Are you selling on Amazon.com and considering an expansion to the UK or European marketplaces? Let us break down some of the main differences you need to consider.
Amazon is the biggest business-to-consumer online selling opportunity in human history! With marketplaces all over the world and millions of active users, it’s the place to be for any eCommerce seller.
Currently, there are 1.16 million active sellers on the Amazon EU marketplaces and the US has a whopping 2.5 active million sellers – that’s a lot of competition in comparison to the EU marketplace, especially as Europe and the United States are similar in size.
Breaking into the US marketplace at this stage in the game is going to be a lot harder and take a lot longer compared to the EU.
If you’re already selling on Amazon in the US, less competition could mean that your unique selling point could be new and exciting to the European Marketplace, resulting in a massive increase in sales for you and your business.
With more and more European Country Marketplaces being added every month, the market size is only getting bigger as more consumers have the ability to buy from Amazon on their local platform.
Although a product sold in the US may be new and exciting to the EU marketplace, you need to factor in the different cultures. What sells in the United States might not sell in Europe, and vice versa.
The changes from the environment (such as the weather) to different holiday celebrations and way of life should be factored into deciding which products you can feasibly sell in each marketplace successfully.
One big cultural difference you’ll notice very quickly is the language barriers that exist with the numerous different countries across the European Market.
Europe has many benefits, the language barrier not being one of them!
In the US, there may be subtle differences in slang within different regions that you will need to account for, and when selling into the UK you’ll encounter this even more so. But the basics of the English language remain.
In Germany, France, Italy, the Netherlands, Spain, Sweden etc this unfortunately isn’t the case. You will need your whole listing and backend keywords to be in the native tongue so that customers can find your listings.
Amazon will automatically translate your listings for you if you are enrolled in Pan-European FBA which is a great starting point, however, they are not usually optimized. Therefore, it is best to get your listings translated professionally, which can be quite costly depending on the number of SKUs you have.
One of the main differences between selling in the EU and selling in the US is tax.
Taxes in the UK and EU
In the EU, you pay what is called “Import VAT” which you pay for your goods to come into the country. This is calculated based on:
Value of products + % of customs duty + shipping costs + insurance
This usually works out at around 20% of the value of the shipment.
There used to be two choices of schemes, Standard Rate and Flat Rate. Unfortunately, the Flat Rate scheme is now not supported by Amazon. Therefore, only the Standard Rate scheme is available, but the VAT rates do vary from country to country.
The Standard Rate allows you to reclaim any Import VAT you pay, and you owe 20% VAT on each sale to HMRC (UK governing body).
If you store, move, or sell goods in multiple EU countries you may be required to register for VAT in multiple countries. Once you have products stored in any European country, you will need to ensure you are VAT registered there.
You can have your products in one sole country and then fulfill orders to consumers in other European countries. However, you will need to keep an eye on distance selling thresholds because once they are exceeded you will need to get VAT registered in that country.
The VAT distance selling thresholds vary between each country. At this time for Germany and the Netherlands the selling threshold is 100,000 euros. For France, Italy, and Spain it is 35,000 euros.
There are also different VAT rates for different product types. There is always a standard VAT rate and usually a reduced rate and zero rate. For more information on the different VAT rates around the EU please refer to the following link here.
Amazon Sales Tax in the US
In the US, sales tax is much more complex as it is applied at the state level and varies according to the laws of each state.
The tax rate applied to your order will be the combined state and local rates of the address where your order is delivered to or fulfilled from. For example, if you live in a state that does not impose a sales tax you may still see tax calculated on your order if shipped to another state.
The amount of tax charged on your order depends on many factors including the following:
The identity of the seller
The type of item or service purchased
The time and location of fulfillment
The shipment or delivery address of your order
You can find out which US states may be subject to tax here.
Hopefully, that helps break down some of the main differences between the US and EU Amazon Marketplaces covering 3 key areas that are crucial to understand before you start selling cross border. If you need support with any aspect of your expansion, please do get in touch we offer an end-to-end solution with services in Compliance, Account Management and Warehousing and would love to assist in making your expansion to Europe a success!