Reduction of Amazon FBA fees by joining the Pan Euro program
Amazon Fulfillment fees just went up again as of March 2023. You can check out the latest fees according to your products dimensions and weight here.
The fulfillment fees are different depending on where you store your goods.
Keep in mind since, Brexit being implemented in 2020 the UK is no longer part of the free movement of goods in the EU. So we will discuss fulfillment fees in the EU and come back to the UK later.
Pan Eu program
We have touched on this before, but just in case you aren’t aware, the Pan EU FBA program reduces your fulfillment fees across all EU Amazon territories and also keeps your products stored closer to your customer.
The benefits of this are reduced FBA fees and faster delivery times. The latter should help your conversion sell through rate since most customers want their products asap.
The disadvantage of the Pan EU program is you need to register for and file VAT returns for each territory you store goods in, which adds an administrative and financial burden to your operations.
But the savings you make on fulfillment fees when selling higher volumes more than makes up for this. Let's dive deeper.
CEE
Central Eastern European country fulfillment is when Amazon stores seller goods in Poland and Czechia.
The reason Amazon has FBA centers there, is to be able to fulfill orders at a lower cost across the border into Germany, the biggest EU market.
What are the benefits of being registered there to your bottom line?
If we look at the latest rate card below and focus on the standard parcel size, you can see it costs €0.26 per unit more if you opt out of using fulfillment from Czechia and Poland.
Time for some quick math to illustrate the additional costs you incur if you choose to only store goods for sale only in Germany and not leverage the Poland and Czechia fulfillment options:
sell 100 units monthly; 100 x €0.26=€26
sell 1000 units monthly; 100 x €0.26=€260
sell 5000 units in a monthly; 1000 x €0.26=€1300
As you can see, savings on fulfillment quickly add up when you use Czechia and Poland storage options, and dwarf the additional tax compliance costs. If you are just starting out however, you can consider just using Germany as your EU FBA base and expand as your sales increase.
Other sellers prefer to jump right in and get their VAT registrations for all territories. The choice is ultimately up to the seller. With each territory comes more compliance and cost, so you can factor that into your decision. You can keep those costs to a minimum using paneurovat.com as a VAT partner for your business.
The next thing to consider is the fees when you only have one EU VAT registration. Let’s use Germany in this case.
As we discussed above, if you only VAT register and store goods in Germany your fulfilment charges in Germany will be €0.26 more per unit than if you stored and fulfulled orders from Czechia or Poland. This isn’t huge, but can add up quickly. But that is if you only VAT register in Germany and only sell in Germany.
Cross-border fulfillment
When we look at cross-border fulfillment, the fees really get high. Let’s give you an example. If you are selling on the Italian marketplace but are not VAT registered there and the product will be coming from Germany the fee for a standard parcel weighing 900 grams or less will be €9.19. If the same product was being fulfilled from within Italy (for which you need to be VAT registered) the fee would be €5.78. That’s a difference of €3.41. That is just the difference in selling one unit. If we multiply that by 100 we are talking about €341.
You can really see the benefit of being in the Pan EU program if you are scaling your business. If you are testing the other EU markets besides Germany, and you are getting traction it would be wise to get VAT registered and store the goods locally via the Pan EU program.
UK and Pan EU
Since Brexit, goods being bought from the UK are considered imports into the EU and vice-versa. Amazon is running a promotion until the end of March 31, 2023 to keep using EFN, but overall this isn’t ideal for fast shipping to a customer.
It is best to be VAT registered and directly import your products into the UK. This way your customers get the product quickly and you pay the lowest fulfillment fees offered to you.
The VAT registry and filing process can be intimidating, but it doesn’t have to be. With paneurovat.com you can calculate your VAT liability in seconds and we can guide you or handle your VAT returns pain free. Get in touch today so we can help you scale up your Amazon business.