Brexit And Its Impact On Amazon Sellers
After many years of back and forth, “Brexit” (British exit), the withdrawal of the United Kingdom (UK) from the European Union (EU) finally happened on 31 January 2020. Well, but were all the things sorted out after so much hassle? Unfortunately, No. Currently, the UK still continues to participate in the European Union Customs Union and European Single Market during a transition period that will end on 31 December 2020. During this phase a new free trade agreement is meant to be negotiated.
Every action has its consequences, and Brexit, has created a major blow on the sellers in the UK and Europe. Catastrophic situations have occurred for UK and EU sellers on Amazon. That is, if your business uses Amazon’s Fulfillment services, many changes are on the way. (and definitely not any good ones!)
As we all know, Amazon.co.uk is one of the most popular Amazon marketplaces in Europe – both for buyers and sellers. Especially companies from overseas tend to start selling in the EU from or in the UK. Due to Brexit, a tense up situation has been aroused as it will directly impact the sales. Though for this transition period the rules and regulations have remained the same, no customs control or customs duties are to be expected. At least for now!
What are these Amazon Services in the UK and Europe?
“Pan-European FBA will still proactively transfer inventory across Europe, and the European Fulfillment Network (EFN) will continue to fulfil cross-border orders.”
Amazon has explained that the UK snub is because Britain will no longer be part of it’s European Fulfilment Network, and unable to access it’s Pan-European Fulfilment by Amazon service. The EFN enables for stocks to be held in British Amazon centers and sold across Europe without any international shipping costs. The Pan-European FBA also allows that UK companies only pay local shipping costs, with Amazon taking full responsibility of extra costs and logistics for the stock’s transport across Europe.
Removal of the EFN and Pan-European FBA means British Amazon retailers have their potential customers slashed from 446 million EU consumers to just 66 million Britons.
Key Amazon FBA Brexit Dates
“We know that these are challenging times for our Selling Partners and we want you to know that we are steadfast in our commitment to supporting your business as we make this transition.”
– Amazon Services Europe
As the end of this year is near, Amazon is trying it’s best to ensure that Selling Partners using FBA have sufficient time to manage their inventory levels in the UK and EU. Amazon cannot just simply tweak operations on the 1st of January and hence are sharing their plans as to when changes will take place. December will be a busy period, as always, and so Amazon has outlined the latest dates so that they can ensure products will arrive at their chosen destination.
- Saturday 14th November: Inventory removal orders for cross-border inventory will stop : This means that removing inventory from UK fulfillment centers to EU addresses and from EU fulfillment centers to UK addresses will stop on the 14th of November. Any removal orders created before this date will continue to be processed until 31st of December 2020. Local removal requests will continue to be accepted as usual, i.e. within the UK or within the EU region.
- Friday 18th December: Pan-European FBA inventory transfers will stop between the UK and EU : That is from the above mentioned date, you will need to send inventory to fulfillment centers in the UK and the EU also in order to maintain your stock levels (refer to the Amazon Brexit help page for information on how to do this). Pan-European FBA inventory already placed in the EU before Friday the 18th of December will continue to be used to fulfill EU orders and Pan-European FBA inventory in the UK will continue to fulfill UK orders. Pan-European FBA inventory transfers will continue as usual within the EU region.
- Monday 21th December: Cross-Border Fulfillment via EFN and Pan-European FBA will start winding down : Cross-border fulfilment via EFN and Pan-European FBA will have to wind down before the end of the year in order to give Amazon logistics time to fulfil any final orders. Over the week starting the 21st of December you will see a dramatic slow down in cross border sales, stopping in full on Monday the 28th of December. To maintain your European sales, you will need to send products to fulfillment centers in the UK and the EU. More details can be found on the Amazon Brexit help page.
Other amendments to it’s processes include, 3P sellers’ products will no longer be Prime-eligible and thus visible to millions of customers through the EU. Advantageous delivery speeds and fulfillment costs will also be no longer available to sellers.
Preparing for Brexit
After this, if your business still wants to continue to trade in the UK and EU, there will be many complications in the way and one needs to be prepared for it. You may need to evaluate the whole process or take guidance from an expert, so that there is less hindrance on the selected path and you won’t suffer from any loss.
- Tariffs : You will need to send products directly to fulfilment centers in the UK and the EU separately, to steer clear of tariffs being imposed twice.
- Customs : You will need to find someone to act as an Importer of Record in the EU in order to send stock to EU warehouses in the future and possibly vice versa.
- Regulations : Currently they are harmonized, but rules on product standards will become different for the EU and the UK markets.
- VAT : You may need to register your business for VAT in both the EU and the UK to access these marketplaces.
In a Nutshell...
It’s a stressful time for all the merchants across the United Kingdom and Europe. Uncertain circumstances soon will be cleared, whether there will be any deal or no-deal Brexit. Hoping for the best! Till then, keep preparing and keep updating yourselves of all the plausible changes impacting your business targets and profit margins. Stay Resilient!
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