If 2021 taught us one thing, it’s that there is still a huge opportunity for sellers on Amazon to step into European marketplaces and gain a major competitive advantage. The US marketplace is mature and saturated with a high volume of common goods and services. Meanwhile, these products aren’t always available in the EU market, and may be the perfect geographic location to try expanding to with your brand.
What’s more is that Amazon has designed its marketplaces worldwide so that the selling process is consistent, no matter where you’re selling. Many services and processes in the US market, such as Fulfillment by Amazon (FBA), Prime, and Sponsored Products, work similar on Amazon’s European marketplaces. The scope of this article is to help sellers understand the benefits of expanding to European markets, and to address key factors they should consider before taking the plunge. Let’s go!
Key benefits to expanding sales into Europe
- Reach tens of millions of additional customers: With nearly 350 million inhabitants across six of its top marketplaces, don’t miss out on millions of new potential Amazon customers!
- Diversify your portfolio: Increase your revenue with new streams, tapping into Europe’s different holiday seasons and peak sales periods versus the US market.
- Gain a first-mover advantage: Amazon’s European marketplaces, such as France and Italy often have fewer sellers in your category, meaning more opportunity for you.
Successfully launch your brand in Europe
We’ve said this before and we’ll say it again: don’t assume that the UK is the best place to expand your business just because of the similarities in language and culture. Getting started selling in a new geographic region is a serious undertaking and requires that you invest some time researching and assessing some key factors to consider looking further into before launching in Europe.
Product compliance, regulations, and tax. First, you must determine whether you are allowed to sell your product, as compliance regulations in Europe change regularly. Assess the specific regulations for your type of product at the Amazon level and at the country level. If you sell products in the consumables, beauty, or consumer electronics categories, you should take reviewing local regulations very seriously to ensure compliance. Every European country has tax requirements for sales of products to consumers known as Value-Added Tax (VAT), which is a type of consumption tax assessed on the surplus value of goods and services.
Competitor sales performance. Conduct an analysis of your competitive category and compare the sales volume in that category across all the different countries, which will give you a good idea of expected sales in each country. You can learn more about how to grow your market share with Pacvue competitive intelligence and benchmarking by requesting a demo here.
Competitiveness. Know who the market leaders are in each regional market. It’s useful to assess digital metrics such as CPC and Share of Voice, in addition to traditional market share, before developing an entrance strategy.
Search volume. Research the search volume to determine the overall demand in each marketplace. That data will tell you what brands the strongest performers are, and if you can feasibly challenge those market leaders or not.
Amazon’s fee structure. The FBA fee will be different in different countries, so calculate your margin for each marketplace. There is an FBA Export program for the EU, so that when you sell on Amazon’s European marketplaces, Amazon will export your eligible products to buyers with postal addresses in 26 European countries. You can learn how to sign up for FBA Export for EU and read their shipping programs and export policy here.
Languages and localization
Amazon requires that listings and customer support be provided in a marketplace’s local language before you launch your product. But it requires more work than simply translating your original content to the native language of the marketplace through using a free translation tool! Localization is the process of adapting your content and listings, customer service, and packaging to suit a new target audience in their local language. Check out a recent blog article on how to localize your product listings on Amazon Europe (and why you should!) here.
Shipping and fulfillment
Thankfully, Fulfilment by Amazon (FBA) in the US works similarly to FBA in Europe. FBA in Europe helps you deliver products to customers, in addition to managing customer service and handling returns on your behalf. And what’s cool is that if you use FBA in Europe, you will get Prime badging, essentially boosting your product listing’s appeal to millions of European customers enrolled in Prime’s quick delivery options. According to Amazon, European FBA offers also have a larger chance of winning the Buy Box.
Compliance is essential for launching your products successfully on Amazon EU, so make sure your brand is complying with the different rules of each country, and more importantly, ensuring proper payments and following of the Value Added Tax (VAT) regulations according to your type of FBA fulfillment method.
It’s important to check the European FBA fees, which vary by marketplace and category, as well as Prime customer delivery times. Amazon fulfillment services help you get products to international customers promptly. You can learn more about European FBA here.
The three ways you can use FBA in Europe:
- The European Fulfilment Network (EFN) allows sellers with an Amazon Europe Marketplaces account who are also registered for FBA to store their inventory in their local fulfilment center and fulfill orders coming from other European marketplaces from the same local inventory pool, which helps to maximize the control and flexibility that sellers have over their inventory. EFN tends to run a bit slower on delivery; however, is a viable first option to take for businesses launching in Europe for the first time. You can read more details about EFN here.
- Pan-European FBA is typically for mature sellers who are already quite successful and want to bring their business to the next level. Essentially, you have your products imported to one country, and then Amazon will redistribute your stock based on your sales in different countries. Usually, this results in a quicker delivery, but it’s a bit more expensive. Hellotax wrote an extensive article on everything Amazon Pan-European FBA here.
- Multi-Country Inventory (MCI) lets you ship your FBA inventory to Amazon fulfilment centers in multiple countries of your choice across Europe, but you get to choose which countries are going to be stocked with your products. This process can save you in transportation fees when shipped in bulk, and typically sees the fastest delivery times. Hence, why MCI is best for businesses executing on advanced targeted strategies. You can learn more about how to manage your inventory and listings using MCI here.
As a best practice, it’s wise to begin getting your inventory in order and to strategize how and where you will be fulfilling your products for European customers. You can learn the basics about VAT, and the details on Amazon’s VAT service for sellers in each country here. If you need further assistance, there are tons of specialists that can help you with VAT regulations.
To get ahead, follow the three golden rules of VAT and shipping:
- Secure an Economic Operators Registration and Identification number (EORI number) and a VAT number.
- Don’t list Amazon as the Importer of Record (IOR), as it will delay the shipment process and will cost more.
- Ensure that you have paid your duty on the products before they get to Europe to avoid delays.
Building the perfect Product Detail Page (PDP)
To help you build the perfect PDP, Pacvue and Salsify recently published a guide to help you optimize your product detail pages and plan your advertising strategy in European markets. This guide covers the beauty and makeup, grocery and baby products, and consumer electronics categories in the UK, Germany, and France. Download the free guide today!
The first essential task of expanding into European markets is to ensure that you have done a lot of research and analysis to evaluate what programs and process available are best for your business. You should make sure you know the local regulations and take your time to ensure compliance. Furthermore, it’s very important to think about a localization strategy to increase your products chances of success.
Are you selling on Amazon in Europe and seeking out Pacvue to scale your operations? Get a free demo today and we will hook you up with one of our Sales Directors in Europe, to walk you through Pacvue’s customizable dashboards, five levels of automation, competitive intelligence, Share of Voice reporting, and more.