Planet Amazon Podcast

Turbocharge Your Global Sales: Breaking into the European Amazon Market

• Adam Shaffer • Episode 12

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Ready to conquer new horizons with your Amazon business? Unravel the mystery of international expansion with our esteemed guest, Piero Perera, the Strategy and Growth Account Manager at AVASK. We promise you an episode brimming with insights and practical advice that could be game-changing for your Amazon selling journey.

Navigating the VAT registration landscape, understanding the ins and outs of tax compliance, and getting to grips with the upcoming environmental taxes in Europe - we've got it all covered. Piero, an expert in global e-commerce expansion and tax compliance, shares his wisdom on these crucial aspects of taking your business beyond borders. Listen in as he discusses the potential pitfalls and rewards of international shipping, the impact of packaging taxation, and why having a multi-currency bank account is key for sellers setting their sights on Europe.

Not stopping there, we journey into the exciting realm of pan-European fulfillment for Amazon sellers. Harness the power of the Pan-European (Pan-EU) program and understand the importance of being VAT registered in multiple countries. Plus, if you've got your heart set on Europe, don't miss Piero's insights into this potentially lucrative market. Finally, we explore the prospect of expanding your Amazon and e-commerce business into other untapped markets. Ready to turbocharge your international selling potential? 

For more information about AVASK, visit https://www.avaskgroup.com/

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The Planet Amazon podcast, brought to you by Phelps United, addresses all things Amazon and other eCommerce marketplaces. In each episode, we talk with Brands, Agencies, and Sellers about Amazon news, new features, policies, brand policies, logistics, marketing, issues, and challenges, among other topics.

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To learn more about Phelps United, visit our website.

Announcement:

Welcome to the Planet Amazon podcast with Adam Shaffer, where we explore the world of Amazon and other e-commerce marketplaces. Join us as we delve into the latest strategies and tactics for successful selling on the world's largest online marketplace.

Adam Shaffer:

Hello, I'm Adam Shaffer, and welcome to the Planet Amazon podcast, where we talk about all things Amazon, and today we're going to talk about something that's, you know, on top of mind for lots of the sellers on Amazon, and that is expanding internationally. And those that are in North America always want to be able to grow, and it's easy to grow with Amazon, but there's definitely some things you need to know before you break out of North America, and so today I have with us a great guest that is really an expert in international expansion. His name is Piero Perera and he's the manager of growth and strategy for a AVASK. They're a firm of tax experts who specialize in global e-commerce expansion, international taxation, accountancy, business advisory and consultancy services, but they are cross-border VAT experts and they provide tax-compliance advice to help brands grow into new international marketplaces. What's also cool is Piero is the host of his own podcast called the On Line Hustle podcast. Welcome to the show, Piero. How are you?

Piero Perera:

Hey, adam, adam, thank you so much. Yeah, very well, thank you so much. How are you?

Adam Shaffer:

I'm doing okay and you know I'm here in Miami but based in the US, you know, servicing the US and Canada and Mexico. You tell us a little bit about you, where you're based, and then let's talk about your firm and what you guys do.

Piero Perera:

Yeah, absolutely so. I'm in, actually, you know, a beautiful studio at AVASK Studios. It's where I record the online Hustle podcast as well. But, yeah, avast headquarters are based in Southampton, the South Coast of the UK, as you may tell by my British accent. Yeah, that's where we're based, but the intro was absolutely perfect. That's exactly the things we do here at Avast. My job personally is to create launch strategies, especially for businesses that I've, you know, have incredible success in the US and kind of want to replicate that in Europe and in other platforms, especially on Amazon, right? So, yeah, by doing that, I make sure that, from the very start to the very finish, we get everything that is sourced and everything that is required to be able to not just enter but also succeed in Europe.

Adam Shaffer:

So what's cool is I mean I met you guys at the most recent Amazon Accelerate conference in Seattle and it's a great show. If you're a seller and you don't go to that show, you should. But I mean I go there and I learn so much and you get to meet a lot of the Amazon people. But you get to meet all these service providers that are part of the ecosystem, and Avast was there. But what was really cool is that they had international breakout sessions and Amazon was talking about getting into Canada, getting into Brazil, new Mexico, but also how do you get into Amia and Asia, which are really sizable markets for them, and it was probably the most trafficked breakout of all the breakouts at the Amazon Accelerate.

Adam Shaffer:

So I know there's a huge demand for people saying how do I break out of my bubble? So I think it would be great to maybe talk about how do you do it, like I know it's kind of the boring part of it. Everybody just wants to get on and start selling stuff. But tell us like some of the issues with going, say, from US to the UK, us to Germany, us to France what do you need to worry about as a seller?

Piero Perera:

Yeah, so for the internationalization of everything, I would say there's a massive difference between Amazoncom and all the other Amazon markets. On Amazon. com, I always say the barriers of entry are very low, so it's very easy for a business to even start on Amazon and start selling Not necessarily be successful, but at least start selling. It's very, very easy. Whilst in, especially the European markets that you mentioned, I always say there's the barriers, entry can be quite high, but once those barriers of entries have been beaten, there's a massive opportunity in the whole continent because there is it's a very hungry sort of consumer base that's ready to purchase products and quality products as well, especially American based products as well that are there. And yeah, those barriers of entries is what probably I'll be speaking about very soon.

Adam Shaffer:

Yeah, I mean so when I think about selling in the UK, because for me it's easy, I understand the language. It's more, for the most part, I do anyway, and so I pretend. I want to not pretend I do. I do. I want to sell in the UK and so we're going to sell in the UK. I'm approved to do it. I could turn it on, but what are some of the things I need to worry about and it's the things I hate to think about, which is like getting a VAT number and getting registered and dealing with the taxes, and that's where you guys come in and that's where I am not going to be too good. So tell us about how it works. What does sellers have to do?

Piero Perera:

Yeah, absolutely so. From the very first point. I would say, before we even go into the VATs I think as much as English is the same language I would definitely think about checking the ability of your product to be sold in the UK, simply because there is amazing products such as Helium 10, jungle Scout, that give you the opportunity to have a look at how successful that product can be and how your competitors or similar products are doing currently in those markets. And you select the UK seller things and you have a look. Once you check that and you obviously know it's a feasible option, I'd say nine out of 10 products that sell well in the US will sell well in the UK as well.

Piero Perera:

So after doing that check, it's the VAT, the famous three letters that I speak about on a daily basis, and VAT stands for Value Added Tax. It's basically the equivalent of sales tax in the US. The only difference in the UK and Europe is normally, when someone checks out a product in the US, sales tax gets added at the end, whilst in Europe, value Added Tax is included in that retail price. So the price that a customer is seeing in Europe is the price that they will be paying in total. There's no other taxes to be added. The retail price is 40 counts or 40 euros. The tax is included inclusive in that price and that's the main difference I would say for dealing from Amazoncom to any other Amazon in Europe.

Adam Shaffer:

So you're saying that. You're saying like so if I'm selling something in the US for $20, it's $20 plus the tax when you check out. But in the UK that $20 includes the tax, so you probably need to increase the price of the product right?

Piero Perera:

Yeah, absolutely. And the main thing in Europe is that the rate isn't the same for every country. So for the UK is 20%, for Germany is 19%, italy is 22%, hungary is 27%. So all of a sudden, your price actually can fluctuate. Well, your profitability has to fluctuate accordingly, so you have to be very careful. It's something that I always warn my US business that start selling in the UK that, yes, your prices have to change. They have to be a little bit higher in Europe for sure to make sure that you cover that cost, because Amazon Collector remit. Just like they do in the US for sales tax, they'll do the same for Europe. But all of a sudden you see Amazon collecting quite a lot more than you're used to. And, yeah, it's because you have to put your price up, but yeah, the value is there.

Adam Shaffer:

So you're saying like so in the US because we charge it extra tax. We work on the selling price. Here in the UK or Germany, it's the selling price and Amazon's going to take a piece of that, their fee plus they're going to take the VAD. Is that what you're saying, correct?

Piero Perera:

Yeah, Amazon takes care of everything, which is a fantastic advantage compared to many, you know, selling on your own website. You know you have to take care of that yourself as well, On a monthly or quarterly basis. You would have to pay each tax authority as well, on a constant basis, right? Because Amazon kind of collects and remits everything for you. So you only need a company like Avast to prove that the sales that you're doing, because that's a requirement that each country has and it's something that I'm going to speak about in a second.

Piero Perera:

But, yeah, the VAT side of things it's a registration that you must have and the number one rule I say to all my clients, everyone that comes through to Avast it's all very related to FBA, and if you're in a fulfilling by Amazon and if you're planning on storing goods in a fulfillment center in Amazon in a particular country in Europe, you must be registered for VAT in that country. That is the number one trigger for VAT, Because even right now, you could possibly sell your products from the US all the way to Europe. However, what are these advantages? You're not going to be an Amazon Prime seller. You're going to have to pay for shipping a higher shipping fee and there's still limitations in terms of how you can actually sell the products.

Piero Perera:

I have a lot of US businesses looking to the European option. All of a sudden, the margins get cut simply because they're not physically in Europe, and that's a massive difference maker really. So, yeah, it's the number one trigger. If you're planning a story in the FBA center UK, Germany, France, any of these countries you must register for VAT.

Adam Shaffer:

So is that step number one. Walk us through the process.

Piero Perera:

Yeah, absolutely. As I said, the process for me on a business basis is researching the product and making sure that there is competition and the product has its own positioning in these countries right. Once you have done that, the first thing is probably looking at the product compliance. So product compliance is understanding whether your product is actually legally allowed to be sold in these countries. So, for example, cosmetics have its own requirements, food, like the USF have FTA, the UK and Europe have their own responsible person requirements. That you have. Our fun fact actually Amazon had their own responsible person sort of service going on in Europe. They've actually just stopped it as of 2024.

Piero Perera:

So a lot of businesses US businesses will be affected in terms of how to operate. You'll require a different responsible person to be able to sell in Europe, and it's something that Allah has partners and can help. It can help with. So that's the number one step. So if you're selling a special type of product, like consumables, cosmetics these are products that require a label check you need to check the labels. The labels have to have certain standards and the ingredients.

Piero Perera:

But if you're selling any other, any product that isn't classified as consumable or has any effect to humans, for example, you're more than welcome to go ahead, and the first step from then will be the VAT side of things, because that is what gives you the opportunity to access the FBA centers in Europe, and, in terms of the VAT registration, it's basically VAT is something that I have to remind every business that I speak to. Vat is attacks, right, it's something, say something that you're dealing with a tax authority in, and in this case, tax authorities, they're based in different countries that speak different languages, and that's the barrier of entry that I'm speaking. That spoke about the very start. It's the different languages make a massive difference, right? And Adam, how many languages do you speak?

Adam Shaffer:

I'm going to say one.

Piero Perera:

So absolutely, and that's why and that's most people right English is a fantastic language that so many people speak. However, tax authorities are not going to go out of their way to change their home language and start speaking taxes in English. They're going to speak about taxes in their own language. And that's where a company like a VAR becomes essential, because you have that expertise in these countries, you have the offices in these countries and you also have the language speakers that can relate any sort of communication that they have from the tax authority back to the client. The amount of times I have, so do you yeah go ahead Now.

Adam Shaffer:

Do you help the sellers get their VAT registration? I mean in these different countries.

Piero Perera:

Yes, absolutely, that's exactly what we do because, as I said, that has that been the number one requirement that you have to start selling. Let's say, adam, your business wants to start selling in Europe and we look into the registration of the VAT numbers, right. And then let's say we start with the UK, we register for UK VAT and, once registered, you are allowed to start sending shipments into the UK and start storing in the FBA centers in the UK and then, on a quarterly basis, we would file the sales that you've done in the UK. We have to show the UK tax authority the amount of sales that you've done.

Adam Shaffer:

So you're doing all the tax and accounting work for the seller in these other markets, right?

Piero Perera:

Correct. Yeah, so as much as there's the registration. Once the VAT number is registered, you have to file the sales, you have to prove the sales, and that's exactly what we do on a constant basis. We have now businesses that have been with the company over 10 years now, right, and we've been doing that for them, and it's a very reliable service, simply because you have your own point of contact as well. There's a genuine tax compliant consultant that actually deals with any complex cases, especially if you were to have any questions about the tax authority, and it's all about to say when, all of a sudden, your registered office address, you get a letter coming from Poland and in the full Polish language, and unless you have someone Polish in your team, you will not know what the letters are first about. And that's what you're doing. You actually send it across to our tax compliant office and they'll know exactly what the letter is about, simply from experience and actually being able to read in the Polish language as well, which is really important.

Adam Shaffer:

What do you see? Some of the issues with your sellers. I mean, some might have already tried to start selling in Europe already and then realise there's some issues. So what are some of the things you've had to untangle?

Piero Perera:

Yeah, a lot of it comes from. I don't want to say like this, but actually it's not taken as seriously sometimes because, especially US sellers they're so used to being on Amazoncom and, as I said, it's been easy to start. And then all of a sudden you go through, for example, ukvat registration and this certain proofs that you need. You need the proof of that. You have a warehousing agreement with Amazon. You need a proof of that. You are ready to ship with a shipping agent, and these things can be quite tricky.

Piero Perera:

And then all of a sudden, you've decided that you want to go into the UK. You've actually decided to send a shipment to the UK, but you've not done anything for the UKVAT registration to be in place and all of a sudden, the shipment is on the way. It comes to customs. The UK and the UK customs ask you for a VAT number and you haven't got it yet. And that's one of the very simple mistakes that can be done. And my number one advice is to not just obviously come to a vast, because we can help, but it's all about the prep. Make sure that you're fully prepped out and you're ready to go before you start sending that first shipment, because it makes a massive difference in the long run In that case, what would happen?

Adam Shaffer:

The customs would hold the products.

Piero Perera:

Yeah, customs will hold the products. You have de-marriage. You have de-marriage costs. You would also have to back data quarterly, the VAT filings, which would be an extra cost as well. Amazon will obviously hold the product. You can send it to Amazon. Amazon can hold the product. So they'll all of a sudden start charging you long storage fees and then your account will definitely be blocked because without a valid UKVAT number, you won't be able to sell from the Amazon UK FBA to any customer in the UK. And sometimes they can be interlinked as well. If, let's say, you're a company with two different seller central, because you're selling two different products, two different brands, all of a sudden, just because one UKVAT is invalid, the whole account gets blocked and it's a risk that can happen with Amazon and, yeah, that's one of them.

Piero Perera:

A lot of the sometimes it's a lot of neglect of the VAT side of things, because I have to remind clients that this is again, it's a tax right. You're dealing with tax authorities and one thing that, for example, italy has a very strict tax regime and they all actually have its own tax police. Believe it or not, it's called what the definancer right, and if you're not paying for VAT, they'll actually come to your house and start knocking on the door and say, hey, where are my VAT payments? Where are the VAT filings? What's going on with your business? It's it can.

Piero Perera:

I'm talking about a very small case, but I warn my clients that this has happened and you have to take it seriously. So VAT has to be filed properly. It has to be deregistered if you stop using it and, yeah, it's very important to have a company like a VAS that can. You can make sure that that's on top of all of this, because you should be concentrating on your business, having the peace of mind of okay, my job is to create a product, create a brand or sell on Amazon and make as much money and grow as possible. Wasavas gives you the peace of mind of dealing with all the taxation and the compliance side of things.

Adam Shaffer:

Do you need to? Obviously, it sounds like you need to have that registration for the VAT. Do you need to also have a company established in these markets?

Piero Perera:

It's a great question. It's a great question because it's something that I get asked quite regularly, and it's a great question because the answer is no. The VAT is actually the only requirement that you have. The only time I would advise for a business to start thinking about having a different company is if you're changing operations. So let's say, you want everything in the US and you have your own US team that's dealing with the US side of the sales and your retail sales, and then you start going to the UK and your products are being shipped from somewhere else. Your production, let's say, it's in Far East Asia and all of a sudden you want your own staff in the UK, you want your own operations, you want your own website for the UK. Then all of a sudden, it starts making sense having different companies in different in different countries.

Piero Perera:

But it is not a necessity. You do not need a different company. All you need is that VAT number to be able to store the goods in and then, on Amazon especially, it's something that's really not required. You just get the VAT number in. There are new requirements coming in in Europe that I'm going to speak about, called EPR, which is for environmental taxes. However, the VAT is the number one tax code that that you need.

Adam Shaffer:

But okay, you don't need a company. No, you just need that so tell us about the environmental stuff.

Piero Perera:

Yeah, absolutely so. It's actually something that's been around a while, but it's being implemented in the marketplaces. This is mainly started from Germany and France. As of last year it's expanded to Spain, austria, a lot of countries in the EU when they're requiring requiring you for you to register for a company, for something called EPR, which stands for Extended Producer Responsibility.

Piero Perera:

It's the whole idea of this taxation comes from the fact that I think us as consumers, we buy the best possible product that we want right, and we try and find the best price, the best quality product. However, we have no say in how the product is packaged, the how the product is made and the components of that product. The whole law is to push businesses to really start thinking about the environmental impact of your product. So it's it. It basically it's not a heavy tax. It's very subtle, but for anyone that is, for example, selling batteries or electronic products that have high plastic value and have a very short life cycle, those are the ones that will not penalize but will be tax more. While, say, an environmental thinking product that has very small, very small amount of packaging, plastic packaging inside and is a product that is there to be used for for the foreseeable future that would be taxed a lot less. And those algorithms are done by weights, by size and and everything like that the main.

Adam Shaffer:

on top of the vat there's this other Fee and but that's not part of the vat. And does Amazon take that, or how does?

Piero Perera:

that work. Amazon doesn't actually take care of it simply because it's not part of of the, of the, the, the retail value of the of the product. It's more on our production value. So let's say you are in the year of 2023. You are selling Standard product with Amazon packaging right at the end of the year. The epr the way epr reporting works is you have to show the amount of sales that you've done in france and germany. Let's say, for example, you have that proof and out of the proof, because when you apply for epr, you you mention how much packaging there is on the on the product, how much paper there is on the product. It's all on a weighted basis. So let's say you've sold a thousand units in 2023. There is a report that says we've sold a thousand unit worth of cardboard packaging on our product and there's a fee to be paid related to that. So Amazon can't really collect or omit for it simply because it's it doesn't really come out from the pricing. But Companies like a vast basically register you for the number and can actually do the reporting.

Piero Perera:

In terms of the cost, I would say it's very minimal. It's something that is a requirement and it's something that it was implementing in Europe to really make Businesses think about the, the value and and and what their product is doing to to the market, kind of start thinking about, okay, how can we make our packaging more sustainable, how can we reduce this cost and how can we make it, you know, make the life cycle of the of the product longer. And yeah, it's another tax to be to be thought of, but I wouldn't use it as a deterrent. As I said, it's one, it's a part of those barriers of entry that I didn't, I didn't know about that.

Adam Shaffer:

That's interesting. And then, and then we talked about you don't have to have a business in the uk, orange germany. You're in france, but you need to that, but do you? I don't know if you do, but you do? You need to have a bank account in these countries.

Piero Perera:

No, you don't. You don't. It's um. There's a particular cases sometimes where, where you might need it, um. What I normally recommend is having a Multi-currency sort of wallet. Companies that can provide, like a bed exchange rate, sometimes using your standard us bank account that's linked to your Amazon account, all of a sudden, let's say, you're getting paid in euros in in in Europe. You're getting paid in In check corona in Republic, you're getting paid in pounds in the uk. If you're using your standard app Bank account, amazon will already charge 4% on the on the exchange rate.

Adam Shaffer:

So so there's 4% that amazon's taken off the top.

Piero Perera:

Yes, on the exchange rate. Yes. So if you have like an intermediary Bank account, like a multi-currency system that actually gives you a favorable rate, then all of a sudden, amazon is not the middle person anymore. They'll still pay you in dollars, but your multi-currency account can give you a better rate in terms of those exchange rates, right? So it is something that that needs to be considered, because you want An account that gives you the small percentages Normally, um, there's loads of company paying air or effects. Well, first, all these top companies give you a wallet I'll satisfy, do it as well, actually and they give you a much better rate. That will be between 0.5 to 1.2 percent. So it's a much better exchange rate that you're that you're dealing with, compared to the 4 percent that amazon takes.

Adam Shaffer:

So if you, if you did, if you did need to open up a bank account for any reason in these countries, do you need to be there? Because in canada, what's weird is you have to actually go there in person to open up the account. Do you need to do that in the uk, or could you do it with you guys?

Piero Perera:

Yeah, it's, it can be. I mean the uk bank account would be related to the uk company, so you would have to open a uk company to be able to get a uk uk bank.

Piero Perera:

Okay so yeah it is very difficult, and one of the one of the main examples that pops into my mind is poland. Right, so a lot of businesses important to poland, because poland have the some of the best warehousing options in in europe. And there's something that I'm going to speak about in a second. Anyway, because Warehousing in europe becomes a really good option for regular shippers, because you don't want to just ship into fba each time. Right, you have shipping costs and you know you know better than than than I do with trump laws importing from china to the us is expensive. If you are doing any packaging work in the us to then reship out Regularly to europe, it becomes a really expensive exercise. So you have to start thinking what is the most efficient way of shipping goods into europe as well. Shipping into poland is a fantastic option simply because, as I said, the the polish warehousing system is. You know it's it's much cheaper to to store in polish, poland based warehouses.

Piero Perera:

However, there is a massive issues in terms of importing goods into poland, because Each time when you're importing into europe, you'll be charged two things duties, which are normally used to by Selling in the us as well if you're importing from outside the countries. The other thing is import vat. Right, there's a difference between sales vat and import vat. I still don't know why they're named the same. But sales vat is charged at the sale of the product. Import vat is charged at the importation of the product. Right, import vat once your vat registered, it's fully reclaimable. So let's say, each time you're importing to the uk you get charged import vat as a business. As you're registered for vat in the uk, you can reclaim that vat.

Adam Shaffer:

Okay, so you do get to take it back.

Piero Perera:

Yes, yes, yes, it's a cash flow exercise really. It's as you're selling the products and or you're re exporting the products. Anyway, the the touch authorities will pay you back, and I'll speak about this later. But in some countries, it's actually not a necessity anymore. You can actually save that money, but it's only it's only doable in some countries. Right, poland is not one of those countries. You actually require a polish bank account to be able to reclaim that money. Right, and to open a Polish bank account, you need to have a Polish company, and if you don't have a Polish company, you have to go to Poland yourself To be able to have the chance of opening a bank account, and the time taken to open that bank account can be between three To six months and all of a sudden these are the advices that I normally give to my clients become, because it's very easy to go and check.

Piero Perera:

Okay, this is my easiest option. This is the it's cheapest country for me to ship into. I can Ship by by rail for all the way from China to Poland. I don't have to use a ship. It's environmentally more friendly. However, I have all the issues now right. So One one thing that I speak about is shipping efficiency, making sure that you ship into the right Country. So I work very closely with a sister company to a boss called Katz, a global logistics, and what we do together is Make sure that whatever businesses, wherever that your manufacturer is based, is to create the perfect group from that Manufacturer all the way to an FBA center or to our warehousing position in Europe. They gives you the best tax benefits, they gives you the least amount of cost and it gives you the most potential to grow as well. And these countries differ. I'd say the UK, france, netherlands are the best countries to kind of ship into in Europe.

Adam Shaffer:

So so you're saying Poland has some advantages, but it gets a little complicated. So maybe if you're still, if you're, if you're initially breaking into Europe, try and stay with the.

Piero Perera:

UK, germany yeah, I wouldn't recommend it. This in terms of a strategy, what I would say Poland becomes a really good option for EU established businesses. For example, if you're an Italian company that wants to look for a very cheap Sort of Warehousing costs, but your products are coming, you know they're manufactured in China it's easy to ship from China to, for example, in in in Europe, into Europe. However, as an Italian business that wants just an Italian products, that was cheap Warehousing then it's much easier because once you're inside of the EU and the 27 EU countries, there is free movement of goods. It's like trading within within all 50 states of the US is the same sort of mentality for good. So I can ship and send a product from Italy to Spain at no duty cost, no tax cost, just send the product. Right, so when when it, when it comes to Poland, that becomes an issue. Right, because you can't reclaim the import VAT without a Polish bank account. So, as I said, the best country is to do with and it's very Important to consider that the UK.

Piero Perera:

I don't know if you guys know, but there's something called Brexit happened a few years ago, so the UK is no longer part of the EU. I One piece of advice as much as geographically, the UK is very close to Europe, now, because of Brexit, the UK it's almost I would almost tell people to consider them as either UK, as a different continent, simply because the tax rules are different. There's different customs requirements yes, it's still VAT. However, it's very different to Europe. You cannot move goods as easily as you, as you Used to and as easily as you can in in the EU. So the UK has to be treated different and I'd say the best options for to send to an FBA center will probably be France in in in Europe.

Piero Perera:

Simply because, when I talked about the import VAT side of things, france, if you're French, you're French VAT registered business. France won't actually charge you any import VAT when you import. So you know the 20% import VAT that I was talking about earlier. France, as soon as you have a valid French VAT registration number, france will not charge you that up front. And that becomes really important, right? Because let's say you are importing a container worth of goods 100,000 dollars worth of goods that you're importing into Europe Paying 20% up front. We're talking about another 20,000 dollars just for VAT that you lose for a temporary period. You can claim it back, but you lose it. For a business that has high cash flow issues, that becomes a problem. So having a country to ship to, like France, where you can ship into, it's still the same price to ship into. However, you don't have to pay that 20,000 dollars. In that example it becomes a really effective way of kind of reaching an FBA center.

Adam Shaffer:

But would it reach an FBA center in the UK or not?

Piero Perera:

You would have to ship to the UK FBA center right and this is separately, separately right.

Piero Perera:

Yeah correct and that's the main part of, I think this whole episode is talking about the program on Amazon, which I'm sure you've heard of by now, Adam Right? So, and the Pan-EU program is one of the best programs that probably Amazon have launched. And Amazon have launched very many different programs, but PANIU is still the main one, the big one that people are part of. So the way the PANIU program used to work is the UK obviously used to be part of the PANIU program before Brexit, but now the PANIU program is made of six countries. It's Germany, france, spain, italy and It's the UK, Spain, Italy, Poland and Czech Republic. Okay, there are potential for other countries to come into Sweden. We'll come into it very shortly, I reckon, because there is a Swedish FBA as well. So will Belgium and Netherlands at some point, but for now it's still those six main countries.

Piero Perera:

The way that the PANIU works is quite brilliant, actually. So the PANIU of these six countries you must have VAT registrations. If you have VAT registrations in all of those six countries, all you have to do as a business is ship into one particular FBA centre, let's say, in this case, france. As I said, it's the best one. If you're shipping to France, amazon will collect everything in France. And then you're going to ask me hey, do I have to ship to every other country? No, because, being part of the Pan-EU program, what Amazon does is, according to the algorithm, they redistribute that to every single country you're VAT registered in, similar to the US, and each state. Amazon will collect to their nearest FBA center and then distribute that wherever it can go. But in Europe, the only difference is that you must be registered for VAT in those countries, and the best thing about it is that you don't necessarily have to go for all six.

Piero Perera:

You can pick and choose the countries that you want to go into. Normally, most businesses will start with Germany and France, because those are the two biggest countries and all you have to do again ship into France and then it interlocks between France and Germany. There's many businesses that only start with Germany because Germany is the biggest market in the EU, but, as I said, then when you start doing that, you get the local fee in Germany. You can still sell into other countries in Europe as well. However, you get the best benefits by being part of all six countries in the Pan-EU, you get the best fulfillment rates. You get the spread of products in many countries as possible.

Piero Perera:

You can reach countries that are outside those six countries as well. For example, a lot of German businesses are selling to Austria. Austria customers order quite a lot from Germany. Dutch-based clients will order from France, for example. So there is a big network in Europe that you can be part of. By the same time, you can pick and choose and you can have a gradual growth in something that I speak about quite a lot. So you can just start with the UK and Germany. It's just that you're not going to have the best benefits. However, it's a great way of seeing what the potential is.

Adam Shaffer:

I mean it's amazing. So the UK not to get political, but they really, when they went Brexit, they were part of this and now they're not. So now it's like its own, like you said, continent and it's treated 100% solo, where you were getting the benefit of Europe. So maybe it's not the UK you start with, maybe it is Germany, france.

Announcement:

Because you're there, you can spread out faster.

Adam Shaffer:

I mean, that's interesting and wow, I mean I guess stuff happens.

Piero Perera:

You see the language bases. I mean the UK is still a fantastic market. I'm an Amazon Prime consumer myself in the UK market and I almost relatively only buy on Amazon because I'm the type of consumer that wants the product the next day, right, so it's still a fantastic market. It makes sense for a lot of US businesses. But the European market has it's still growing. It still has so much potential and I advise businesses to kind of start taking the steps now, because the rewards will come later.

Adam Shaffer:

How long does it take to get going? So say, it's December and I want to start thinking about New Year. I want to launch UK or Germany. How long does it take to get?

Piero Perera:

this going? Yeah, it's a great question, and it's a fantastic question simply because I get asked quite a lot and again you have to. I have to mention that we are dealing with different tax authority authorities and different ways of working Right, and there's different requirements to register the VAT number as well. In the UK, you have to prove that you have your Amazon store from set up. Then, instead Italy, you only have to provide the directors passport and they give you a VAT number in like a week, but different countries have different requirements and different timelines.

Piero Perera:

I would say the overall, depending on the country. I will probably give you two to three months to start with. If you were to start today, I would probably start planning for a Q2 launch in the UK and Germany, Because there's many things that come in between. There's the Christmas period now the festive periods in the US, where it can be quite busy as well, because it's the most important quarter for any e-commerce business and then you have to start planning the documents that you require and then we have to submit it to the tax authority and we have to make sure that nothing is wrong. If anything goes wrong, we have to communicate with the tax authority to make sure we get it.

Piero Perera:

So I would say a Q2 launch is likely. So I always warn businesses two to three months is about right to start thinking about it and then it's. I can imagine for a business it becoming quite tough because you have to learn your production, your manufacturing, your buying and making sure that everything is sorted. Hence why I always say about the barriser entry to start might be a little bit difficult, but once you're in, you're in type of thing.

Adam Shaffer:

Wow. So you know it sounded it sounds complicated. So we talked about VAT. We talked about duties import VAT outside of France and we talked about this environmental duty or tax that they have, and so it sounds kind of scary. So you know, I think that's why I don't want people to get scared.

Adam Shaffer:

I want them to say it's complicated and I need a partner, and I need to find a partner like Avast to work with out there, because once I do get this going, the machine works. It's just you got to. It's not as simple as just lighting up a store in the US. So I want people to understand that Avast exists, because this is an issue that most e-commerce outside of Amazon if you want to do Shopify or any of these other e-commerce platforms in Europe you need this kind of help. So I think it's incredibly important that pan-Euro fulfillment sounds like. You know that sounds like a dream.

Adam Shaffer:

So I think that's something people should think about and I think they should talk to somebody like you to think about what their strategy is before they get going. Now, it's great if somebody's already in trouble you're there, but I think it's always better to start better from the start, before you're there, where you kind of have a clean slate. So I think you know listeners should talk to you, your company or company like your company, before they take that step and light up that first queue on Amazon in Europe or the UK. So, coming close to the end here, I wanted to just pick your brain on. You know what was like one of the biggest wins you guys had. You're working with one of your partners. What's something that you really did a great job and help them out and get out of some kind of issue.

Piero Perera:

Yeah, I would say I'll say on, one of the best stories that I have is it's our US based client that that have massive success in the US and I really enjoyed the Did I write actually. I met in person actually. I met him at Amazon Accelerate in 22 the previous, the very first one and I met him in person again in the UK as well, and what they did best was to not rush anything, to be as calm as possible and take the, the whole strategy by time. This nine figure seller in in the US that's looking to, you know, replicate somewhat in Europe and what they did and the main issue that we saw there is their skews, because they have 25,000 plus to pick accordingly to what suited to the market. It's very important. That's where, as I said, brown companies like helium 10 come in and play a massive role, because they kind of really show you what type of product actually suits best. And then it's splitting the strategy and the starting strategy right.

Piero Perera:

So how are you planning on shipping? What is the shipping method? If everything is coming from China, what is the most cost-effective way of doing so? If you're sending a container, how do we split the container if you spend, if you want to split, if you have enough amounts to be able to send to containers, then have definitely split one to the UK because the UK market still has massive demand, and then split the other container towards Europe Because of double taxation side of things as well. So that was massive because a lot of businesses, I think, still Ship towards the UK. They have to pay VAT and duties there and then they take some of their stock and they ship it to Europe where they have to pay VAT and Duties again. So there's a loss of money there in that case. So if we actually split the shipment, in that in that sense you only you don't pay VAT in England, in the UK, simply because there is a scheme, just like France, where you don't pay In port VAT and we ship into France.

Piero Perera:

Well, actually in this case we shipped it to Netherlands because the Netherlands another country that has that same option it's not part of the pan EU program, but this particular client used a 3pL solution in Europe because, as I said, they have many skews and they want to some long-term storage as well and a ship less, as less as possible. So sorting that whole strategy out for them to start, and now they're finally on pan EU program. They have all the VAT numbers. They're probably the whole strategy to launch, probably to come around I want to say six to nine months. But they did it very slowly, they took their time and they do it properly and now the containers have arrived, they're starting selling in Europe and they're already seeing great results.

Piero Perera:

Obviously, to match the Amazoncom side of things, it will take its time, but they've done a great job in terms of kind of listening to the advice that a boss gave them and now they're finally starting to Really to really see the perks of all the hard work there's been over the past six months. Now, again, that still sounds a little bit scary. So what I really want to, what I really want to push, is it doesn't necessarily have to be like that, it doesn't have to be container stuff. He has it's, it's. It can be a gradual growth, as I've always said. Let's start with the UK being one of the one of the best countries to go into, because it's easy because of the language side of things. Start from the UK and you send one parcel of one particular skew and all of a sudden you see that success and then we build that gradually, but the VAT side of things is still the number one thing that we need to look into so.

Adam Shaffer:

So with that, and you're kind of getting to my my last and final question, but can you, piero, can you give the listeners of North America Final advice on Looking at Europe as a way to expand?

Piero Perera:

Yeah, absolutely for me. What I really want to push is the opportunity side of things. Right, it's. It's a fantastic opportunity for you to replicate what you're already doing. The US. Ignore the barriers of entry, because a company like a boss will help you. There's other companies as well that can help you kind of get you all of those requirements for you to be able to start selling in Europe. And once in Europe, you need to understand okay, where, where can I maximize profitability? So my number one advice is to get in touch with someone and myself that strategizes for businesses, especially to launch. You can do so violin tin or my email at pierrot up Pereira at a boss group, calm and yeah, my whole job is to make each and every business that I speak to Succeed as much as possible in Europe and make the whole Starting and those barriers of entry that I've spoken about a little bit less scary. So that's my awesome.

Adam Shaffer:

Awesome. So it sounds scary a Voskin in Piero and the team there take the Scariness out of it. But you know, expanding on Amazon especially, but with your e-commerce business, but expanding into other markets is a great way to grow. It definitely adds to the complexity and that's why having partners helps, but I do recommend it. I think it's something that you do step by step and and thank you very much, piero, for your advice today really super important and helpful.

Piero Perera:

Hey, thank you so much for having me. I really appreciate it. Thank you.

Announcement:

Thank you for watching another episode of the Planet Amazon podcast, where we talk all things Amazon. If you want to learn about how to Accelerate your sales on Amazon, visit Phelps United's website at Phelps United comms you.

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