Amazon FBA:
Selling Options, Advantages, VAT duties

If you are selling on Amazon Europe, you can decide between two different possibilities of warehousing and despatch of your products: FBA (Fulfilment by Amazon) or FBM (Fulfilment by Merchant).

Selling with Amazon FBA

Fulfilment by Amazon (FBA) is a service of Amazon which allows commercial sellers to store their goods in local warehouses of Amazon. They will be stored there until an order from close is made and the product will be delivered from the warehouse which is the closest to the customer.

This way, customers get their products very quickly and FBA products are trusted most by the customers.

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Advantages of Fulfilment by Amazon (FBA)

Fulfilment by Amazon offers a variety of advantages for its users. Depending on your company, there are several fulfilment types to choose from and logistics, warehousing and distribution will become much easier.

Furthermore, the visibility and consequently the traffic on Amazon will increase as FBA-products have, because of the fast delivery, the same listing as Amazon’s products and for sellers who want to expand to more than one European Amazon market, FBA is the easiest and the most cost-efficient way.

Of course, this service is not free of charge and a fee has to be paid on every sale.

Many Amazon Sellers make use of FBA and let the e-commerce giant take care of the entire logistics process and the sellers themselves can reduce their workload. However, the taxation aspects are what the sellers needs to do by himself.

Naturally, all active sellers need to register with the local tax authorities before they start selling and tax returns and filings will be due on a regular basis.

VAT duties for FBA sellers

As mentioned before, using FBA requires at least one proper VAT registration as well as ongoing VAT returns. Expansion within Europe can lead to a need of additional VAT numbers (see distance selling).

So, the seller needs to ensure vat compliance, not Amazon. Since 01.01.2019, Amazon is liable for VAT fraud of people selling on the platform. Germany and France for example have passed new VAT laws that makes marketplaces liable for any kind of VAT fraud that happens on their platforms.

To avoid this liability, Amazon and eBay ask sellers to provide them a new VAT form (F22). This excludes them from being liable and at the same time allows the authorities to access all sales data from the past.

A Comparison: EFN, CE or PAN EU?

This chapter shall remove the last doubts and show which way of fulfilment is the best for a company taking into account the current size and the turnover. All 4 FBA types will be explained and compared. These are namely, the European Fulfilment Network (EFN), the Central Europe Programme (CE), Pan-European FBA and Multi Country Inventory.

With each of this services, different rights and duties come along. Using the option that fits best to a company in its current state can boost sales tremendously.

EFN: Amazon’s European Fulfilment Network

The European Fulfilment Network (EFN) allows FBA sellers to store their inventory in one of Amazon’s local Fulfilment Centres all across Europe and fulfil national orders, or orders coming from other European marketplaces, from the same local inventory pool.

The European Fulfilment Network simplifies the inventory management by keeping all inventory in one local pool, in one Fulfilment Centre, maximizing the control and flexibility of all goods.

FBA inventory can be listed for sale on all of Amazon’s European Marketplaces using a single selling account. Orders from these marketplaces will be fulfilled from the FBA inventory using Amazon’s fast and reliable European Fulfilment Network.

Here you can find Amazon’s fulfilment fees.

Who is it for?

The European Fulfilment Network (EFN), a good opportunity for businesses in the early stage of development. EFN allows you to sell throughout Europe, however, when a certain export limit is reached, storing all over Europe with another FBA type can make more sense. As just mentioned, for the beginning it’s just perfect. Especially because it’s little paperwork, you get a higher visibility on Amazon and of course the Amazon Prime status.

Advantages

Prime

Only 1 VAT number require

Perfect for small businesses

Disadvantages

Higher storage fees

Higher cross-border fees

Longer delivery time

If EFN is not enough for you and if you are already selling in Germany, the Central Europe Program could be interesting for you.

CE: Central Europe Program:

The Central Europe Program allows storing in Germany, Poland and the Czech Republic. It’s ideal for companies that are a little bigger, starting at about a turnover of 500 units/month.

FBA inventory can be stored in all three of those countries, additional fulfilment networks can be used, the fulfilment fees per FBA unit are 0.50€ lower and the shipping efficiency is increased.

Advantages

Lower fulfilment fees (0.50€)

Additional fulfilment centres

Shorter delivery time

Disadvantages

VAT registration in Poland and in the Czech Republic

More paperwork and tax duties

Many sellers opt for the Central Europe FBA program, especially if they already sell their goods in Germany. CEP can be a worthwhile expansion strategy. For Amazon sellers who want to reach the largest possible number of customers in Europe, there is something else: the Pan-European Fulfilment Network.

Selling with Pan-European FBA  

Pan-European Fulfilment by Amazon: this service helps FBA sellers to sell their goods to Amazon customers across the EU more efficiently than ever before. Fastest deliveries and the lowest costs are only two of the many benefits. More about that now.

Pan-European FBA enables sellers to deliver their inventory to a local fulfilment centre for Amazon to take care of the logistics; Amazon ships the sellers’ products across its European Fulfilment Network according to the anticipated local customer demand. The product will then be fulfilled from the closest warehouse.

The Pan-European FBA service can also help sellers to grow their business by making their products eligible for Amazon Prime, meaning they will have access to millions of Amazon’s most loyal customers, along with Amazon’s trusted and acclaimed customer service.

How Pan-European FBA works:

1.      Start:

Sellers enrol products that are eligible for Pan-European FBA.

2.     Shipping:

Sellers ship Pan-European FBA enrolled products to a local Amazon Fulfilment Centres, based on the anticipated local demand (no extra costs for the seller);

4.     Orders:

When customers order the products, Amazon will handle the fulfilment logistics and provide fast, reliable delivery from the closest fulfilment centre where the product is available;

5.     Fees:

For the delivery, sellers will only pay the local fulfilment fee of the marketplace in which the product was ordered, there is no cross-border fee.

Is Pan-European FBA the right choice for me?

It the best solution for big sellers. PAN European FBA gives sellers the opportunity to store their goods in all of Amazon’s warehouses across Europe. This ensures the fastest delivery and further, all products get Prime status. The customer usually gets his order on the next weekday.

Advantages

Low fulfilment costs

Fastest delivery

Prime status

Disadvantages

VAT Registration in all countries you store in

Loads of duties and paperwork

With the right strategy and reliable partners, Pan-European FBA is definitely worth striving for. It’s the biggest of all FBA types, most customers can be reached and the fastest delivery time and the low fulfilment costs are also plus. At the end, it depends on you actual turnover and you should sell at least 1,500 units/month.

Conclusion

FBA sellers should focus on their sales when it comes to the decision which service to pick. The rule of thumb is the following: EFN, if the monthly turnover is less than 500 units, CE when the turnover is between 500 and 1,500 units per month and PAN EU if the sales are higher.

However, it can also be a possible expansion strategy to choose PAN EU right in the first place – but only if it pays off in the end. Mainly the increasing bureaucratic burdens and the administrative duties are factors that slow down the expansion process or simply overwhelm the seller. But at the end, Pan-European FBA is the level everyone should aim for.

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