Amazon to simplify post-Brexit fulfillment to EU for UK sellers

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Since the UK officially left the EU in 2020, UK businesses have continued to struggle to sell in Europe. The disruption to business has been widely reported, with exporting companies complaining of additional costs, logistical difficulties and administrative burdens. Others have decided to stop selling in Europe altogether. Ollie McAninch, SEO Specialist at Optimizon, examines its impact on marketers on Amazon and what they can do about it.

We can see that although all trade has suffered from the Covid 19 pandemic, trade between the UK and the EU has failed to bounce back unlike most global exchanges.

Due to the costs and operational challenges of opening dedicated fulfillment centers in the EU, many savvy sellers have turned to Amazon. Shipping directly to Amazon’s European warehouses eliminated some of the post-Brexit issues. Namely, using Amazon’s European logistics to distribute the products to European markets.

However, even with this configuration, friction still exists. Fulfillment through Amazon’s European Marketplaces does not alleviate the administrative pain of getting products to the EU in the first place. This was not helped by severe logistical disruptions due to truck driver shortages and port disruptions.

The good news is that Amazon is now aiming to make it easier for UK businesses to fulfill EU orders from its UK warehouses, and global businesses could also benefit from this new service. Amazon Optimizon experts tell us how and why it’s designed to make life easier for UK and global businesses selling in the EU.

Amazon’s European distribution network

Fortunately, Amazon will restart its European distribution network this year. From November 2021, a pilot will be launched for eligible business partners, where processing from the UK to the EU will be reopened via the European Fulfillment Network.

This means that UK sellers can sell to European markets through UK fulfillment centres. In other words, this will allow you to store your products in Amazon’s fulfillment centers in the UK, and Amazon will re-ship your orders to the EU.

Global exporters looking to break into UK and EU markets will follow with interest. By using the European distribution network to execute product sales across the UK-EU customs border, businesses can reduce administrative burden by authorizing Amazon and its affiliates to export goods on their behalf.

Who will be eligible?

Initially, Amazon is running a pilot program and sellers must be invited or applied, provided they meet certain criteria.

To sell between the UK and EU using the European fulfillment network, you must have an Amazon EU account, with offers for your products in the UK and EU (Germany, France, Italy and/or or Spain).

Your business must have Fulfillment by Amazon (FBA) shipping and export settings enabled. Additionally, you must have stock stocked in UK fulfillment centers, and the same Stock Keeping Unit (SKU) must be provided for your UK and EU offerings.

The price of an eligible item must not exceed €135.

What are the costs?

European Distribution Network charges will apply, so it is important to ensure that prices reflect European Distribution Network charges and VAT.

For a list of European Fulfillment Network fees, go to FBA Fee Change Page and scroll down to the table under Standard FBA Fulfillment Fee (per unit, sold on Amazon).

Remember that while FBA fees to Europe may seem steep per item, it’s important to realistically compare the cost of fulfilling your own company’s items.

To ensure that fees and VAT have been reflected in your prices, you can either adjust prices manually or use Build International Listings Pricing Rules to adjust them automatically.

Is Amazon’s European distribution network profitable?

We often hear complaints from our customers about fees charged by Amazon for FBA services and other costs (such as packaging). However, companies must fairly compare these fees with the costs of providing these services themselves. In most cases, we find that companies are unable to compete with Amazon when it comes to their world-class logistics.

If you sell products below €135 that can absorb Amazon European Fulfillment Network fees and VAT (which is a legal requirement, not an Amazon cost), the service could help your business comply with the EU, without the associated administrative headaches.

The mere fact that you will once again be able to fulfill European orders from a UK-based Amazon warehouse will be music to the ears of many UK sellers. Meanwhile, global brands looking to access the UK and European markets will follow with interest.

As always, if you need help setting up or optimally managing any aspect of your Amazon business, don’t hesitate to contact the Optimizon team of experts.

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