Amazon US vs. EU: The Top 5 Things to Know

Are you selling on Amazon.com and considering an expansion to the European marketplaces? Global E-commerce Experts explains the top five differences you need to consider in this guest post.

Amazon is the biggest B2C (business-to-customer) online selling opportunity in human history! With marketplaces all over the world and millions of active users, it’s the place to be for any eCommerce seller.

But would an additional Amazon marketplace suit your business, and do the products you offer resonate with the users on that marketplace? What are the real differences between selling on Amazon in the US versus selling on Amazon in the EU? Let’s find out!

Compliance

One of the main differences between selling in the EU and selling in the US is tax.

Taxes in the UK and EU

In the EU, you pay what is called "Import VAT" which you pay for your goods to come into the country. This is calculated based on:

Value of products + % of customs duty + shipping costs + insurance

This usually works out at around 20% of the value of the shipment.

When you register for VAT in the EU, you have two choices of schemes, Standard Rate and Flat Rate. Unfortunately, the Flat Rate scheme is only available in the UK. Therefore, in most EU countries only the Standard Rate scheme is available, but the VAT rates do vary from country to country.

The Standard Rate allows you to reclaim any Import VAT you pay, and you owe 20% VAT on each sale to HMRC (UK governing body).

The Flat Rate is aimed at small businesses and on this scheme Import VAT is not reclaimable. However, you pay a lower percentage of VAT to HMRC on each sale. 6.5% VAT is owed in the first year on the Flat Rate scheme which then rises to 7.5% after the initial year.

Once you exceed £230,000 in taxable sales you will have to move onto the Standard Rate scheme.

If you store, move, or sell goods in multiple EU countries you may be required to register for VAT in multiple countries. Once you have products stored in any European country, you will need to ensure you are VAT registered there.

You can have your products in one country and then fulfill orders to consumers in other European countries. However, you will need to keep an eye on distance selling thresholds because once they are exceeded you will need to get VAT registered in that country.

The VAT distance selling thresholds vary between each country. At this time for Germany and the Netherlands the selling threshold is 100,000 euros. For France, Italy, and Spain it is 35,000 euros.

There are also different VAT rates for different product types. There is always a standard VAT rate and usually a reduced rate and zero rate.

Amazon Sales Tax in the US

In the US, sales tax is much more complex as it is applied at the state level and varies according to the laws of each state.

The tax rate applied to your order will be the combined state and local rates of the address where your order is delivered to or fulfilled from. For example, if you live in a state that does not impose a sales tax you may still see tax calculated on your order if shipped to another state.

The amount of tax charged on your order depends on many factors including the following:

The identity of the seller
The type of item or service purchased
The time and location of fulfillment
The shipment or delivery address of your order

You can find out which US states may be subject to tax here.

Product Labeling Requirements

Tax is not the only compliance hurdle you will need to overcome, particularly when selling in the EU.

Amazon requires that all products sold on their platform are compliant with the product labeling regulations in each country the items are listed in.

Labeling laws in the US are much more relaxed than laws in the EU and label compliance is a crucial step many sellers overlook when they expand to Amazon in the EU.

The EU has strict laws on labeling including restrictions on certain ingredients and claims, font size, CE markings, approval numbers, and a whole host of other standards and (potentially) product tests that you will need to ensure you meet and carry out before you sell.

Let’s take food supplements as an example. If you were selling a food supplement in the US you could state "burn fat" on your product label. In the EU, this claim would need to be backed up by scientific evidence based on the ingredients in your products, and your product could be taken off the shelf and marked as unfulfillable if it does not meet these requirements.

You can speak to the team at Global E-commerce Experts who are the leading label compliance experts in the EU if you require further assistance with your product labels.

Competition

Currently, there are 1.16 million active sellers on the Amazon EU marketplaces and the US has a whopping 2.5 active million sellers – that’s a lot of competition in comparison to the EU marketplace, especially as Europe and the United States are similar in size.

Breaking into the US marketplace at this stage in the game is going to be a lot harder and take a lot longer compared to the EU.

If you’re already selling on Amazon in the US, less competition could mean that your USP (unique selling point) could be new and exciting to the European Marketplace, resulting in a massive increase in sales for you and your business.

Culture

Although a product sold in the US may be new and exciting to the EU marketplace, you need to factor in the different cultures. What sells in the United States might not sell in Europe, and vice versa.

The changes from the environment (such as the weather) to different holiday celebrations and way of life should be factored into deciding which products you can feasibly sell in each marketplace successfully.

Fulfillment Options

FBA, also known as Fulfillment by Amazon, is one of the most convenient services ever offered to eCommerce sellers.

Having said that, FBA is slightly different in the EU compared to the US due to the three different FBA options offered within Europe: Multi-Country Inventory, European Fulfilment Network, and Pan-European FBA.

Each of these options has pros and cons which you can discover more about here. However, on average, FBA sellers who join Pan-European FBA increased their sales by 30%. (Based on a 2017 survey of 10,175 sellers, 300 of whom joined Pan-European FBA.)

There are also some changes to be aware of due to Brexit, including the following. 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, Spain, and the Netherlands sites.

RestockPro supports FBA inventory management in 10 Amazon marketplaces: Australia, Canada, France, Germany, Italy, Mexico, Netherlands, Spain, UK, and the US.

To mitigate the impact of these changes, you should consider splitting your inventory and sending it to a fulfilment centre in the UK and another in the EU, so that you have sufficient stock on 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.

Editor’s note: As of March 2022, fulfilment between the UK and the EU will once again be allowed via the European Fulfillment Network.

Language Barrier

Europe has many benefits, the language barrier not being one of them!

In the US, there may be subtle differences in slang within different regions that you will need to account for.

In Germany, France, Italy, the Netherlands, and Spain you will need your whole listing and backend keywords to be in the native tongue so that customers can find your listings.

Amazon will automatically translate your listings for you if you are enrolled in Pan-European FBA which is a great starting point, however, they are not usually optimized. Therefore, it is best to get your listings translated professionally, which can be quite costly depending on the number of SKUs you have.

Keep Building Your Brand

The US and EU both have pros and cons, however, both platforms will allow you to build a brand and take your business to the next level. With market research, a solid plan, and an understanding of fulfillment options, both locations can help boost your reach and increase your overall sales.