August 26, 2020
This webinar takes you through the marketing eCommerce landscape in European countries, including logistics, operations, and country-specific considerations.
Ready to go global? The massive reach of Amazon’s international market can be a valuable opportunity to expand your brand into Europe. This webinar takes you through the marketing eCommerce landscape in European countries, including logistics, operations, and country-specific considerations.
All right. Thanks everyone for joining our webinar today, “What U.S. Brands Need to Know About Expanding into European Marketplaces.” Good morning to everyone with me on the west coast here in the states. Good evening to everyone over in Europe. Couple of housekeeping tips before we get started, we are recording this webinar. We’ll be sending out the recording later today with a follow-up email after the webinar ends, so you’ll have access to that as well as some of the slides with the resources that are presented here today. We’ll also send out our contact information, so you can get in contact with Pacvue and FordeBaker.
We will be taking questions throughout this webinar. Go ahead and enter those into the Q&A panel. The bottom of the control panel of your Zoom meeting. There’s a little Q&A chat box. You’re go ahead and press your questions into there. And then, we’ll be answering questions at the end of the presentation today, so hang on to those.
But with that, I’m super-excited to introduce our speaker today, Tom Baker, who is the founder of FordeBaker, a full service Amazon agency. FordeBaker is based in the UK, but they are actually an international agency. They work across Amazon marketplaces and FordeBaker works with Pacvue to really help scale brands’ advertising campaigns on Amazon. So, Pacvue is the enterprise platform for Amazon advertising as well as other marketplaces. And through a combination of automation and bringing in retail data, share of voice data, advertising data into one platform will allow advertisers to uncover new opportunities.
And so, we’ve been partnering with FordeBaker since early this year to really add their special sauce, add their expertise into the technology, and really uncover new opportunities for brands. So, really excited to have Tom Baker here to talk about expanding into new markets. So, Tom, I’m gonna turn it over to you.
Okay. Thank you, very much, Adam. And hello to everyone that’s listening and watching today. It’s my pleasure to tell you about selling in Europe and what that means for Amazon sellers from North America. As Adam said, we’re a full service Amazon agency. We work with all types of businesses in North America and Europe. And it’s a very common thing for us to be talking about expansion from North America into Europe. And I wanna share some of the practical tips that we share with our clients about how to get started in Europe, and why that’s such a great opportunity.
So, the agenda for today is really just to give you an overview of what it means to sell in Europe through Amazon and how that works across the different countries. Then we’ll explore the different European fulfillment options through FBA. We’ll have a quick word on Brexit and the implications of Brexit on fulfillment and how that will affect your planning.
Then, we’ll talk about the operational considerations is how you research and start to think about your country’s strategy, product strategy, and so on. And then, we’ll look at launching and expansion and what you need to think about on – some tips around where you need to focus your attention. We’ll talk about team resources, so what skill set you require to run a Amazon store across Europe. Pacvue will be sharing some advertising benchmarks. So, some comparisons between the U.S. and Europe. And then, at the end there’s some FAQ’s. And then, we’ll have time for the Q&A.
So, Amazon in Europe, it’s six marketplaces and counting. So, this multicolored European map is really describing Amazon’s presence in Europe. So, there are six live marketplaces covering a population of 342 million people. So, that’s all of those in yellow that you can see there, the UK, Spain, France, Italy, Germany, and then recently the Netherlands came on board.
Amazon just announced that Sweden will be the next marketplace to open up. So, they’re in green. We don’t have a set date for that, but that’s all been announced, and the planning, brand registry, and all of that kind of stuff is being opened up. We expect Poland and Czech Republic to be next. So, those two in red. Amazon already has fulfillment centers in those countries to serve the German market. There’s not too much of a stretch to imagine them opening there. Again, we expect that to be next year.
The great thing about selling in Europe and it’s one of the key points I want to get across to you today is that it’s considered as one entity. It’s just as big as United States is in terms of population, in terms of the amount of people that you can reach, and the amount of sales that you can – that you can acquire. So, obviously, individually, is relatively smaller countries, not so much, but as you can – if you consider Europe as one entity, then there’s just as much opportunity as you’re seeing in the U.S.
From a management point of view, that’s all unified under one Seller Central account. So, you can manage all of those different countries from one account, and you just toggle between the different ones to look at your different listings, sales performance, advertising performance as well.
And then, just another key point. So, those marketplaces that I’ve just talked about are all accessible to all of those other countries in blue that you can see there. So, somebody in Portugal down in bottom left can buy from Amazon Spain, somebody in Ireland can buy from Amazon UK, so on and so forth. So, actually whilst it is those countries in yellow and the ones in red and green we’re expecting to come on board as marketplaces, you are actually opening yourself up to the entirety of Europe. So, it’s a huge, huge opportunity.
So, just to give you some stats to back that up and these come from a mix of Amazon’s data, third-party data from eMarketer and similar web and the usual places you expect to see it. So, Amazon is the biggest e-commerce site in UK, Germany, France, Italy, and Spain. That’s no mean feat. E-commerce is very competitive over in Europe just as it is in the U.S. So, to be No. 1 is an incredible achievement. Amazon also seeing a huge growth spurt due to the pandemic, the same growth spurt that they’re seeing in the U.S. is happening over in Europe as well.
So, they’re already big; they’re just getting bigger. So, just some stats to back that up. And then, these are stats from a UK research. And it really looks at the last four or five months of experience for people that are buying on Amazon.
And I think that the key point that you can take from that is that once people start to use Amazon, they really love it, and it becomes a habit for them, and they stay with Amazon. And that’s what we’re seeing because this huge shift to e-commerce over the last few months is accelerating Amazon’s growth. And I think that will genuinely be sustained over in Europe as I’m sure it is in the U.S. as well.
So, just to quickly recap on that then. So, six marketplaces already, that’s gonna expand. You’re reaching hundreds of millions of people. And they’re very loyal to Amazon. And Amazon is incredibly popular in Europe.
So, given that there’s this big opportunity, the first question really is how do you launch in Europe. And what questions do you need to ask of yourself and your business to be able to give yourself the best opportunity to be successful in Europe. Now I’ve talked about there’s lots of people and there’s lots of opportunity, but because it’s – we’re talking about multiple different countries, there is some complexity to launching into Europe, and thinking about the different considerations due to language, and differences in tax and business rules. So, I just want to go through some of the considerations that you need to think about as you start to evaluate the opportunity in the different countries in Europe.
The first thing is to think before you act. So, there’s gonna be a natural inclination to think UK is gonna be the best place to start sharing a common language, the culture’s much similar between the UK and the U.S. than it is between the U.S. and let’s say, France, for example. So, why not go into the UK first. And then, expand over into the rest of Europe. It’s likely to be a good approach for a lot of businesses. But I wouldn’t take it as read that it’s always going to be the best approach for every type of business.
So, let’s say, for example, you sell ski equipment or cycling equipment. There are much bigger marketplaces for that type of product in France and Germany and Italy than there is in the UK. So, do your homework. Look at the trends in the different countries. Look at the popularity of your products in the different countries. And just don’t assume that the UK is always going to be the best marketplace for you.
And then, really just thinking about market entry. There are five areas that we will look at with our clients as they’re evaluating moving from the U.S. into Europe. And the first place to start really is, are you allowed to sell your products in those European countries, so the compliance, regulation, and tax. Now, there’s no scare stories here. Compliance, and regulation, and so on are relatively similar to the U.S., not identical by any means, but there’s gonna be lots of similarities. Now, the key point is you need to look at the regulations for your particular type of product at an Amazon level, but also at a country level.
So, for example, some countries will have different requirements in terms of ingredients, and labeling, and safety compliance. They tend to be harmonized across the EU, which is a good thing about the EU. But you will see some differences between U.S. regulations and European regulations, inevitably so. And there’s also gonna be some tax requirements that you will have to research as well. So, always do your research into these areas first because essentially what that’s doing is saying, can I sell my product in each of these different countries. That’s the first thing that you’ll need to do.
Then, once you’re confident that you can sell your products or that you know what changes you need to make to labeling and ingredients and so on, then you can start to look at the actual marketplaces. So, there’s gonna be differences between the different marketplaces. So, for example, at a very high level, Germany as a marketplace is much bigger than France. Really what you want to be doing is drilling down into your particular category and comparing the sales volumes across that category, across all of the different countries just to get a feel for actually how many units you might expect to sell in each country.
Then you want to look at the competitiveness in each of those categories across the different countries. So, for example, is there a market leader that’s dominating the category? Is it spread across lots of different brands? Are those brands well known? What’s the cost per clicks in each of those different marketplaces? That works as a proxy for how competitive those marketplaces are.
So, there’s combining those two things plus the search volumes. So, you want to know what the overall demand is within those marketplaces. That will also tell you which brands are much stronger than other ones and get a feel for whether you can challenge those market leaders. And then, that will inform your advertising strategy as well. So, between those three things, you’ll get a size of the market and how competitive that market is.
Then, the next level is to understand Amazon’s fees. So, the fee structure, as in you’re gonna pay the referral fee and you’re paying an FBA fee is exactly the same as what your experience in the U.S. However, the FBA fee is gonna be different in different countries. So, as a classic example, the FBA fees and storage fees in France are higher than they are in other European countries. So, you need to know this level of detail before you enter the market.
You need to understand, can I sell my product in that country. What changes do I need to make to it to ensure that I’m compliant? What’s the market opportunity in that country? How competitive is it? And then what’s my margin gonna look like after Amazon’s fees. So, once you’ve got all of those things together, then you can really get a picture for where you should be starting your entry into Europe plan.
So, the big question really is, should you go into all countries or should you have a selective entry strategy. Should it be one country? Should it be couple of countries? Can be all countries? So, once you’ve understood the opportunity and the profitability across the different countries, then the question then is, do you have the resources and the operational infrastructure to go across those countries that you selected from that prior research.
And the things that you’ll need to think about from an operational point of view is the logistics and getting the stock from the U.S. or from your manufacturer, wherever that might be in the world into Europe. What are the implications there? What are the costs? What do I need to do from a tax point of view? What you guys call sales tax in the U.S., we call value added tax, VAT, over here. And there’s rules around how you manage VAT in different countries. And then, also your product compliance. And going through those processes to it to ensure that you are compliant at the local level and also at an Amazon level. And then, localization.
So, the key things here, and we’ll go into more depth a little bit later. But obviously, your listings need to be in the local language. They should be high quality. You need to do customer service in the local language. Some of your packaging might have to be in the local language as well, depending on which category you’re in. So, just thinking about all of those implications from an operational point of view. And then, how would you resource that? So, how much time and money is required to manage all of these different countries? What’s that actually gonna take at a people level?
I will say, we’ll talk about team a little bit later, but the skill sets that make you successful in the U.S. will make you successful in Europe. But you obviously need to resource that. You need to think about your advertising budget and how you’re gonna split that across the different countries. And then, as I say, what’s the team that’s gonna help you to be as success in Europe. So, your internal team and whatever agency or freelancer support you need through that initial phase of getting your set up and then your growth and expansion across Europe.
So, once you’ve done that research, and you’re confident in the operations logistics, how you’re gonna resource things, the biggest step you then need to go through is how you’re gonna fulfill your orders in Europe. Now, all of the fulfillment options that are familiar to you in North America are also available in Europe. They work in exactly the same way to some degree and all the Prime benefits of being FBA. It’s the same over here. Seller fulfilled Prime is a little bit more complex because it’s only available in certain countries. But generally speaking, most people that are launching into Europe are using FBA.
Now, there are three different ways that you can use FBA in Europe in a cross-border program. And those three options are European Fulfillment Network, which is commonly called EFN. There’s the Pan-European program. And then, Multi-country Inventory program, which is very similar to Pan-European. There’s only a few differences. So, just explain how each of those works. This is gonna be important for you when you’re deciding which countries that you’re going to sell into and what your expected order volumes are, that those decisions will dictate what type of fulfillment method that you use, which one of these three that you will use.
So, let’s start with European Fulfillment Network. So, this is the simplest way and the entry level way for a lot of FBA sellers. So, let’s say that you’ve chosen the UK as your home marketplace in Europe. You will move your stock into the UK. And that will go into UK fulfillment centers. Then, you’ll have set up your listings in all of the other different countries that you want to sell into. And then, when somebody in those different countries purchases your product – so, let’s say there’s a French person buying your product from amazon.fr. They order it. Amazon will move the stock from the UK fulfillment center and ship to that customer.
Now, you get all the benefits of Prime, the Prime badge, and how that helps you with buy box, and rankings, and so on. But the delivery is a little bit slower than if that stock was obviously located in France. It’s good for businesses that are just starting out in Europe, don’t quite know what the volumes are gonna be. It’s lower cost, lower operational overhead, and you can test and learn.
The next one is the Pan-European Fulfillment program. So, if you’re much more confident that you’ve got demand across Europe, then you can use the Pan-European Fulfillment program.
So, again, let’s take an example. So, you’ve decided that the UK is gonna be your home marketplace. So, your stock comes into the UK into Amazon’s fulfillment centers. And then, because you’re on the – you’ve told Amazon you want to be part of the Pan-European program, they will move the stock internally between all of the different marketplaces. So, some of the stock will move to Germany, France, Spain, Italy, and so on. And that’d be – over time, that’ll be optimized based on what your sell-through rate is in each of those countries. And Amazon will manage that for you.
The benefits of this are again, it’s all Prime and the benefits you get from having that Prime badge. The big benefit is that the customer gets the products quicker than if they were in the European Fulfillment Network because the stock is held closer to them.
There are some additional costs to doing this because Amazon’s moving your stock for you into multiple fulfillment centers. So, there’s a slightly higher cost, but the net benefit is much greater because of that quicker delivery time that increases your conversion rates. So, that kind of fly wheel gets going. So, if you’re confident in your sales volumes, immediately say if you’re doing about 2,000 units, at least, then this is something for you. So, this is probably the most common way that businesses are selling in Europe.
And then, there’s a variation of this. So, that’s called the Multi-country Inventory program. So, it’s exactly the same as Pan-European in the sense that the goods are stored in different countries and Prime-manageable, and if the stocked in a particular country, then it’s next day delivery and customers love that, so on and so forth. You get all the benefits from that.
The difference is that you’re not storing your stock in the UK, and then Amazon’s moving it. You’re actually telling Amazon that you’re going to send the stock in directly into their fulfillment centers across multiple countries. And you can choose which countries in Europe that is. So, if you know that your products are gonna do really well in Spain and Italy, then you’ll move your stock into Spain and Italy. You’ll ship directly into those countries and get it into the Amazon FC there, rather than having to put it into the UK, and then Amazon moves it before the customer orders it.
So, there are the three options. Just to summarize who or which type of business is more suited to different programs. So, EFN, as I say, it’s better for smaller businesses that are just dipping their toes into Europe. It’s easier from an operational point of view to have the stock in just one country. And you can open up all your listings into Europe and just see what happens.
If your sales pick up and you’re seeing really good sell-through rate, then you can move on to the Pan-European program. And as I say, if you’re launching, Pan-European’s generally the one that we advise for businesses are confident in their sales volumes, the demand is there across multiple countries. And that’s the one to go for. If you want to specify that you’re selling only in particular countries, then you use the MCI, Multi-country Inventory program.
Okay. So, having said all of that, there’s this thing called Brexit happening. So, we’re in a transition period right now. Brexit will officially happen on December the 31st. And that is having an impact on the way that fulfillment is done across Europe. So, I want to raise this now. So, if you are considering selling in Europe, you will need to think about this now, and plan ahead for January the 1st when the UK does completely detach itself from the EU.
So, I won’t read through all of this, but essentially what Amazon have announced is that the UK will no longer be part of those Pan-European FBA programs. So, you can’t hold your stock in the UK. And then, when a customer orders it in France – Amazon can’t move your stock from the UK to that customer in France. And the same with Pan-European. So, they won’t move your stock internally before the customer gets ordered from the UK to Europe. What that’s gonna mean is if you want to sell in the UK and EU, you will need to hold stock in the UK, and then one or more of the EU countries.
So, adds a little layer of complexity, and we’re just advising clients or anyone thinking about selling into Europe, that they’ve got to consider these things right now. Obviously, as Brexit evolves, things are going to change, and Amazon will react to it. But we expect that this is the way that things are gonna happen from now on.
Pan-European fulfillment, the three ones that I mentioned, the EFN, Pan-European, and Multi-country inventory will still work in exactly the same way in the EU. So, between Germany, France, Italy, Spain, and the Netherlands, and Sweden when it comes on board. That will still work in the same way, in the same incredibly efficient way that it already does. It’s just the relationship between your stock that might be held in the UK, or orders that you’re taking in the UK. So, it’s just something to be aware of.
Amazon are doing a lot of work right now to build the FAQ’s. So, you will see that in Seller Central, and just something to keep an eye on as you do start to plan this. But this is something we’re helping with our clients prepare for now.
Okay. So, next we’re talking about tax compliance and regulation. So, we’ve looked at the market research. We think we know which countries we wanna go into. We know that – we still about the operations and the team that’s gonna be required to resource all of that. We’ve looked at FBA and which program we might want to use depending on our size and as expectations in terms of sales and what that means from an operational point of view.
As you’re doing all of that, you need to think about tax, compliance, and regulations. So, let’s just quickly go into that. So, as I say, the term that you use in North America is sales tax, we use a similar term, which is value added tax. It, essentially, the same thing. Obviously, there’s some differences.
The bottom line is if your stock is held in a particular country, in an Amazon fulfillment center, you’re paying VAT in that particular country. So, that’s why the EFN program is great if you’re just starting and you’re not so sure, and you don’t have too many business documents to deal with. But if you’re doing Pan-European and your stocks held in multiple countries, then you will need to be kind of VAT registered in all of those different countries.
It’s always important to be proactive here. Again, Amazon provided a lot of information. They have their own VAT service for European sellers. There’s a lot of information in these links here at a EU level, and then a country level. Don’t be overwhelmed by this or fearful of it. Yes, you are gonna need to set these things up as you start, but there are people that specialize in Amazon tax regulation. You’ll be able to find them through the Amazon service provider network. Agencies like ourselves will be able to help you do a lot of that, and also put you in touch with specialists as well. The important thing is just to be proactive, read upon the subject, and just know what your tax burdens are depending on how you get set up in Europe and which countries that you sell into.
So, just another thing that we talk about with clients. When it comes to tax and shipping, there’s three golden rules that we talk about. So, you must ensure that you’ve secured what’s called the economic operator registration and identification number. So, you’ll see this references the EORI number. And you’ll need your VAT number as well as you prepare your goods for shipment to Europe. Just be proactive. That’s the key thing.
When you’re shipping to Europe, don’t list Amazon as the importer of record. It’s your business entity, or it’s your freight forwarder. If you put Amazon as the importer of record, it will get held up at the fulfillment center, you’re likely to have to pay fees. It’ll take you longer to start selling. So, just make sure you do not do that. It’s a common thing that people mistake, just don’t do that. And make sure that you’ve also paid your duty on the products before they get over to Europe.
Any customs duty that you have to pay. Again, Amazon won’t pay that for you and the stock would just get held up until you sort that out. And it can be very difficult. So, just be aware of these things, get them set up first. They’re not difficult if you do them first, upfront, it’s not difficult. And if you – not aware of them and you ship your stock. And then, that’s when it causes lots of problems and costs. So, just be aware of that and be proactive.
So, once I’ve talked about rules and regulations and compliance and so on, the takeaway that I want you to have from that is that as I’ve just said, it’s a one-off job. Do the research, source some local expertise, and make sure you’ve got that sorted upfront. Once you’ve done that, everything else falls into place. And then, you can focus on the launch and expansion across Europe. And this is where it gets interesting.
So, I really wanna take a moment just to put Amazon in context in Europe. So, obviously, Europe is a continent of more than 350 million people, but it’s fragmented naturally because there’s so many different countries. Now, if you were trying to go across all of these different countries with your own website, or you’re trying to do that through retailers, that is incredibly complex, slow, and there’s far more upfront cost.
If you do it through Amazon, it’s far easier. The audience is already there. There’s no upfront costs of building your own website, creating your own audience, and so on, and so forth. Amazon’s done all of that for you. And it’s the easiest way for you to distribute across these hundreds of millions of people in Europe. There’s no other way of doing it. And there aren’t any other Pan-European marketplaces. So, Amazon doesn’t have a European marketplace competitor like, for example, you could argue it as a competitor in Walmart in the U.S. So, that doesn’t exist. There is no version of Walmart for them to compete against across Europe.
So, I really wanna get that point across that if you are seriously considering selling in Europe, Amazon is the best way to do it. Over time, you will diversify, I’m sure, whether that’s your own website, whether it’s other regional marketplaces, retailers and so on. But the first step, Amazon’s the place to be. And part of the reason why is because they make it incredibly easy to distribute your products across Europe. And part of that is a tool they’ve created called build international listings. And it does exactly what it says on the tin. So, there’s nothing really compares to this in terms of ease of reaching so many different countries, literally, within a few clicks of your mouse pad.
So, just to quickly explain how easy that is, you will set up your European Seller Central account. You’ll sync that with your North American Seller Central account that you’ll migrate your listings over to Europe. So, you can use the same skews, it’ll be on the same ASINs. You’ll select which countries you want to sell in. And then, with a click of a button, those listings will appear on all of those different marketplaces. So, immediately your products are open to all of those different countries.
Amazon will machine translate your content from your U.S. listings. It’s not perfect by any stretch of the imagination, but in terms of just having a listing and having a presence for all of your products in all of those countries, nothing is quicker, nothing is easier than this.
So, really, want to impress upon you that it’s an amazing tool to use. What I will say, though, is having that reach does not mean that you’re gonna immediately be successful. So, this is where the attention to detail comes in. So, although, Amazon machine translates the copy, that’s not gonna be in perfect, localized language, do take the time to research the culture, and tone, and social attitudes, and so on in each marketplace. Get somebody who knows the local language, who knows Amazon in that local country to do the content localization. Even in the UK, make sure you’re using British English, not American English. People will spot it a mile off and it will reduce your conversion rate.
So, just that upfront investment and attention to detail to your listings, and your keyword research, and so on and so forth, will pay off big time. And I really wanna get across to you, although, Amazon gives you all these tools to get reach, it’s then up to you to really start to drive the sales. And localization is the first step. So, I want you to really acknowledge that. And if you’re gonna put your time and effort in anything, it’s localization that’s gonna be the key thing.
So, these are really golden rules to selling in Europe. So, as I say, do not treat Europe as one homogenous audience. Although, Amazon, your Seller Central account is one account, and you manage everything at the same as you would do in all countries, do not treat the way that you create the listings and the way you talk about the product the same in all countries. Do not assume that UK is the best place to launch. Do your product research. Look at the compliance in different countries. It will be different in some cases. In many cases, it’s exactly the same. You’ve got nothing to worry about, but just do your due diligence.
As I say, go the extra mile to localize and even just not translate it with Google Translate. Get someone who really knows the local language. Look at the pros and cons of the various fulfillment methods. And then, make your decisions based on margin. So, knowing that FBA is more expensive in France than it is in the UK, for example, and how you really ... And once you start creating sales, looking at the margin on each product and at a country level, and then starting to really focus on your effort, where the action is and where the profitability is.
Okay. So, now I’m gonna handover back to Pacvue. And they’re gonna talk through some comparisons between the U.S. and European advertising market.
Great, thanks Tom. So, what we’re gonna look at here is some first-party data from Pacvue. We’re looking at real advertising data that we’ve aggregated. And all of this is in terms of U.S. dollars. So, we’re comparing apples to apples here.
And if we just look at this takeaway right now, there’s a couple of big things that stand out. First, across the board, the European marketplaces are much more efficient in terms of advertising dollars than the U.S. market, just at a whole level. So, your CPCs across the board are lower in the European markets. And a return on ad spend is higher consistently across the board.
This isn’t surprising. This actually mirrors a lot of the trend that we saw in the U.S. market over the past few years. As Amazon moves into new categories, into new regions and locales, typically, where there’s wide customer market and low competition, you’re gonna see those low CPCs at first and really high RoAS. And then, as more and more brands, more competitors get into that category, get into those markets, we see them push those CPCs higher and higher in order to reach those consumers. And of course, your RoAS starts to normalize from there.
So, obviously, this will change over time, but right now there’s a pretty wide open field for advertisers to really get into the European market. So, to what Tom said earlier, the fact that if you take Europe as a whole is actually a larger market than the U.S. itself plus how efficient it is to reach those consumers right now through advertising on Amazon. There’s a really green field for advertisers to take advantage of that.
The second thing to really key on the previous slide is just the fact that the European marketplaces are not a monolith. And this is something Tom talked about consistently here, and that we’ll talk about again, is really do your research into the individual markets. Different categories are gonna have more success and have more efficiencies in different countries in Europe. And so, again, watch the CPCs, though, trend over normal rates. The United Kingdom and France, and some of the older markets in the EU starting to get closer to where the U.S. is now.
All right. So, the next slide that we’re gonna look at is some trends over time this year. And so, really what was the impact? Obviously, in the U.S., we had a big impact from the COVID-19 pandemic on advertising and sales on Amazon. And Europe was impacted as well, but again, differently in different marketplaces.
So, what we’re looking at that blue line at the top was the U.S. and we’re looking at average CPC. It took a pretty big dip right at the beginning of the pandemic and the shutdowns that were happening in the U.S. As advertisers pull back on their ad spend, there was a little bit less competition on Amazon. We’re starting to see things normalize in CPCs as we saw in our last quarterly report at Pacvue. CPCs are normalizing to pre-pandemic levels as things start to open up again, supply chains open, and advertisers push more and more dollars back into advertising on Amazon.
In the EU or in Europe, a little bit different. So, the UK actually had the largest drop in CPCs down 14% quarter-over-quarter. This is largely due to supply chain issues. So, just like what we saw in the U.S. We saw a lot of products going out of stock. We saw a lot of supply chain issues being able to actually get inventory into the country. Similar story for the UK hit pretty hard by that. And again, rebounding now as we go into the second-half of the year. Other countries not hit quite as hard within Europe, Italy, and Spain, not quite as large markets, and also not as hit by the inventory issues.
All right. And the next slide, Tom, if you wanna go forward is a return on ad spend. Again, looking at the same month-to-month comparison. So, again, the blue line there is the United States. The red line is Europe as a whole at an aggregate level. France, we actually saw the biggest decrease in April, whopping 20% down. And then, things starting to come back up over the summer months as we saw in the U.S. as well. But across the board, we’re seeing RoAS drop as we get into the holiday season. And this is pretty consistent year-over-year, in August, seeing a drop in RoAS right before we get into the holiday season into Q4, into the Black Friday, Cyber Monday buildup of deals at this point.
And then, the next slide, Tom, is a category breakdown. And so, really the point here that I’m trying to get across is just, yes, there are differences across the different marketplaces. But ultimately differences are down at the category level. So, taking the European marketplaces as a whole is not gonna be as successful for you. You really need to go down, do your market research down at the individual product level, product-line level. Look at who your competitors actually are. And also, be aware that your competitors online are not the same as your competitors in brick and mortar. And that’s especially true for Europe as well.
So, use the data that we have impact you, use some proprietary research that we have, use the expertise of people like Tom, and really understand who are the fast movers on Amazon in these different countries at the category level, and understand where you have open opportunity that you can get into.
Tom, I’ll turn it back to you. We’ve got about 15 minutes left in the webinar. So, couple slides left, and then we’ll take some questions.
Yeah. So, I’ll skate through these ones then. So, team, I’ve already touched on team a little bit. The key thing really is your team structure that works in the U.S. is gonna work in Europe. Obviously, the big difference is you’re gonna need the local language expertise. Now, you don’t necessarily need to hire a French copywriter full-time or whatever. There’s a big freelance network out there in Europe. You can find them through the Amazon service provider network, or you can use agencies like ourselves. But the skill sets are gonna be exactly the same. And the way you organize that is that can be exactly the same.
We do recommend talking to local specialists in tax and compliance before you start. So, it’s an upfront cost, but it pays off in terms of certainty of what you’re doing, and you don’t hit problems later down the line. I’ll give you an example from about five years ago. So, when I first started working on Amazon, I didn’t know about VAT certification. And I was working for a toy company. And we hit our VAT sales tax threshold. And that was the point where we had to provide the documentation. But that just happened to be in November. And November for a toy company is the most important time. And our Amazon account got suspended for like five days until we provided the documents. So, just being proactive means that it’s gonna pay off in the long-term. It’s not gonna hurt you like it did to me all those years ago. And I learned – I’ve learned the lesson. So, I’m just sharing that with you.
And then, the third thing is really, there’s lots of variables to selling across Europe. Obviously, all the different countries, and so on. So, I think taking a testing-and-scale approach is the right thing to do. So, see what happens as you go across all of those different countries. Amazon recommend going across all the different countries with a small amount of inventory and seeing what works. We don’t necessarily recommend that for everyone because there’s an operational overhead to doing so. But I really recommend taking a experimental approach to it.
I think to increase your chances of success, having that local knowledge is important. So, I would recommend that you do try to hire people or a agency that’s gonna help you, I’ll say, increase the likelihood of success and reduce the risk of taking the wrong decisions, not knowing about VAT certification, like I did all those years ago.
Right. So, these are some FAQ’s. I won’t read through all of them. This about nine, and you can read them at your leisure when you get the link from your email.
There’s a few key things I want to just go through. So, you can use your U.S. company, you can use your U.S. bank account. You’re gonna get paid in sterling or euros, depending on which marketplaces you’re in. So, you’ve got to think about your currency conversion. Amazon had a currency conversion offering, but it’s not necessarily the most competitive thing. So, just be aware of these things.
What else can I tell you? You’re gonna use the same ASIN, so don’t worry about that.
Product reviews, so Amazon will migrate your product reviews for a short period of time from the U.S. just to get you going, but you will have to generate reviews in the local country. So, just think about that. Don’t rely on your – there’s no such thing as relying into sales history in the U.S. And that won’t migrate over to Europe. If you’re selling in multiple marketplaces, you are gonna have to hold your stock in Europe in some shape or form. You can’t hold it in the U.S. and then deliver to the customer. That’s just not gonna happen.
Then the other thing’s really – and just thinking about lead times and shipping products. So, making sure that the products are all within the expiry date rules is really important if you’re doing freight, sea freight, and so on. So, just thinking about planning ahead, really, really important thing to consider.
Right. So, final slide then. So, key takeaways. So, Amazon in Europe reaches lots of people. Amazon is getting even more popular this year. And that will be sustained because of the pandemic. And once people start buying on Amazon, they stay with Amazon, and new marketplaces are being opened all the time.
Do your market research before you start. Decide which products you’re gonna sell in which countries, what’s your margin in each of those different countries, how are you’re gonna resource that. Be proactive with your tax and so on. Hopefully, I’ve made that really clear. Learn about the different ways that you do fulfillment by Amazon across Europe. Different choices, depending on your expectations. And also how Brexit’s gonna affect that.
As I say, look at the fees and your margins across different countries. That’s something you might assume to be the same, but it’s not necessarily always gonna be the same, partly because Amazon’s cost, partly because advertising costs are different in different countries, as well as, as Adam’s shown. Invest in the local market with localized content is the best thing you can do. And always remember that what made you successful in the U.S. will make you successful in Europe.
So, Amazon as a system, as a flywheel, works exactly the same way as you launch products, as you expand those principles that have made you successful in the U.S. do translate into Europe. And you will be successful if you apply those same principles.
So, that’s the presentation. There’s a few links here to some of the research and some of the Amazon’s help around all these different rules, regulations, FBA fees, and so on.
So, all I got say really is to thank you for listening. I’ll take your questions now. And Adam will run that. We’re offering a free consultation for any businesses looking to expand into Europe. So, just follow up with Pacvue afterwards. And we’ll be happy to help you start to think about how you sell in Europe. And enjoy the benefits of reaching those hundreds of millions of people. So, that’s it. Thank you, very much for listening. And we’ll go into questions now, I believe.
Yeah. All right. So, we’ve got a few questions rolling in. If you haven’t gotten yours in yet, go ahead and use the Q&A box on the control panel on the Zoom. But Tom, why don’t we just start with, if someone is serious about expanding into Europe at this point, what’s the best way to get started and really work with your agency if they wanted some additional help.
So, yeah. So, let’s assume that we’ve gone through that initial consultation chat. So, that would really be about understanding your products, your business, what your goals are. We could give you guys some advice on what we know about compliance and tax already just so you have a general sense of what it’s going to take. And we’ll give you obviously that local knowledge.
In terms of, if you were to work with us to launch into Amazon, what we would – we’re a full service agency. So, we can take as much control as you’d like and run the whole system. The key things really are around getting the documentation set up, your VAT, any product compliance documents.
We do a lot of work to really localize content. Also learning about what worked in the U.S. and applying that to the local conditions in each of the different countries. And then, helping businesses to go on that path of how they expand from, if it’s one country, how did they get to the next one, how they go across all the different countries.
And really, the key thing also is just keeping on top of how things change in Europe because of Brexit or changes at local level. And that’s really where the benefit comes from using a local operative in Europe.
Great. So, do you have any status or information on the Early Review Program or Vine in Europe?
Yeah, so, they work in exactly the same way that they do in the U.S. So, you’ll be – as long as you meet the standard eligibility requirements, which are the same as the U.S., then you’ll be able to use those programs in the different countries in Europe. You’ll be able to use them in each different country. That kind of thing is seen as separate because reviews are specific to each different country. So, yeah, exactly the same and very useful. We recommend it.
Great. And then, if you have the same ASIN in both the U.S. and EU marketplace if there’s an issue with the U.S. listing, does that also affect the European listening?
No, so, that will be completed entirely separately. So, and the same applies in Europe. So, if there was a – I don’t know, your product got restricted in France, that wouldn’t stop you from being able to sell that product in the UK. It wouldn’t block the listing in the UK. So, yeah, although ... Yeah, the ASIN’s exactly the same. There’s no spillover effect from different marketplaces in that sense.
Great. Amazon’s machine translation, does that also apply to Vendor Central listings, or is that only at Seller Central?
That is a good question. I believe it is. The systems are different in the sense of building your international tools – Build International Listings tool. And obviously, your vendor manager will be able to help you perhaps do that in a more curated manner. But yeah, that localization machine learning is all there. Yeah.
Okay. And can you port over your A-plus content from the U.S. into Europe?
So, Amazon’s have just, I think, last month announced that that’s gonna be – that is possible. So, it was a real pain. Let me tell you to be – to build the same language in the U.S. and the UK and Canada and so on. But now you’re able to migrate that. So, once you’ve linked your North American account and your, let’s say your UK account, you’ll be able to just migrate the content across. Obviously, what I will say is just make sure that then you do localize your American English into British English, but it’s much easier than it used to be.
Great. So, question around the advertising and the RoAS for August, specifically, and just what was causing of the drop. Just my quick answer. We’re seeing more competition get back onto Amazon now. We saw a pretty big pullback on spend in the first half of the year. We’re seeing a big increase now in spend actually over the next – last few months. So, that’s driving up CPCs back to where they weren’t even pre-pandemic levels. So, that’s just obviously bringing the RoAS back down.
And then, a piece of this too, is especially, what we’re seeing in the U.S. is a lot of these brands it’s use-it-or-lose-it budget. So a lot of people, they had this budget in the first-half of the year that they weren’t actually able to use largely due to inventory issues. And so, now that’s being pushed into H2, and especially as we get into the holiday season. And so, we’re actually seeing right now an acceleration of the competitiveness on the platform, which is pulling up those CPC costs for advertising.
Tom, are you seeing anything specific or different in Europe?
Yeah, exactly the same thing. And I think part of it is – everything that you’ve explained. And then, Amazon’s getting back on its feet as well. So, the fulfillment centers are opening up to much more inventory. They’re pushing new promos, and so on, and so forth. So, yeah, that would be the reason. It’s positive news because things are just getting back to normal.
Great. And then, does Amazon provide clear reporting as to which products are selling into which marketplaces?
Yes. So, you’ll be able to see your reporting at a country level. So, you have one – it’s actually the same as if you’re selling in the U.S. and Canada. So, you’ll just toggle between the two different marketplaces in Seller Central. And then, you’ll be able to see the business report at a country level.
Okay. Got a Prime Day question. So, first is Prime Day in the EU? Does it work differently in Europe than it does in the U.S.?
So, yes, there is Prime Day. And it’s exactly – work exactly the same. I believe, I’m hoping it’s gonna happen in October. So, no official date, but yeah, it’s exactly the same. And it’s just as popular.
Okay. What about the – what about the rest of the holiday season, the Cyber Monday, the normal Q4 trends for businesses?
Yeah. Again, so, I would say in terms of consumer trends, the UK is very similar to the U.S. Black Friday, Cyber Monday, very popular over here. I think what you’ll naturally see is in other European countries, there’s gonna be some variation.
So, for example, France, they probably won’t be as interested in heavy discounting for Black Friday and Cyber Monday. It’s just culturally not as popular thing. But in some ways that’s an opportunity for a business. So, if a local business in France isn’t aware or bothered about Prime Day or Black Friday or Cyber Monday, but you come in there knowing that that’s worked in the UK or U.S., then there’s no reason why it can’t work in France. It’s just that maybe brands aren’t pushing it as much. So, in some ways is use what you know about selling and your experience of selling in the U.S. And that often can give you opportunities and advantages.
All right. Okay. Final question here. We talked a lot about the pros and cons of Vendor Central versus Seller Central in the U.S. Those same pros and cons apply in Europe or is there any different considerations?
Yeah, exactly the same. So, this is a question I probably get asked every day. So, yeah, the same debate that you will have in the U.S., it’s the same here in Europe. The pros and cons are exactly the same. I’m trying to think if there is any way that they would be different. I don’t think – I don’t think there really is. Yeah, we tend to recommend Vendor when it’s a particular category that Amazon’s really, really interested in or a product they’re really, really interested in, or it’s just somewhere that it just makes sense from an operational point of view to use vendors.
So, for example, alcohol, all the alcohol brands that we work with use Vendor Central just because it’s far easier from a compliance and fulfillment point of view. But generally speaking, that same debate is that you have about pros and cons exactly the same.
Okay. And we’re right at time. So, first of all, thank you for everyone for joining the webinar today. Thank you, Tom, for all this great insight.
I know we covered a lot of ground today. So, again, we will send out the recording in a follow-up email later today. We’ll also send out the slides, so you can link to all those resources. But by all means, if this is something that you’re considering expanding into other marketplaces, get in touch with us. You can get in touch with Pacvue. And then, we can work alongside FordeBaker, or of course, you’re welcome to email Tom directly if you have additional questions from this webinar.
But again, thank you, so much. And otherwise have a great rest of your day.