E-Commerce Trends Fast and Easy Way to Enter Amazon Europe

In the process of entering Amazon, most sellers set Amazon US as their primary marketplace. This is due to the various advantages such as a relatively low language barrier, the No. 1 market share in the North American e-commerce market, and the high purchasing power of U.S. consumers. However, Amazon is the No. 1 e-commerce platform in the European as well as the North American market. Amazon EU (Europe) accounts for 91% of Amazon US in terms of market size, but the number of sellers is 50% to that of the United States^[1]. Based on these figures, there are many views that the Amazon EU market is a marketplace with more opportunities than Amazon US. What’s certain is that the Amazon EU market is a marketplace that should be considered a top priority when expanding the Amazon marketplace. Entering Amazon EU

1. 1. 1. Documents Required for Entering Amazon EU

      Let’s see how to enter this attractive Amazon EU market, focusing on the differences from Amazon US When entering Amazon EU, there are some additional documents needed along with the required documents enter Amazon US The necessary documents differ depending on whether the seller is classified as an individual or a business. In the case of an individual seller, an English copy of the resident registration certificate and a basic certificate (which requires a notarization in English) is required. For a business seller, a certified English copy of the company registration certificate, articles of incorporation, and shareholder list are required. In general, these documents are required during the 2nd entry process, and the documents to be submitted at this step are specifically requested.

      1. In the case of requesting a passport or an official ID: a copy of the passport and basic certificate (notarized in English)

      2. In the case of requesting Proof of Adress: resident registration certificate in English (Proof of Adress of the name of the responsible person) or company registration certificate in English (proof of address of the company name)

      3. In the case of requesting Statutes: articles of incorporation in English

There are many details to pay attention to when entering the market, so let’s proceed after being well-informed of the actual manual provided by Amazon^[2]

2. European Customs Clearance and Certification

After entering, you are required to check the type of certificates required for the products and perform the necessary procedures for certification. For Amazon US, certifications such as CPC (infant products) and OTC (pharmaceutical products, functional cosmetics) are typically required in the export process. Since Europe has similar certification procedures, the typical certification systems in Europe will be briefly described below.

The first certificate to be introduced is the CPNP^[3] certificate, which is a must-go certification process to sell cosmetics in Europe. If it is not a functional cosmetic, unlike the United States, where the cosmetic certification process is a voluntary registration process (FDA VCRP certificate) of the seller, all cosmetics are subject to mandatory registration in Europe. In this process, it is necessary to designate a responsible person (RP) in Europe. Export can only be carried out when product information is submitted and approval is completed.

Next is the CE marking^[4]. CE marking is a system established in December 1985 that integrates the certification systems that were different for each EU Country and issues a certification mark. CE marking is applied to products that are deemed to contain risks in terms of consumer health, safety, hygiene, and environmental protection among products distributed in Europe. CE marking must be attached to those products. CE marking is required in 21 categories including machinery, medical equipment, electronic equipment, children's toys, etc. So, before entering the Amazon EU, it is important to identify whether a product requires CE marking or not. One precaution is that in the past, sales were possible throughout Europe through CE marking, but after Brexit, the UK has to undergo a separate certification process called UKCA. (The grace period for CE marking in the U.K. Ended on December 31, 2021)

In addition, unlike US exports, where an exporter can simultaneously play the role of an importer through a system called CAIN (Customs Assigned Importer Number), for export to Europe, an importer in Europe must be designated. Amazon does not act as an importer, so you need to find a separate local corporation. Even if Incoterms is designated as a DDP, you must enter IOR (Importer of Record) to export. 3. VAT Issue, a Barrier to Amazon EU Unlike the United States, which does not collect VAT(Value-added-tax) at the national level, you are obligated to pay VAT to the relevant member state if you enter Amazon EU. Like the following, VAT is usually levied at around 20% in Europe. The seller is obligated to pay the VAT. In general, to pay VAT to an EU member state, you must go through the VAT return, payment, and refund procedures every 3 months after completing a tax return and registering as a taxpayer in that member State on your own. This is a rather inconvenient process because it is a process that must be conducted by each member state rather than Europe as a whole. This acts as a major barrier for sellers to enter Europe.
To support sellers who are struggling with this adversity, Amazon is providing global tax agent service for VAT. Amazon VAT service is a tax service available in 7 countries: the UK, Germany, France, Spain, Italy, Poland, and the Czech Republic. When applying for this service, Amazon handles the taxpayer registration and VAT payment procedures, provides major updates, and manages tax reporting. The monthly fee is 33.3 euros, which is applicable only for one member state. If you apply for VAT service in more than two member state then you must pay accordingly(33.3 euros X the number of member states). The time it takes to complete the application varies from member state to member state. More information can be found on the Amazon Seller Central page^[5]. 4. Working Strategy and Pros and Cons of FBA in Amazon EU If you have decided to enter Europe based on the informations above, you need to establish a detailed strategy for entering the European market. The most important aspect in sales is the understanding of the market and consumers and the commercial value of the product. Although Europe is integrated into the EU, it is not possible to recognize Europe as a one identical market because each member state still has different cultures, languages, and economy sclaes. Therefore, we recommend you selecting and entering the main target member state within the EU based on your understanding of products and markets.

At this time, FBA working methods in Europe across multiple borders are divided into EFN, MCI, and Pan-European FBA. First, the EFN(European Fulfilment Network) method is a concept of selecting a base country in the EU and exporting inventory from the FBA warehouse in that member state to the FBA warehouse across Europe. In this case, there is a benefit of only having to pay VAT in the base country, but additional costs are incurred in the export agency process. Second, the MCI(Multi-Country Inventory) method is to stock inventory in each FBA warehouse of different countries. There is no separate export process within the EU in this case, but VAT must be paid to all member states where the inventory is received. Finally, Pan-European FBA is a method of entrusting Amazon to relocate inventory across Europe after stocking the inventory with the FBA in the base country. There is no additional fee for the Pan-European FBA program, but there are application requirements that must be approved by Amazon. More information can be found on the Amazon Seller Central page^[6]. 5. Strategy to Enter Amazon EU If you start selling on Amazon EU, we recommend to start with the EFN method. (This was possible in the U.K. in the past, but after Brexit, this method cannot be used in the U.K.) As mentioned above, the benefit of the EFN method is that only the member state selected as the inventory storage base is subject to VAT tax. If you use the Amazon VAT service, you only have to pay the cost for one member state, and even if you pay the VAT directly, you are liable to pay the tax in only one member state, which can reduce the burden of work. However, these benefits are only granted within the ‘cross-border sales limit,’ so you must be aware of the limit. Limits on cross-border sales vary by member state and are summarized in the table below. If sales occur in a member state other than the member state selected as the FBA inventory storage base, then the VAT only needs to be paid in the member state up to the cross-border sales limit. However, if you exceed the limit, then you also have to pay the VAT in that member state. The EFN method is advantageous in reducing VAT, but there is a set limit and because it is an export agency process, additional costs are incurred. Therefore, if during the initial entry process you manage your inventory in such method and your sales grow in other EU member states, then it is a common strategy to switch to the MCI method, which is a form of managing inventory directly in each member state’s FBA or to participate in the Pan-European FBA program.

After Brexit, Amazon UK has greatly reduced its connection with Amazon EU and the certification requirements have changed, causing inconvenience for sellers. However, since Amazon UK is an English-speaking country, it can overcome a significant level of the language barrier. It is still an attractive option because it has excellent linkage with Amazon US, such as the Amazon US account brand registry through the U.K. trademark application. Due to the recent revision of the VAT law in the U.K., method is changed so that the market place(Amazon) is responble for the paying VAT when selling products under ₤135, which has the benefit of being free from complicated VAT issues partly. In conclusion, if it is difficult to enter Amazon EU and Amazon UK at the same time, we recommend a strategy to enter Amazon UK first, which is relatively easier, establish an understanding of the European market, and then advance into Amazon EU.

So far, we have looked at the process and strategy of entering Amazon EU. It is true that entering Amazon EU is comparatively more challenging than Amazon US However, the difficult entry process is a factor that applies equally to all sellers. If you overcome this obstacle through bold decisions and investments, these entry barriers become a protective barrier that prevents competitors from entering. Therefore, if you have confirmed the possibility in the European market, we recommend focusing on the possibilities rather than the hardships and boldly entering the market with accurate information. If you Established a Strategy for FBA Europe, then Join Cello Square for Your Logistics Management There are several steps to prepare for business expansion. With numerous documents and country-specific regulations, you will often face logistics management at the last step.

We recommend to use Samsung SDS’s Cello Square’s e-commerce products for Amazon sellers who may be confused when they face a logistics management problem that they are unprepared for.

Cello Square supports the successful export of global sellers by providing a guide on import customs clearance for exports to the United States, Japan, Europe, and so forth. By providing real-time delivery status, Cello Square allows users to track the entire delivery process from the domestic collection site to the arrival at the Amazon buyer's location. The biggest advantage is that the fastest delivery is possible regardless of the volume, making it easy for FBA emergency restocking.

Especially, there is an e-commerce consulting package, so you can experience dedicated Amazon FBA service that brings satisfaction with fast and accurate delivery and competitive freight rates by providing an optimal solution from preparation for local import customs clearance to Amazon warehousing.
Cello Square provides e-commerce services, which include Amazon FBA Express (Global), Amazon FBA Ocean Transport (US/Japan). We plan to gradually expand our services in a variety of methods, so please look forward to them.

References [1] 『Amazon Korea’s Introductory Seminar for New Stores Entering Europe』, Amazon Korea
[2] https://sell.amazon.co.kr/global-selling/europe
[3] Korea Testing & Research Institute
[4] ISO Certification Management Support Center
[5] 『How to get started with VAT Services on Amazon』, Amazon Seller Central
[6] 『Pan-European FBA product eligibility (Pan-European FBA Product Qualifications)』, Amazon Seller Central

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