Why I’m not using Pan-European FBA

I mentioned a few posts ago, that I’d chosen not to use Pan-European FBA.  I used to use it – but the problem was, I was very naive about the implications and ending up having to pay a lot of additional money that I hadn’t accounted for…

So, what is Pan-European FBA?

If you are an FBA seller in Europe you can have one Seller Account, one pool of inventory (usually in one warehouse) and sell on all Amazon’s UK marketplaces.  (UK, DE, FR, IT and ES.)

Your products are also eligible for Amazon Prime.

This is called the European Fulfilment Network (EFN).

The main difference with Pan-European FBA is that the stock is physically moved (by Amazon) and stored in various warehouses in the European marketplaces.  They say, this is to make delivery to customers in Europe quick and reliable.

Amazon PAN-European FBA

What are the benefits?

The fulfilment fees are much lower, as you will only pay the local fulfillment fee from that marketplace.

When you sell to customers of other marketplaces via the EFN, which I outlined above, you pay a cross-border fee for each order shipped, on top of the fulfilment fee.

All these additional fees obviously impact your margins.

That sounds like a good thing. Why don’t you want that?

There are two main reasons.

  1. The more you move stock around (from warehouse to warehouse) the more risk there is of your stock getting lost or damaged.
  2. Storing stock in these countries can mean you now have VAT implications – even if you don’t meet the distance selling threshold.  (See below.)

Number two is the big one and the reason I decided it wasn’t for me.

What’s the distance selling threshold?

If you’re based in the UK and you sell to customers in Europe you don’t need to register for VAT in those countries unless you a:

  • Store stock in those countries
  • Sell to customers based in those countries and meet the ‘distance selling threshold’.  

For Spain, France and Italy this is currently €35,00, for Germany this is €100,000.

If your sales are under that, and you don’t hold stock in any of those countries, you don’t need to register, which can save you a lot of time and hassle.

What if I do need to register?

If you do, you’ll probably need to get professional advice – which will cost you.

I had a very small amount of stock stored in Germany and paid an accountant almost as much to register for VAT in Germany and submit my returns, as I owed in VAT.  Needless to say, this was a big hit.

Having to do this four times, in four languages is probably out of the question for most of us to do ourselves.

Amazon now offers VAT services for €400, per country, per year.  That may be worth considering if you think it would work for you.

One thing to consider here though is that Amazon stores stock in two additional countries – the Czech Republic and Poland.  So you might be eligible to pay VAT there too. Remember, you have no say as to exactly where your stock is held.

Is it worth it, for anyone?

Well, I guess that depends on how many sales you’re doing.  If you’re VAT registered and you’re making enough sales that you’re exceeding (or coming close to) the point where you need to register for VAT, then perhaps.

As always, I’d love to hear your thoughts on this!