Why spent a ton of money, time and resources managing two operations, double stock and additional European partners? Registrations, thresholds, clearances, customs and tax authorities can hold a big draw when you want to grow in a European market. Why would you need a European warehouse for your ecommerce shipments into Europe? Especially when you already have your own advanced fulfillment center or local 3PL partner in your home country for your domestic shipments.
First question to be answered
Do you really want to sell into the 300+ million European e-shoppers markets? Or? Are you just offering a shipping solution?
As you might have guessed, it’s more complicated than putting something in Google translate and getting international shipping packaging. Is your company up to the daunting task of expanding or growing to a whole new European market?
Amazon looks like a good, simple and easy start when you are not familiar how Europe works. If that’s your strategy, it’s nearly impossible to really build your brand in Europe or stop with Amazon in Europe and finally trying to localize your European sales channels.
After starting with Amazon, it is even harder to get European visitors to your .com website and start building a customer relationship. Eventually your European customers only know you and your products from Amazon (also known as the world’s biggest product search engine), only looking for the best prices.
What are the challenges?
Brands & Retailers are constantly being asked to do more for less. Looking for opportunities and making calculated risks is traditionally key to making it in the retail space. To achieve the same goals from your home country (a happy and returning customer, being in control of the customer journey, increase of the conversion rate and finally sales), you need to know the European market. If you’re not thinking about Europe and the possible challenges, it’s likely that you’re missing out.
- Localisation of the brand(s) and product(s) in 26 different European countries
- Return on investment of marketing efforts/cost
- 26 different European VAT percentages and customs authorities
- 26 different European company registrations and thresholds
- Competitive and affordable shipping costs and transit times into Europe
- An all-inclusive and customer friendly checkout for European customers
- Complicated cost-effective European 3rd party fulfillment center(s) or fulfill from your home country
How do you beat the complex challenges?
Here’s a checklist of ways to beat the heat when it comes to transitioning to European markets:
- Carefully consider technology and partner platforms based on your products, market, and competitors in the market you’re tackling.
- Find the right partner and market your product in Europe for affordable and fast shipping.
- Use social media to sell as much directly to consumers to avoid partner revenue drain.
- Focus on products that are unique to your brand to stand out in crowded markets and create demand.
- Small details such as changing from a “.com” to a “.e” or “.fr” make the European market more comfortable with your product’s website.
- Partnering with a localization expert help you ensure that your message is tightly aligned with a target customer’s need from country to country.
New European ecommerce rules adopted
The Council adopted new rules making it easier for online businesses to comply with VAT obligations. They are not implemented immediately but gives non-European brands and retailers who want to be compliant an advantage. The current threshold in the US is $800 per ecommerce shipment from outside the US. No import duties and taxes are applicable. Europa has a complete different threshold. Europe has three thresholds making thing complicated. Below € 22 no import duties and taxes, below € 150 just taxes and above € 150 import duties and taxes.
Part of the EU’s ‘digital single market’ strategy and new ecommerce rules, the proposals are aimed at facilitating the collection of VAT when consumers buy goods and services online.
This should have supposed to revamp the rules making the European VAT system fit for the digital economy? By reducing red tape, Europe wants to achieve both cost savings for non-European brands and retailers and increased tax revenues for the different member states.
Don’t want to be surprised?
The new rules extend an existing EU-wide portal (mini ‘one-stop shop’) for the VAT registration of distance sales. And they establish a new portal for distance sales from third countries with a value below €150. This will reduce the costs of complying with VAT requirements for business-to-consumer transactions.
VAT will be paid in the member state of the consumer, ensuring a fairer distribution of tax revenues amongst member states.
Cross border ecommerce liability
Additionally, the new rules make online platforms, last mile companies and postal services liable for collecting VAT on the distance sales that they facilitate. Even for shipments below € 22. This was not foreseen in the Commission’s proposals but has become an essential provision of the package. Most goods that are imported for distance sales currently enter Europe VAT-free. Either with an incompliant invoice or dataset, resulting in unfair competition for European businesses. Due to the new liability, platforms, mail services and integrators are not willing or able to take these financial risks which will create even higher shipping and clearance cost.
The timeline for the package – a directive and two regulations – was adopted without discussion at a meeting of the Economic and Financial Affairs Council. The new rules set out the following timeline:
- introduction by 2019 of simplification measures for intra-EU sales of electronic services;
- extension by 2021 of the one-stop shop to distance sales of goods, both intra-EU and from third countries, as well as the elimination of the VAT exemption for small consignments.
So, in other words. If you are already selling into Europe via a platform, shipping via a mail service and or integrator service with the incoterm DDU (delivery duty unpaid), you need to act now. Your sales will stop from the first day the physical customs checks will start and all shipments (platform, mail service or integrator service) need to be cleared as a single shipment as soon as they arrive in Europe.
Do you want to stay in control of your ‘last mile’ and customer journey? Do you still want to be flexible, cost competitive, complaint and would like to get a more in-depth insight for your current and future European sales strategy?
Contact us via our website or send an email to email@example.com and we are more than happy to schedule a call how we can help you doing more business in Europe and how to increase your European sales in a compliant way.