UK sellers need to adjust export plans

Amazon has announced orders through Fulfilment By Amazon (FBA) will not be fulfilled across the UK-EU border from January 1, 2021.

It essentially separates the UK from the European Fulfillment Network, and means that sellers fulfilling orders to EU customers from UK warehouses will face extra costs and red tape.

The decision could also have knock-on effects on warehouse storage demand in the UK.

Amazon has advised sellers to mitigate the impact of these changes by ‘considering 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’.

ParcelHero’s Head of Consumer Research, David Jinks MILT, said: “Amazon has to plan its systems months ahead and has obviously opted for the worst-case scenario and decided EU and UK sales need to be kept entirely separate for now.

“Amazon will be highly reluctant to see a build-up of UK sellers’ stock in Europe during December. That will present a red tape nightmare in January, when some stock is inevitably returned.

Currently the European Fulfilment Network is the easiest Amazon service for UK sellers to use in order to reach EU customers. EFN allows UK-based sellers to fulfil orders from any Amazon European marketplace using just one Fulfilment Centre, such as the UK. UK sellers can create listings on Amazon’s EU marketplaces but fulfil those orders using UK stock. Items are shipped directly from the seller’s UK warehouse. The fees for EFN sellers are quite steep, but the advantage is that it presents an easy way to sell into the EU without needing VAT numbers and minus the red tape in other countries.

David added: “Our worry is that the end of this service just six days after Christmas is bound to create a nightmare before Christmas, as Amazon starts to repatriate UK sellers’ stock.”

The situation is equally complex for retailers using Amazon’s Pan-European FBA service. Pan-European UK sellers send their stock to a Fulfilment Centre in the UK and Amazon then distributes it for storage across Europe. That means sellers are only paying UK local fulfilment fees while using Prime same/next day delivery services throughout the EU. From 1 January, UK Pan-European sellers will have to send stock to an Amazon warehouse in Europe at their own cost. 

David added: “Once it has reached an EU Fulfilment Centre in, say, France or Germany, it would then be distributed by Amazon to other European warehouses as is currently the norm. For sellers, this means splitting stock and potentially increased transport and storage costs. It also means they are forced to deal with VAT in different EU countries.”

He advised: “ParcelHero lists thousands of courier services to the EU for Amazon retailers who decide to continue selling to the EU, so getting stock to a designated European warehouse is easy. We recommend France as the cheapest EU destination. By using couriers to reach Amazon EU centres, UK sellers could enjoy significant profits by sending lightweight, high-value items to European warehouses. Bulk shipping of less valuable items can also reduce costs considerably. Again, a wide range of pallet load services can be seen on ParcelHero’s website that are ideal for stocking EU warehouses.

“For all those UK sellers not wanting to take a leap into the unknown, January marks the end of EU sales on Amazon. Adding to the problems, the e-commerce giant may start to get heavy-handed about large quantities of stock shipped to EU warehouses at the start of the Christmas season, just in case a backlog of forced returns starts to build. Sellers may want to consider getting stock to the EU well in advance of any service disruption for their final EU Christmas. We recommend Amazon retailers bring all their Christmas plans forward, even if it means increased storage costs. Otherwise, Amazon’s many UK sellers are facing a blue Christmas without Amazon EU.”

USA post cost increase
From 1 July many companies using the United States Postal Service (USPS) for final delivery will have seen prices rise significantly. Some shippers sending small parcels to the USA are facing a rise in costs of over 100% this month. The increases will hit many mailings that use the United States Postal Service (USPS) for final delivery within America and put up prices for many traders using the USPS-China Post ePacket service for e-commerce.

ParcelHero’s Head of Consumer Research, David Jinks MILT, said the new charges will have considerable impact on business and e-commerce shipping prices to the USA from China as well as countries, such as the UK, with close trading links to America.

The background is President Trump denouncing cheap e-commerce imports into the USA last year.

ePacket revolutionised low-cost imports from Hong Kong and China by reducing rates to almost the same as sea shipping, while knocking weeks off the transit time. Typically, a shipment by sea between China and the US took eight weeks, whereas most ePacket shipments are under 30 days.

The main benefit for sellers, however, was the low price of ePacket shipments. UK-based sellers would often use ePacket to drop-ship parcels to the US.

David Jinks said: “Now that its price advantage has gone, many traders selling to the USA using ePacket for drop shipping may decide that they want to switch to international couriers. At least that gives the option of a far faster service between destinations such as China and the USA. They may also consider concentrating on bulk orders to reduce overall costs and warehousing stock within the US.”

David added: "There’s more bad news on the way. More nations will be setting their own terminal dues in the future which means higher mailing costs, and there are a raft of further headaches for sellers using online marketplace traders from July next year:

"From July 2021, non-EU sellers will have to charge VAT on all imported goods. Non-EU sellers will have to register for IOSS in just one EU state to declare the VAT on any affected imports on shipments below €150. This is known as the ‘non-Union scheme’.

"Marketplaces will also become responsible for charging VAT as they are deemed the seller – just as will happen in the UK in January. Finally don’t forget the UK Govt has mooted a home delivery charge to make people reconsider the amount they buy and return online – similar to the concept of the plastic bag charge. 2021 looks like being a tough year for online marketplace sellers, all considered."