If you are located in Europe and want to jump over to the US, or in the US and want to go in Europe, in India, in Australia… Amazon seems to be a good starting point.
According to Amazon, “Amazon makes selling in Europe simple and easy.”
How much of that is really true?
Let’s review three key factors which need to be well organized before jumping into international mode:
- Logistics: how should you organize your supply chain?
- Value Added Tax: How to handle that?
- Language and Localisation: parlez-vous français?
The Amazon model has been designed based on lean logistics, quick delivery, even a few hours in the main cities. Amazon’s famous A9 algorithm – the one which decides of the ranking of your products, of the orders, of everything – will rate very strongly the availability of your products. Your choice of logistic solution will have a big impact on your availability, and therefore of how your products will be ranked.
First scenario: Sellers
Sellers sell directly on the marketplace, and can have their stock inside Amazon – the well known FBA (Fulfilled By Amazon). This option makes logistics simple: you decide the amount of stock you wish to send, and Amazon handles the inland logistics for you. In Europe you have access to pan-European FBA (UK, Germany, France, Spain, Italy), in the US to pan-America (US, Canada, Mexico) so you could decide to send products to one country and have access to all these different markets. This makes your logistics much easier to handle. You will have only to ship in one country, in the different locations the system decides. The system will then make your products available in different countries.
The pan-zone FBA is the easiest solution for you in terms of logistics. However, it has to be in line with your sales strategy: are you comfortable selling directly, and if not you will need to consider the vendor option.
Second scenario: Vendors
Vendors can only be invited to the system. Say you have received an invitation or got help from an Amazon agency to get one, now what? You have several options.
The first one Amazon will probably offer you is direct import: Amazon will take care of the import of your products in North America or Europe. Benefit: short-term much easier because you do not have to worry about customs, transport, and logistics. Drawbacks: your delivery time will be over three weeks, therefore impacting a lot your availability hence your performance on Amazon.
The other option is to deliver locally – this means owning or subcontracting a warehouse locally. This option can handle also multiple countries in the EU or the US. Benefit: you have a better chance to handle properly your account, be reactive (with promotions, advertising, and reacting quickly to orders). Amazon will expect to order on a Monday, and for you to be able to ship by Friday. Drawbacks: this means additional costs locally, and another warehouse to take care of.
Depending on your sales strategy, on your short / medium / long term target you will want to choose different options: a pan-area FBA or direct import could be a good short-term option/test. If you want to establish a long-term business, investing in a local presence to be able to handle quick deliveries would come into question.
Value Added Tax – VAT
All products sold in the EU and in North America are subject to VAT regardless if you have a local company or not. Depending if you are selling as a seller or as a vendor, this will have different impacts.
Selling direct B2C: The Seller Option
As a seller, you will sell directly to end consumer. That means you will sell including VAT, and that you will be receiving the VAT. In this case, that means for each country you sell in, you will have to register a VAT account. In Europe, for example, that means registering to get a VAT account for each country. There is a threshold though for each country, a limit under which you do not need to register yourself. Amazon Seller Central provides very good VAT reports making your life easier. Some companies offer services to make your VAT declaration easier.
However, this means that the seller option if easier from the logistics point of view, is more complicated from the VAT regulation point of view, as you will have to register in each country in Europe, and each state in the US.
Selling indirect B2B: The Vendor Option
As a vendor, you sell to Amazon, therefore in B2B, with an order and an official invoice. If you are based in the same US state or EU country as the Amazon’s warehouse you’ll be shipping to, you will include the VAT to your invoice and deduct it in your accounting. When you are exporting, you will not include VAT to your invoices.
If you open a local warehouse to deliver Amazon, you will have to register also for a local VAT, which could be provided by your warehouse subcontractor.
If from the logistics point of view the seller-FBA solution was the easiest, in terms of VAT, the vendor solution will be easier to handle and will need much less paperwork with the administration.
Language and localization: Hablas Ingles?
Whether you are a vendor or a seller, the localization topic is the same. You can ask yourself as a customer if you land on a product page in a foreign language, or translated by a machine, how you feel. This is specifically true in Europe with 5 different languages.
Having consumers in mind
For a short-term test, you might consider having most of the content in English, and focusing on English speaking countries (the UK, the US, Canada), and then expanding in the other countries. But to expand in the other countries you will need translation and SEO optimization for each language. In this case, you will need to proceed by importance of market: in Europe, you can start from the UK and/or Germany, then France, Spain and Italy. In North America start with the US, then Canada and finally Mexico.
The challenge of having local language for end users is the same as for sellers. Both Seller Central and Vendor Central are always available in English and in the local language. One oddity though: Amazon Marketing Services (AMS), the advertising platform linked to Vendor Central is only available in the local language. If you are very well used to it in your own language, it should not be a problem, however, it can become tricky, especially as all functions are not available in all countries.
“Amazon does make it easier to go global”
Finally, we can say Amazon does make it easier to go global. But they do not prevent you from planning, checking and making a proper plan before moving ahead. Beware of simple promises of a problem-free solution – that does not really exist. You will need to work hard, plan well, and budget for extra costs (local warehouse, VAT registration, translation or local support.)