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The dark side of Amazon Pan-European FBA

Selling to multiple European countries at once is a goal that many e-sellers dream to reach in 2022. Through the Pan-European FBA program, Amazon gives the same opportunity to its sellers, but all that glitters is not gold.
Selling to Europe: the dark side of Amazon Pan-European FBA

According to Ecommerce News, eCommerce sales in Europe are expected to reach €1.020 billions in revenue by 2025. For this reason, Amazon is inviting its merchants to adhere to the Amazon Pan-European FBA program.

Currently all European economies are in the state of being able to benefit from eCommerce. 
UK and Germany are the largest European markets for eCommerce, constantly compared to USA or Japan, but the real news – as well as what makes 2022 special is that all euro-area countries are presenting relevant data in terms of eCommerce turnover. Every single European country has experienced an increase in e-sales to a level that can’t be ignored. 

Millions of European customers are creating one huge demand for eCommerce products and services, as well as fast and reliable delivery.

European ad international sellers consider this as a formal invitation to dive in and start expanding their brands across European countries.

Many strategies can be put in place for the purpose since the lands of opportunity lay within the whole continent, to the point that expanding through one single country at the time isn’t the only method. According to your sales channel, product and target audience, it may be strategically more convenient – and profitable – to launch in 2+ countries simultaneously

european customer commerce
Average European consumer during an online shopping session

When selling on a marketplace that is present in multiple countries – like Amazon for instance – the aforementioned strategy benefits sales dramatically as demand for the same product can be high and consistent across vast areas that typically include multiple countries. Merchants that have done their homework will therefore refuse to limit their business to a single marketplace and chose to sell to multiple economies simultaneously.

This is where Amazon Pan-European FBA kicks in

The multinational company has in fact, sensed the opportunity.

The name, Amazon Pan-European FBA, suggests that this FBA solution applies to the entire of European continent – Pan (pas, pasa, pan) is the greek term for “all”, – but it doesn’t literally apply to the whole continent. Thanks to this system Amazon sellers can sell their goods to 5 European countries: France, Spain, Germany, Great Britain, Italy. Simultaneously. 

How does it work?

IF you’re familiar with the FBA (Fulfilled By Amazon) system, imagine something similar on a larger scale, but with some peculiarities. If you are unfamiliar with Amazon’s distribution mechanisms, continue reading. 

According Amazon Pan-European FBA’s system, all that the seller needs to do is to send inventory to one of Amazon’s warehouses. From here, Amazon will automatically and autonomously distribute inventory to seven warehouses. These warehouses are located in Poland, Czech Republic, France, Spain, Germany, Great Britain, Italy. This will be done through time in accordance to the sales volumes per country. Not only the seller will benefit of inventory distribution based on product demand, but all storage issues are taken care of and the products will be promptly picked and packed as soon as they are sold. So just like regular FBA, the merchants only needs to manage and restock their inventory

Amazon Pan-European FBA definitely presents many advantages like:

  • Saving lots of time and money because merchants won’t have to send their products to different warehouses and can benefit of shipping bulk discounts
  • Relation one-to-many. The seller interacts with one warehouse and amazon handles all the rest
  • Super easy to start
  • Amazon handles customer support on the merchant’s behalf
  • Merchants access instantaneously different delivery services: Priority delivery, Free Shipping and Free Enhanced delivery. 

The Cons

Does this mean that once the sellers have sent their stocks to the chosen warehouse they can just lean back and forget about it? No. In fact even if the highly technological system brings in a lot of advantages, there sure is one crucial issue that must be taken into consideration:

Being enrolled in the Amazon Pan-European FBA Program means that Amazon can store the seller’s goods in multiple countries. Storage alone calls for the need of VAT registration in every single country (not only the five ones where the goods are actually sold, but Poland and Czech Republic as well). 

This is still true even after the VAT reform that took place on 07/01/2021.

Registration process can take anything from 8 to 12 weeks to be completed and it is strongly advised that no stock is moved before obtaining the identification number to avoid huge financial losses. In fact, failing the VAT registration by the time the goods enter the destination country, makes them eligible for taxation regardless of the fact that they haven’t been sold yet.

An upset Amazon Pan-European FBA seller dealing with VAT obligations

Once VAT registration is completed, the merchant will need to regularly comply with the specific reporting obligations in place for every country.   

The EU-based business as well as the company with headquarters outside the European Union will then be able to benefit from the OSS scheme (One-Stop-Shop) and access the system to file a single VAT return for all their sales transactions in the EU.

Amazon Pan-European FBA selling program has many advantages, but it’s not for everyone.

Bureaucracy and extra costs must be seriously taken into consideration. While Amazon Pan-European FBA merchants will benefit of an IA that takes away loads of work on one side, on the other they are still responsible for the collection and payment of their taxes and the filing of all relevant returns.

However, Amazon Pan-European FBA is not the only “operations-smart” solution available for who wants to sell to Europe.

With Borderl3ss, Brand owners and e-sellers can access a system that allows them to sell to multiple European countries, without having to compromise and maintaining total control over their expansion strategy and their business. 

In fact, they can: 

  • Activate specific warehouses to serve the countries that they chose to sell to 
  • Easily keep stock details under control 
  • And move inventory between storage units in accordance to their sales volumes

Book an appointment with our team today to find out everything about Borderl3ss’ software technology and the warehouses locations that will allow your Brand to reach all your European customers. At YOUR conditions.

Robin Calandri

Robin Calandri

DTC Fulfillment Blog

Find all the information you need to optimize your European fulfillment operations. 

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