU, facilitating easy movement of goods without customs checks, import duties, or tariffs. The VAT rules were aligned with the EU, and Amazon's European Fulfillment Network enabled swift and cost-effective fulfillment through FBA. This resulted in a smooth experience for both sellers and consumers across borders.
Post-Brexit, however, new trade agreements introduced additional requirements for sellers looking to access the EU market. This shift created obstacles that dissuaded some sellers from expanding, but it also opened doors for those willing to take on the challenge.
The Impact on UK Amazon Sellers
The regulatory landscape changed almost overnight, significantly altering how sellers operated. New policies and requirements had both positive and negative ramifications. Rather than being part of Amazon Europe, the UK became its own distinct entity. While many sellers became eligible for Prime Shipping due to a focused approach on UK shipping, selling in the EU became more complicated, limiting potential revenue streams.
Expanding into the EU Market
Expanding into EU countries differs from entering the U.S. market in that it does not require creating a new Amazon account with extensive documentation. Instead, sellers can easily indicate their intention to add a marketplace on the Amazon platform, streamlining the process once key information has been established.
Five Key Considerations for European Expansion
- Larger Market, Greater Rewards
The implementation of Brexit has altered the landscape of the Amazon marketplace. Sellers based in the UK now have access to a market worth approximately €31 billion, a stark contrast to the previous combined market of €96 billion when including the EU. While some EU-based sellers have exited the UK market, the vacuum presents a wealth of opportunities for sellers willing to expand. - VAT - Value Added Tax
Sellers must be VAT-registered when selling in the EU, similar to the requirements in the UK. However, businesses need separate VAT registrations for each country they operate in, which involves additional costs. Fortunately, VAT compliance can be outsourced to third-party providers, simplifying the process. - EORI - Economic Operators Registration and Identification Number
An EORI number is essential for importing goods into the EU or the UK and is required for customs and import tax purposes. This number can be obtained at no cost, although carriers may handle registration for a fee. - EPR - Extended Producer Responsibility
EPR mandates that producers take responsibility for their products' entire lifecycle. Sellers must register with national EPR schemes in specific countries (like France, Germany, and Spain) and report on the quantities of materials they place on the market. Amazon provides resources to help sellers comply with these regulations. - FBA System
Fulfillment by Amazon (FBA) operates differently in the EU, with separate operations for each country. To store products in a particular country, sellers must have a local VAT number. While it’s advisable to begin with storage in one country (e.g., Germany), sellers can eventually scale to multiple countries through Amazon's Multi-Country Inventory system. The end goal is to obtain VAT registrations in multiple countries, thus minimizing cross-border taxes.
Intellectual Property Protection: Understanding the Differences
Since Brexit, UK trademarks no longer automatically cover the EU and must be filed separately. EU trademarks are governed by the European Union Intellectual Property Office (EUIPO), requiring distinct applications. UK businesses that previously held EU trademarks had them converted into comparable UK trademarks by the UKIPO, but this only ensures protection within the UK.
Trademark Registration
A registered trademark offers formal protection for your brand at the national level, granting exclusive rights to your intellectual property. If you wish to sell in multiple countries, additional trademark approvals are necessary.
Amazon Brand Registry
Amazon Brand Registry provides brand protection within Amazon’s ecosystem. To enroll, businesses must already have a valid trademark. A trademark registered in the UK or EU allows sellers to join the Brand Registry for Amazon platforms in those regions, ensuring brand protection on Amazon itself.
It’s highly advisable to obtain both a trademark and Amazon Brand Registry for every marketplace you sell in.
Currency Considerations
When selling in Europe, consider the location of your bank account and the currency in which you’re selling. Amazon processes currency exchanges based on the bank account's currency, which can lead to unfavorable rates and unnecessary losses. To mitigate this, consider using third-party services to create virtual bank accounts with better rates.
Steps to Selling in the EU
- Assess Product Viability
Research the EU market to determine the potential for your product. Tools like Helium and Jungle Scout can provide insights into market performance. - Prepare for VAT Registration
This process can take several weeks to months, so it’s essential to initiate it early. - Apply for Extended Producer Responsibility Numbers
Getting this done early can streamline administrative tasks. - Add the European Marketplace
Officially integrate the country of your choice into your UK Amazon account. - Begin Shipping
Start sending your products across the EU and unlock new growth opportunities for your business.
This article highlights the complexities and opportunities present in the evolving Amazon marketplace landscape. At Blue Peak, we help clients navigate these challenges and seize the tremendous potential within the EU market. If you're interested in exploring how we can assist you in maximizing your Amazon business, feel free to reach out!
