What changes for Amazon vendors does BREXIT, the exit of the UK from the European Union, bring about? How will sales in EFN and PAN-EU model look like after BREXIT? How big will the changes be and how to prepare for the changes effective from January 1, 2020? The UK is preparing big changes for online retailers.
What kind of change of vendors to Amazon does Brexit, i.e. the British exit from the European Union, bring with it? How will sales in EFN and PAN-EU model look like after Brexit? How big will the changes be and how to prepare for the changes effective from January 1, 2020? The UK is preparing big changes for online retailers.
[NEWS] – You can read the latest Brexit information >> here
In mid-August, Amazon announced major changes for its FBA dealers using the EFN or Pan-EU model in the UK. The FBA sales operations will be divided into European and British services. The EFN model in the UK will come to an end, as will transfers of goods for Pan-EU between the EU and the UK. Online retailers in the UK need to be aware that they will no longer be able to process orders from all EU markets from their warehouse in the UK.
What is the European Order Execution Network Amazon (EFN)?
The European Fulfillment Network (EFN) enables FBA dealers to store their goods in one of Amazon’s local logistics centers across Europe and process all orders from all 5 European markets from the same local pool. This makes it much easier for the vendor to ship their goods to logistics centres in one country, here in the UK, which in turn are shipped to buyers in any Amazon market in Europe.
Brexit and EFN
From January 1, 2021, goods of EFN vendors stored in the UK will be shipped to national orders only and will not be shipped to orders from other EU markets. This means that goods will have to be stored in EU countries in order to sell products to EU customers. At the same time, sellers will be required to register for VAT in the individual EU countries where the goods are stored – VAT registration is mandatory. Having only one VAT number will no longer be sufficient.
What is the Pan-EU FBA?
Pan-European Fulfillment by Amazon (Pan-EU) is a service for Amazon retailers using the FBA, which allows goods to be stored in all Amazon warehouses in Europe and from there products are shipped directly to the buyer. This means storage in up to 7 countries, providing the fastest delivery time and lowest delivery charges. Using the Pan-EU FBA you send goods to a specific warehouse and Amazon distributes goods to other warehouses in European countries.
Brexit and Pan-EU
This will change as the UK leaves the EU. From January 1, 2021 it will not be possible to move goods between warehouses in the UK and the EU. This means that you will have to have goods in the UK and the EU or you will choose only one of these options.
How to continue selling in Europe?
Salesmen on Amazon:
- They will be able to sell mainly in the EU and then store goods in Amazon warehouses in Germany, France, Spain, Italy, Poland, Czech Republic;
- And/or store goods in the UK for sale on the local UK market
So if you want to be able to sell as before in all Amazon markets in Europe you will have to use the two solutions above or choose EU or UK. For many sellers, this may involve additional tax obligations.
What changes for PAN-EU vendors?
Sales in the Pan-EU variant will still be possible with the only difference – the goods will have to be stored in the UK and EU. Except that you send the goods to warehouses in the EU and to the UK separately. It is very likely that Amazon Pan-EU will continue to be the most profitable FBA model for many Amazon retailers.
Amazon FBA Brexit announcement
Regarding Brexit and its impact on Amazon salesmen in Europe, Amazon announced the following:
“[…] The UK is due to formally leave the EU’s Single Market and Customs Union from January 1, 2021.
While UK-EU negotiations are ongoing (including determining what tariffs, if any, will apply), from January 1, 2021 there will be a customs border between the UK and EU which will have an impact on businesses working across this border.
This will have the following impact for Amazon Selling Partners from January 1, 2021:
- FBA offers using EFN will not be fulfilled across the UK-EU border.
- Pan-European FBA inventory transfers will stop between the UK and EU (however, Pan-European FBA will continue to transfer inventory within the EU region, supporting your sales on Germany, France, Italy and Spain sites)
- To mitigate the impact of these changes, you should consider splitting your inventory and sending it to a fulfilment centre in the UK and the EU, so that you have sufficient stock either side of the new customs border
- This may require you to ship your products across the new UK-EU customs border and provide additional information as part of a customs declaration
Your Amazon business will continue to operate as usual until January 1, 2021. However, there are actions you can start taking now to prepare your business for the new customs borders. For information about how you can prepare for these changes, and for all of the latest information about Brexit, please see our BREXIT guidance help pages and the UK government website.
Thank you for selling on Amazon. We remain committed to supporting your business selling in the UK and in the EU as we make this transition, and we will continue to provide the latest information to support you and help your business thrive in the future.”
United Kingdom – sales platforms responsible for collecting VAT from foreign sellers since 1 January 2021
At the end of the Brexit transition period, the UK government will introduce a new model for collecting and accounting for VAT through sales platforms. This change will ensure that goods from EU and non-EU countries will be treated in the same way as those from UK companies and will improve the effectiveness of VAT collection from foreign sellers.
Here are the most important changes concerning VAT for foreign sellers:
- Abolition of the low consignment value relief, which exempts from VAT on imports of goods with a value of GBP 15 or less
- Online sales platforms (OMP) will be responsible for collecting and accounting for VAT
- For goods shipped from abroad and sold directly to consumers in the UK without using the sales platform, the foreign seller will be required to register and settle VAT with HMRC
- In the case of sales of goods by foreign sellers, where the goods are located in the UK at the point of sale, the responsibility for accounting for VAT will be transferred from the foreign seller to the sales platform
- Foreign sellers will remain responsible for accounting for VAT on goods already in the UK and sold directly to consumers in the UK without the involvement of OMP.
Since we are still in a transitional phase, a lot may change and nothing is set in stone. But one thing is certain, the changes to Amazon’s warehouses and the resulting consequences for EFN vendors and the whole EU will come!