It has been nearly five years since the referendum that voted the United Kingdom out of the European Nation.
Since the vote, Ecommerce sellers have been wondering how their business will be affected by the change in trade deals.
If you’re an Amazon FBA seller running your business from the UK or the EU, these changes are especially important for you, although you will still be affected even if you don’t use FBA.
Let’s cover everything you need to know to adapt your Amazon business to Brexit.
Table of Contents
1. What Is Brexit?
2. The transition period is over
3. Brexit’s impact on trade in the UK and EU
4. Amazon’s official announcement
5. What does this mean for my Amazon business?
6. Brexit and your Amazon FBA business
7. How to handle your UK and EU FBA inventory from now on
8. Adapt to Brexit and continue thriving in your Amazon business
What Is Brexit?
The EU is one of the world’s largest economies and was made up of 28 countries (now made up of 27). Because of free trade agreements, an Amazon seller from one country in the EU – for example, France – can sell goods to someone located in another country within the EU, like Germany.
Citizens in the EU also have the right to travel from one country to another without restrictions. They can also decide to move to another country, get a job in any EU country, and retire anywhere they wish.
Before Brexit, the United Kingdom was a part of the EU. However, the UK has been debating their role in the EU for a long time. During a referendum in 2016, citizens of the UK were asked whether they wanted to remain in the EU or leave.
This referendum resulted in 52% of voters wanting to leave. As a result, the UK became a separate economic entity, and citizens of other EU countries can no longer come and go freely in the UK as they please.
Typically, tariffs and quotas get imposed between two countries for the trade of goods. However, a free trade agreement was struck between the EU and the UK. Products that cross the border will still be subject to customs checks, which means trade won’t operate as smoothly as before Brexit, but no other tariffs on goods will be imposed.
The Transition Period Is Over
Up until January 1, 2021, the UK was still in negotiations with the EU in regards to trade laws. This meant that if you were an Amazon seller in the UK or the EU, you might not have seen any changes before then.
However, the UK’s market is now separated from the EU since the beginning of 2021. Some issues remain to be decided, such as financial services and data sharing, but other than some small details, the transition period is now over.
This means that if you haven’t already prepared for Brexit, you should do so as soon as possible.
Brexit’s Impact On Trade In The UK And EU
Despite the trade deal struck between the UK and the EU in December 2020, Brexit has still had an impact on trade between the two economic entities so far.
One of the biggest issues stems from the struggles at the border, which has incurred extra costs and paperwork ever since the finalization of Brexit.
23% of small firms in the UK have suspended their sales in the EU because of post-Brexit rules, and 4% have decided to suspend those sales permanently. 70% of small UK traders also experienced delays when moving shipments.
In addition, sellers exporting goods from the EU into the UK now need to file customs declarations that vary depending on the type of products.
Here are some real examples of business owners and how they have been impacted thus far:
Daniel Lambert (Wines): “On the 20th January we finally got our first successful tariff free C88 Collision symbol. Now to find a lorry to collect stock. After doing this job for 29 years I know pretty much all the wine logistics companies. So after a few calls it was clear they are also having some problems. My regular logistics partner has suspended their service completely from the EU to the U.K. until February. These guys operate in 31 countries & know how to move stock quickly, but the paperwork nightmare is just too much for them. They don’t have the time to waste frankly.”
Richard Townsend of Bailey Paints: “A shipment that used to cost £95 (€107) and take five minutes to organise will now take an afternoon and cost £400 (€452).”
Joycelyn Mate of Afrocenchix: “A customer… had to pay over 50% of what his overall parcel was worth to get it out of customs and we had to send him a VAT invoice… It’s been horrible and it’s almost gotten to the point where we’ll have to probably stop trading with the EU, which is going to cost us thousands of pounds over the next three months.”
Amazon’s Official Announcement
In July of 2020, Amazon made an official announcement regarding Brexit:
We would like to share with you the latest information on Brexit to help you prepare your business for upcoming changes.
On January 31, 2020, the UK left the EU and entered a transition period where existing arrangements are being kept in place until December 31, 2020. The UK is due to formally leave the EU’s Single Market and Customs Union from January 1, 2021.
While UK-EU negotiations are ongoing (including determining what tariffs, if any, will apply), from January 1, 2021 there will be a customs border between the UK and EU which will have an impact on businesses working across this border.
This will have the following impact for Amazon Selling Partners from January 1, 2021:
• 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 and Spain sites)
• To mitigate the impact of these changes, you should consider splitting your inventory and sending it to a fulfilment centre in the UK and the EU, so that you have sufficient stock 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
Your Amazon business will continue to operate as usual until January 1, 2021. However, there are actions you can start taking now to prepare your business for the new customs borders. For information about how you can prepare for these changes, and for all of the latest information about Brexit, please see our BREXIT guidance help pages and the UK government website.
Thank you for selling on Amazon. We remain committed to supporting your business selling in the UK and in the EU as we make this transition, and we will continue to provide the latest information to support you and help your business thrive in the future.
What Does This Mean For My Amazon Business?
Amazon is one of the biggest online retailers both in the UK and in the EU, so it makes sense that its sellers would be impacted by the change.
If you have an Amazon seller, you will see a difference, although this difference will not be the same whether you are in the UK or the EU.
As a member of the EU, you’ll still be able to sell to other countries within the EU without a change. The changes will occur only when you sell to people in the UK. Unless the majority of your customers came from the UK, your Amazon business won’t see too much of an impact.
Of course, if you are a seller in the EU with a majority of your customers in the UK, these changes will make a huge impact on the way you run your Amazon business.
On the other hand, as a seller living in the UK, all your customers from the EU are affected. This means that if you previously sold to people across the EU, you’ll run into some difficulties and will lose some benefits.
Brexit And Your Amazon FBA Business
Here are some of the most important changes for Amazon that have occurred as a result of Brexit.
First off, Amazon’s UK FBA operations are now split from the EU FBA operations. If you are in the UK, it means you can no longer be affiliated with the European Fulfilment Network, or EFN.
In addition, Amazon’s UK Fulfilment Centres are no longer fulfilling orders for European countries.
Before Brexit, you could transfer inventory items between the UK and EU without a problem. This was known as the Pan-European FBA inventory transfers. However, this is no longer possible.
As a seller, you could previously send your Amazon products to fulfilment centers in the UK, and Amazon would take care of distributing them for storage across the EU. Now, this is no longer possible. However, stock that is sent to Amazon warehouses elsewhere in Europe will be distributed to other European warehouses – just not in the UK.
Your UK products will no longer be Prime-eligible in the EU, which means lost visibility to millions of potential customers. It also means that fast delivery speeds and advantageous fulfilment costs will no longer be available to Amazon sellers.
If you are a larger seller, it may be financially viable to split your stock between UK and EU warehouses. However, as a smaller seller, you will have to think about whether or not you can afford taking this step, since it requires more liquidity to hold stock in several warehouses at once.
If you’re a seller who is selling at a high volume, you may be eligible to offer Seller-Fulfilled Prime. Unlike Amazon FBA, which provides Prime shipping to customers that gets fulfilled by Amazon, sellers who have an SFP membership take care of their own fulfillment.
Keep in mind that Amazon has high standards of performance for sellers to become SFP members, so this will not be available to all sellers.
Another option is to use Fulfillment by Seller, which places you in charge of your own fulfillment. You won’t have to pay FBA fees, but it also means you’ll have to pay shipping costs (or charge them to your customers, which makes your products less attractive compared to competitors who offer Prime.)
If you don’t want to handle your own fulfillment, you can also opt to find a third party fulfillment company. These companies take care of all aspects of fulfillment, which includes storing your items in a warehouse, shipping to customers, and distribution.
If you are a UK seller, you will also need to register for VAT using a fiscal representative, which is a locally established business within the EU that will be liable for the VAT you owe when selling products to the EU.
Keep in mind that tax laws will change this upcoming July. Instead of registering for in-country VAT and filing in separate countries, you’ll now be able to file a One-Stop Shop filing, or OSS. This is true, unless you’re holding stock in other countries within the EU. If that’s the case, you’ll need to file for VAT separately.
How To Handle Your UK And EU FBA Inventory From Now On
Now that Brexit is completed, you’ll need to keep your inventory in a UK fulfillment centre when you want to fulfill orders in the UK.
To sell in EU countries, you’ll have the following options:
You should also take the steps required to enable multi-country inventory. When you do this, your inventory will be able to get transferred across borders. You’ll be able to find those settings in your FBA settings:
As a seller in the UK, you can also continue to sell your products to customers in the EU, as long as you enroll in the FBA Export Program.
Amazon has created articles to help you manage your UK and EU inventories if you are using Amazon FBA.
“For storage limits taking effect on or after January 1, 2021, you will get one set of storage limits in each storage type covering UK inventory, and a second set of storage limits covering inventory across the EU (Germany, France, Italy, Spain and the Netherlands). Previously, there was one set of storage limits that applied across the UK and Europe.”
You’ll be able to find out everything you need to know by going into your account and opening the Storage Volume menu in your Inventory Performance Dashboard.
For your current inventory usage in the EU and the UK, here is what you can do:
“For limits that went into effect before January 1, 2021, the usage for Europe and the UK will still be combined. For your subsequent period and beyond, you will see your current storage limits split between the UK and Europe when you sign in to the respective marketplace account.”
Keep in mind that until further notice, your UK and EU stores will share the same IPI scores.
Other changes will occur throughout 2021, including:
• Amazon will eliminate the packaging weight adjustment in their fulfilment fee rate card and adjust the weight limits for each size tier accordingly. This change will occur starting on June 8, 2021.
• Size tiers will see a change: the FBA Small and Light programme will now be aligned with the standard FBA programme. This is in an effort to keep offering low fulfillment fees on Small and Light items.
• Amazon has extended the limits of the fulfilment size tiers to account for fulfilment of heavy and bulky products. This service will have fees associated with it. According to Amazon, “products greater than 31.5 kg or 175 cm in length can now be fulfilled in the United Kingdom, Germany, France, Italy and Spain as part of the domestic FBA programme. In addition, sellers will pay a minimum referral fee of £15/€15 for each item sold via Heavy and bulky FBA, in addition to FBA fees.” This has been effective since April 1, 2021.
Adapt To Brexit And Continue Thriving In Your Amazon Business
Brexit hasn’t made it easy for Amazon sellers to succeed in the UK and EU. However, it is still possible to build a thriving business by not only adapting to Brexit, but also taking proactive steps to grow your customer base and increase your sales.
You can keep reading to learn more about how you can grow your Amazon business!
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