Are you selling on Amazon Europe, or planning to in future? In essence, you can choose from two options for warehousing and dispatching your products. These are Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). Here, we’ll take a look at the advantages of Amazon FBA.
Amazon FBA selling options
Fulfillment by Amazon (FBA) is a service offered by Amazon. Essentially, it allows sellers to store their products in local Amazon warehouses around the globe.
Your products remain in these Amazon warehouses until a customer orders one from a nearby location. At that point, the product is dispatched from whichever Amazon warehouse is closest to the customer.
This ensures that customers receive their orders as quickly and smoothly as possible. Moreover, Amazon customers trust FBA delivery.
Advantages of Amazon FBA
- Range of possible fulfillment types, depending on your company
- Simplified logistics, warehousing and product dispatch
- Reduced seller workload
- Simple and cost-efficient expansion for FBA sellers on additional Amazon Europe marketplaces
- Due to quick, reliable delivery with FBA, FBA sellers gain the same listing as Amazon products
- Increased seller visibility on the Amazon platform
- Growth in traffic on the Amazon platform
Key points to note
Most importantly, Amazon takes care of the entire logistics process. However, sellers do need to pay an Amazon FBA fee on each product sale. In addition, sellers need to manage taxation procedures for themselves.
All Amazon sellers need to ensure they register for VAT with their relevant local tax authorities. Sellers must also submit their tax returns as required.
Amazon FBA: VAT for sellers
As an Amazon seller, you’ll need a minimum of one complete VAT registration to sell your products on the platform. You’ll also need to submit regular tax returns that include your VAT data.
If you expand onto various Amazon Europe platforms, you may need to organise additional VAT numbers.
As such, it’s each seller’s responsibility to regulate their own VAT registration, not Amazon’s. As of January 1 2019, Amazon is liable for any VAT fraud committed by sellers on its platform. In order to try to avoid this liability, Amazon now requires sellers to submit a VAT F22 form.
This form waives Amazon’s liability for seller VAT fraud on the platform. In addition, it allows the relevant authorities to access all sellers’ sales data history. You can find out more about Amazon VAT here.
Is EFN, CEP or Pan-EU the right choice?
Below, we’ll outline the advantages and disadvantages of these various Amazon fulfillment options. That way, you can easily choose the right one for your products.
It’s important to note that each fulfillment option carries its own tariffs and obligations. As a result, it’s vital to choose the one that best suits your company’s current scale and turnover. Then, you’ll be set to effectively boost your sales.
EFN: Amazon’s European Fulfillment Network
EFN lets FBA sellers store their products in Amazon warehouses within one European country. From there, the products are sent out to fulfill national and cross-border orders across Amazon’s European marketplaces.
Fundamentally, EFN simplifies inventory management. By keeping all products in one local inventory pool or Fulfillment Center, EFN optimises product control and flexibility.
As a seller, you can list products for sale across all Amazon’s European marketplaces using a single seller account. Due to this, EFN is best for sellers with a turnover of less than 500 units per month.
Advantages of EFN
- Great opportunity for early stage businesses
- Selling opportunities across Europe
- Amazon Prime status
- Increased visibility on Amazon
- Low levels of paperwork
- Only 1 VAT number required
Disadvantages of EFN
- Higher storage fees
- Higher cross-border fees
- Longer delivery times
- Potential for reaching export limit, at which point you should choose another FBA option
CEP: Amazon’s Central Europe Program
The CEP allows sellers to store their products in Germany, Poland and the Czech Republic. It’s best for companies with turnover between 500 and 1500 units per month.
If you’re already selling your products on Amazon’s platform in Germany, the CEP could be a handy expansion option.
Advantages of CE
- Store inventory across 3 countries
- Fulfillment fees reduced by €0.50
- Increased shipping efficiency
- Option of using additional fulfillment networks
- Shorter delivery times
Disadvantages of CE
- VAT registration required in Poland and the Czech Republic
- Increased paperwork
- Increased tax duties
Pan-EU: Pan-European Fulfillment by Amazon
Pan-EU FBA is a worthwhile option for sellers aiming to reach as many European customers as possible. Primarily, it offers low-cost, rapid deliveries.
With this FBA option, sellers deliver their products to a local fulfillment center. Then, Amazon manages the rest of the logistics chain. First, inventory is delivered across its Europe-wide network based on predicted local customer demand. Then, once actual orders come in, these are fulfilled from the closest Amazon warehouse.
Pan-EU FBA is the best option for large volume sellers on Amazon’s European marketplaces. As a result, it best suits sellers with turnover of over 1500 units per month.
Advantages of Pan-EU
- Sellers become eligible for Amazon Prime
- Access to Amazon customer service
- Increased visibility on the Amazon platform
- No cross-border fees, only local fulfillment fees
- Fastest Amazon delivery times
Disadvantages of Pan-EU
- VAT registration required for all countries where inventory is warehoused
- Significant paperwork and tax duties
Amazon FBA: which type is right for you?
Fundamentally, the choice between Amazon’s EFN, CEP or Pan-Eu network will depend on your average monthly turnover (< 500 for EFN, 500 – 1500 for CE, 1500 < for Pan-EU).
Looking for more advice on which Amazon FBA option will help you succeed on Amazon? Contact the Sawa team.