The year 2021 will bring tremendous opportunities to online sellers for a multitude of reasons, one surprising one will be due because of Brexit. We will discuss the effects of Brexit and additional 5 Points About Brexit and Amazon Logistics in this article. But first, we will touch on the background story of Brexit.
What is Brexit?
British-Exit, also widely known as Brexit, refers to the United Kingdom’s decision to leave the European Union (EU). January 31, 2020, marked the beginning of the transition period of the UK leaving the EU until the end date of December 31, 2020. On January 1, 2021, the UK will formally leave the EU’s Single Market and Customs Unions and a border will be placed between the UK and the EU.
What Does Brexit Mean for Online Sellers?
Although the uncertainty can be worrisome, sellers should not stress. Brexit will bring an opportunity for online sellers to expand into a new marketplace. Remember, it’s the pioneers who jump into the uncertainty that end up having more leverage when the marketplace eventually and inevitably settles down. For sellers in the UK, uncertainty presents the opportunity to sell to the domestic market with less competition.
With that being said, Amazon sellers will have to adapt to the changes that come with Brexit. The first change to take note of is that Amazon is changing its European Fulfillment Network as the UK continues to separate from the EU. This will mean that if one vendor supplies inventory in, for example, the UK, Amazon will distribute the goods to the entire EU. Second, the Pan-European FBA inventory transfers between the UK and the EU will be suspended by Amazon on December 31, 2020. Lastly, physical representation in any country in the EU will be required as part of the customs declaration.
Brexit – Top 5 Points About Amazon Logistics
- Have an Importer of Record / Indirect Representative – Foreign companies who have EU VAT numbers without an EU presence will need an Indirect Representative who will take care of your shipment at the time of import.
- Returns It’s important to plan for returns when shipping to Amazon from any country. Global logistics providers such as First Choice Shipping has partner warehouses from 14 countries in the EU that will help you manage, consolidate, and ship back any unfulfillable or returned goods.
- Declaring the shipment value – In many EU countries, such as Germany, they require that the declared value should be the sale price of the goods. The import VAT can then be reclaimed at your quarterly filing.
- Have a VAT # in every country – It is highly recommended that all sellers have VAT numbers in each EU country with an Amazon FBA center, as you never know where Amazon will direct your shipment.
- Shipping to other countries with one VAT # – If you only have one VAT number from one country, let’s say France, you can still ship to another country, for example, Germany with your French VAT number as long as you have an Importer of Record in the destination country. Do check with your accountant if you’ll have an issue with reclaiming VAT as every country has its own set of rules.
How Sellers Can Prepare for Brexit
If you haven’t yet, ensuring that you have sufficient inventory to mitigate the possibility of being charged for goods that are leaving the UK into the EU should be a top priority. We always stress the importance of sellers not putting all their eggs in one basket, in terms of logistics, don’t ship all of your inventory to one place. The big thing sellers have realized during the major logistics disruption of 2020, is the importance of creating your supply chain.
This can be done by working with a 3PL (3rd / Third Party Logistics) company that can store your goods in the case where Amazon restricts the amount of inventory you can send. By working with a 3PL, sellers will have a place to store their products while shipping to Amazon in increments, or if stuck, can send directly to the consumers.
Next, make sure to work with a trusted global logistics provider such as First Choice Shipping that can ship into the EU with the ability to act as an Importer of Record before shipping. The Importer of Record will certify that the shipment was done properly, ensure that it successfully cleared through customs if you are shipping in accordance with the law, and will take responsibility for the security of the shipment.
Last, but certainly not least, if you’re planning to ship inventory into Germany (the best country to import goods right now), it’s important to declare your goods properly because (a) it’s demanded, and (b), it will save you from paying extra fees. Setting up in Amazon DE will require you to register a new VAT number in Germany, which can take some time, approximately 3 months. We recommend getting started right away.
If you want to learn more about Brexit and how to prepare your business for the inevitable changes, feel free to contact First Choice Shipping to get in touch with our knowledgeable support team that will help you every step of the way. We hope you have found the 5 Points About Brexit and Amazon Logistics useful for your continued success.