As the UK Brexit transition period will end after 31st December 2020, Amazon has confirmed that due to the new customs border the company will not fulfil European Fulfilment Network (EFN) items across the UK/EU border. Additionally, Pan-European FBA inventory transfers will also cease on the same date. Amazon has warned UK sellers that are utilising its fulfilment service that practices will have to be adjusted to avoid any issues arising.

What are the upcoming changes to Amazon?

The announced changes will significantly impact sellers on the marketplace utilising EFN and Pan-European FBA solutions. Currently, EFN is an easy solution for selling internationally, whereas Pan-European FBA is generally suited to sellers with higher levels of inventory.

EFN

EFN allows sellers to fulfil orders from any Amazon European marketplace while shipping goods from an Amazon fulfilment centre located in one country. Following Brexit, Amazon has stated that goods stored in UK fulfilment centres will not be eligible for fulfilment across Europe due to the increased difficulty in logistics. For many sellers, this means that the potential opportunity for sales will reduce from 446 million EU customers to 66 million people in the UK.

FBA

From 1st January 2021, stock located in Amazon UK warehouses will no longer be eligible for Pan-European FBA. Sellers will be unable to distribute their stock across Europe.

Currently, sellers with Pan-European FBA can sell across Amazon Europe marketplaces by sending products to UK fulfilment centres, where Amazon distributes the items for storage across Europe. This also enables items to become Prime-eligible to millions of customers, offering faster delivery while sellers are only charged for local UK fulfilment fees. After 1st January 2021, stock sent to Amazon warehouses in Europe can still be distributed across other European locations, but cannot be sent back to the UK.

The overall impact for businesses

Whilst Amazon has stated that changes will be implemented from January, sellers should prepare in advance to ensure that there is minimum impact on existing business.

Any stock located in Pan-European FBA may be sent back before the end of the year due to adjustments for the holiday seasons. Sellers should ensure that any adjustments are made prior to the end of December to avoid any last-minute issues.

Businesses will also deal with the impact of the logistical issue that will arise due to the higher barrier to entry to selling in European marketplaces from the UK. Sellers with affected products will be forced to split stock into EU and UK warehouses, which will likely lead to higher inventory holding and shipping costs. A similar process will apply for EU and global sellers with products on UK marketplaces, in which stock will be split into two territories.

Tips for preparing

The impact of Brexit will affect most businesses trading on the marketplace, therefore it is essential to prepare in advance.

It is recommended that sellers consider splitting inventory and sending it to fulfilment centres in the EU and the UK to ensure that sufficient stock is maintained across all channels. It should be noted that this will result in shipping products across a new UK-EU customs border, which will require additional information to be provided as part of a customs declaration.

Seller-fulfilled orders using a third-party carrier can continue to be delivered across the UK-EU border, however, it will the responsibility of the carrier to ensure all duties and tariffs are paid prior to delivery to the customer.

International VAT compliance will also alter, as all UK sellers who keep stock in the UK and ship to EU countries that do not exceed EU sales thresholds will face obligatory VAT registrations in the countries where the stock is kept by Amazon.

Preparing your inventory

Sellers will have to select a process for making customs declarations, which can be done internally or using third-party services. Setting up new shipping models can be difficult, therefore businesses should start planning and making changes as soon as possible.

To ship products across a customs border, sellers will require the following information in their declarations:

• VAT numbers will be required to move goods across a border and store locally in another country.

• An Economic Operators Registration and Identification (EORI) number will be required to move goods into any EU countries.

• Country of Origin Information will determine whether your goods qualify for preferential treatment such as reduced or zero rates of duty, depending on whether a trade agreement between the EU and UK exists.

• Harmonised System (HS) Codes will determine the level of duty and import VAT applied to products.

• Sellers should confirm whether they will need to provide licenses, certificates, or permissions from intellectual-property right owners to move goods across the border.

Summary

Although there is a lot of uncertainty regarding Brexit, Amazon has outlined the required steps that need to be taken to prepare for the upcoming changes. The severity of the changes will heavily depend on whether there is a trade agreement between the EU and the UK. Sellers should use this period to research the extent of how their products and sales processes will be affected to ensure minimal disruption.

For more information regarding the upcoming changes due to Brexit, how to prepare your business, and which solutions are best for undisrupted trading, contact one of our dedicated specialists.