Expanding your business to Amazon Europe presents exciting opportunities but also comes with unique challenges. This guide provides a step-by-step overview of everything you need to know to get started. You’ll learn everything from selecting your primary marketplace and choosing a fulfillment method to understanding legal obligations and managing language barriers.
By being able to navigate these challenges, you can effectively tap into the European market and maximize your selling potential. Whether you’re opting for Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM), this guide covers essential considerations to help you set up your Amazon Europe venture successfully.
1. Choose Your “Home” Marketplace
Amazon Europe currently offers eight main marketplaces: France, Germany, Italy, Netherlands, Poland, Spain, Sweden, and the United Kingdom. You can operate across these markets using a single Seller Account, but it’s crucial to decide where the bulk of your products will be distributed.
Shipping products from the US to Europe is an option, but it tends to have high costs for both sellers and customers. Fulfillment by Merchant (FBM) from within the EU is a viable alternative, but it comes with some challenges as well. With this option sellers are required to manage their third-party storage and distribution logistics.
For those opting for Fulfillment by Amazon (FBA), selecting an overseas home marketplace is a requirement. Within FBA, sellers can choose between several distribution models: single-country inventory, Multi-Country Inventory (MCI), or Pan-European FBA. Each offers different benefits in terms of delivery speed and Prime eligibility across various European countries.
Pro TiP: Use Viral Launch’s Market Intelligence tool for deep insights into the European markets. Our tool provides valuable data on search volume, market trends, and competitive analysis, with the ability to filter by European-specific markets. This helps sellers accurately identify profitable products, estimate potential profits, and understand market demand. By leveraging this information you can make more informed decisions and ensure your success in the diverse and competitive European market.
2. Determine Your Fulfillment Method: FBM vs FBA
Fulfillment by Merchant (FBM) can be managed from either the US or the EU, but each option comes with distinct challenges. Managing FBM from the US may initially seem easier, but it involves significant costs, such as international shipping fees, which can range from $22 to several hundred dollars per order. These fees depend on the size, weight, and destination of the products.
Choosing FBM within the EU can significantly reduce shipping costs and delivery times. However, this approach requires finding reliable third-party distribution centers to handle storage and logistics. Products fulfilled through FBM may not always qualify for Amazon Prime eligibility, which could have a negative impact on sales.
If you’re considering Fulfillment by Amazon (FBA), there are now three primary options available:
- European Fulfillment Network (EFN): This option allows sellers to store their products in one of Amazon’s EU fulfillment centers. From there, products can be shipped to other European countries as orders are received, ensuring Prime eligibility across those regions.
- Multi-Country Inventory (MCI): This method involves storing inventory in multiple EU countries, making your products eligible for Prime in each country where stock is held. This option can provide faster delivery times and improved customer satisfaction in multiple regions.
- Pan-European FBA: With this option, sellers store inventory in one EU country, and Amazon distributes products across its European fulfillment centers based on anticipated demand. This setup ensures Prime eligibility in all participating countries. Leading to improved delivery times and inventory management.
Each FBA option has its own set of pros, cons, and fee structures, so sellers need to evaluate and determine which best fits your business model and customer base.
3. Research Your International Legal Obligations, or Hire an Expert
While you can do the research and contact the right overseas parties yourself, it may be best to save yourself a headache and just hire a lawyer if you don’t have one already. A lawyer specialized in international law can outline the legal, tax and compliance obligations you must follow in each country, as well as determine the specific EU labeling and warranty laws you are obligated to observe.
In many cases, Europe is more strict than the US in terms of labeling and product compliance, with conformity markings that are EU-wide as well as specific product restrictions and compliance obligations that are distinct within each country.
An authorized representative is needed to take care of the legal requirements and regulations enforced by local governments when marketing products in Europe and the UK. Investing in quality assistance could save you from future legal nightmares or having your listing removed for lack of compliance.
4. Register for a VAT and EORI Number
If you plan to sell on Amazon Europe, you will need to register for both a Value Added Tax (VAT) number and an Economic Operator Registration and Identification (EORI) number. An EORI number is mandatory for all merchants selling goods across EU borders (whether using FBA or FBM) to facilitate customs clearance and the tracking of imported goods.
VAT is a consumption tax applied to the value of goods and services sold within the EU. Unlike in the US, where sales tax is added at the point of sale, VAT is included in the retail price of products in the EU. Sellers are required to collect VAT on sales, report it, and remit it to the respective tax authorities.
Even if you are selling low-cost items, registering for VAT is generally necessary unless the product margins are exceptionally slim, which is rarely the case for most sellers. The VAT rates vary by country and product category, so understanding the specific rates applicable to your products is crucial. Additionally, compliance with VAT reporting and payment schedules is essential to avoid fines and penalties.
5. Address Language Barriers
While not legally required, providing customer service in the local language of each country you are selling in can significantly enhance the customer experience and potentially increase sales. However, the product listing’s copy must be in the language of the country where the product is being sold. This is crucial for ensuring clear communication and compliance with local regulations.
For sellers using Fulfillment by Amazon (FBA), Amazon provides 24/7 customer service in the language of the marketplace where the purchase was made. However, Amazon does not automatically translate product listings. Therefore, whether you are using FBA or Fulfillment by Merchant (FBM), it is essential to have your listings accurately translated into the local language.
Hiring a reputable translation service or using local-speaking copywriters is recommended to ensure that your listings are not only grammatically correct but also culturally relevant. This helps build trust with local customers and can improve search visibility by using the right keywords and terminology. Which is essential when entering new markets.
Even in English-speaking countries like the UK, there are differences in terminology that US sellers should consider. For example, what is called a “pitcher” in the US is more commonly referred to as a “jug” in the UK, and using the appropriate term can affect searchability and sales.
Pro Tip: You can start a free trial with Viral Launch’s keyword research tool to precisely target the right keywords for the appropriate country. You’ll gain the ability to filter by specific European countries, so you can fine-tune your strategy for maximum effectiveness.
6. Localize Your Listing(s)
Localizing your Amazon listings goes beyond just translating the language. It involves adapting to the specific regulations and cultural nuances of each EU country. Most European Union countries require labels and packaging materials to be in the local language. This is one of the instances where an international business lawyer can be helpful to ensure your business is compliant. Remember that the EU uses the metric system for all measurements, so a 7-inch phone case would be listed as 18 centimeters.
It’s also important to consider that the conversion rates fluctuate. Sellers need to keep these fluctuations in mind when setting price points between the dollar and local currencies like the pound or euro. These fluctuations can impact your pricing strategy and profitability. Besides language and metric differences the categories and consumer expectations can also vary significantly between countries. This will affect how your products are perceived and sold.
To successfully sell on Amazon Europe sellers must conduct thorough market research is essential. For assistance you can leverage tools like Market Intelligence to analyze your competition and calculate potential profits. This research will provide accurate insights into the local market dynamics and help you optimize your listings and pricing strategies.
What Amazon Sellers Need to Know About the EU’s Digital Services Act
With full application of the EU Digital Services Act (DSA) in 2024, Amazon sellers need to understand its significant impact on global e-commerce. New regulations and standards for digital services will affect e-commerce in the following ways:
- Increased accountability: The DSA imposes stricter obligations on digital platforms, requiring them to take more responsibility for the content they host. This includes enhanced mechanisms for content moderation and the removal of illegal content.
- Transparency requirements: E-commerce platforms will need to provide more transparency regarding their algorithms and advertising practices. This includes disclosing how products are ranked and how user data is used in targeted advertising, whether through Amazon advertising software or other methods.
- Consumer protection: To reduce the sale of counterfeit and unsafe products, digital platforms must verify the identity of traders before allowing them to sell on their platforms.
- Cross-border compliance: International digital commerce entities will have to adapt their practices to meet the stringent requirements set by the DSA to continue operating within the EU market.
- Impact on SMEs: Small and medium-sized enterprises (SMEs) may face challenges in adapting to these new regulations due to increased compliance costs. However, all market players, regardless of size, must adhere to the same rules, potentially benefiting SMEs in the long term.
- Enhanced user rights: Users will gain more control over their data and will have the right to challenge content moderation decisions. This empowers consumers and enhances their online experience, potentially increasing their engagement and trust in e-commerce platforms.
For full details on how the DSA will affect digital platforms like Amazon, see a report from the European Commission here.
Final Thoughts on Selling on Amazon in Europe
Expanding into Amazon Europe presents both exciting opportunities and unique challenges. Sellers will need to navigate diverse marketplaces, comply with legal requirements, and address language barriers. The insights provided in this guide will help you strategically position your business to tap into the potential of the European market.
Viral Launch’s comprehensive suite of tools and services, including our keyword research and market intelligence tools, can provide you with the precise data and the guidance you need to thrive in the diverse and competitive European landscape.
*The employees of Viral Launch are not lawyers, nor does this blog provide legal advice. If you need legal advice, please contact an attorney directly.
