Europe holds enormous potential for eCommerce. With its 342 million inhabitants in six Amazon marketplaces, it’s easily comparable to the US in terms of population and potential sales. Additionally, the European markets are not as competitive as the US market. They consistently have a better ROAS - $5.07 vs $6.69 on average - and a lower CPC.
To shine more light on how brands can successfully expand into the European marketplaces, Tom Baker, the founder of FordeBaker, joined Pacvue for an informative webinar.
Here are the most important highlights.
While the EU is often viewed as one market, it’s still a fragmented one. Launch of products and services across multiple countries can become costly and complex if you do it by yourself.
With Amazon, on the other hand, you can reach an existing audience and distribute your products without upfront costs. Amazon also makes it easier to migrate existing listings from your US account with their Build International Listings.
The first inclination for many businesses might be that the UK is the best place to start because of the common language and similarities in culture. But that might not always be the best approach.
Here are five aspects to look into before launching in Europe:
These five factors will drive your entry strategy, i.e. if you will enter all countries or selected ones. Regardless of which countries you pick, localization is vital for business success. This means having your listings, customer service, and even packaging (where local regulations specify) in the local language.
As mentioned, it’s important to comply with the different rules of each country, and it’s especially important for sales tax. In Europe, companies operate with the term Value Added Tax (VAT) instead of sales tax.
Typically, you pay VAT in the country where you hold stock, so the VAT regulation you need to follow will be dictated by the type of fulfillment method you choose.
The Amazon fulfillment options are the same in Europe and North America. There are three ways you can use FBA in Europe:
For the fulfillment to run as smoothly as possible, it’s best to start early with getting your inventory in order. If things get too complicated, Amazon has a VAT service for their sellers for each country. Additionally, there are a lot of specialists that can help you with VAT regulations.
To get ahead, the three golden rules of VAT and shipping:
The current transition period will last until December 31st, 2020. After the transition period is over, the UK will no longer be a part of any of the 3 cross border FBA programs. If you want to sell in both the EU and the UK, you will need to hold stock in both places. Fulfilment across countries still in the EU (France, Germany, Italy, Spain and The Netherlands) will still work the same.
The key to expanding into European markets is good research. Make sure you know the local regulations and take your time to ensure compliance. Additionally, it’s important to think about localization to increase the chances of success. With a well-built strategy and support, you can start capitalizing on this valuable opportunity.
If you’re keen to replicate your successes on Amazon.com in Europe but don’t know where to start or you’ve launched but you’re struggling to make an impact then FordeBaker are offering a free 30 minute consultation for all Pacvue blog readers. Simply book a meeting slot with FordeBaker founder Tom Baker.
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