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Expanding your eCommerce business into Europe

The “European Union” may sound like a wonderfully harmonized market with one shared currency, yet the reality on the ground is vastly different; there are some key barriers to entry that should be carefully considered before taking a leap of faith
Berlin Skyline (Photo credit: Sven Scharr)
Berlin Skyline (Photo credit: Sven Scharr)

Although it is the second smallest continent in the world, Europe does boast the largest B2C eCommerce market on the globe. Worth around 500 billion Euro in 2016 and predicted to grow to €590 Billion in 2017 and €660 billion of total online revenue in 2018.  The United Kingdom, France and Germany are clearly the major e-commerce countries in Europe, good for 60% of all turnover on the continent. The UK alone ‘does’ around €160bn. Let those numbers sink in for a second. This is a huge market potential for any ecommerce business and definitely worth the effort of trying to tap into. Does it have your attention?

Market Differences

The “European Union” may sound like a wonderfully harmonized market with one shared currency, yet the reality ‘on the ground’ is vastly different. There are some key barriers to entry that should be carefully considered before taking the leap of faith. The English language will get you far in the UK and Germany, but not in France. Different cultures require different strategies.

Each country has its own preferences for specific platforms, delivery- and payment solutions. Where Amazon is huge in the US (43% of all online US retail goes through Amazon), the Dutch like Bol.com and Jean-Claude can’t be bothered if it’s not on Cdiscount.com. DHL (Deutsche Post) is an excellent choice for the mainland, but the Brits prefer Royal Mail or Yodel. The whole world knows Paypal, but the Dutch like iDeal for their payments. And this is only the beginning.

Market Regulations

European market regulations for E-commerce are also subject to ongoing changes and it may be hard to keep up when you’re not actually based in Europe. Tax and import regulations still vary from country to country and are different for EU-based sellers or Non-EU e-commerce companies.

As recent as December 1st 2016, the European Commission unveiled a series of measures to improve the Value Added Tax (VAT) environment for e-commerce businesses based in the EU. These proposals will allow consumers and companies, in particular start-ups and SMEs, to buy and sell goods and services more easily online. You can read the official EC press release here.

For companies based outside the EU, there are a number of taxes such as VAT and import duty to consider. The amount due is calculated on the value of the goods. The EU valuations rules need to be understood. However, the fundamental issue is ‘who is the Importer of Record’ and therefore responsible for the payment of all import taxes – you (the supplier), or your customer?

Solutions

A third-party logistics (3PL) has the necessary expertise to make sure your business is compliant. They can also take on the role of “Importer of Record” and deal with all the import tax hassle.

Certain European fulfilment companies offer LVCR (Low Value Consignment Relief) solutions that provision the entry of lower value products into the EU without paying duties. This alone can instantly increase profitability of your European venture.

Multi-location (“split-stock”) Fulfilment in Europe offers additional cost benefits to online retailers, eliminates customs hold-ups and ensures faster delivery times for customers.

A European fulfilment partner can save international customers thousands of dollars on last mile shipping costs, maintain a high quality returns process and ensure the e-tailer’s sales grow in Europe and the UK. Check out this eBook to learn more.

Conclusion

Expanding into Europe has to be done with due diligence and proper planning. Make sure that you are going to work with people that know how to do this if you have no in-house experience.

Contacting a reputable European eCommerce Fulfilment provider is a great way to start.

 

About the Author
For the past 15 years Weeb has led global marketing activities for a wide range of Hi-tech start-ups, creating lead-machines that exceed targets. With a passion for people, business and all things tech, he uses his toolkit to hack business growth for a living. When not at Graduway you can find him on the trails or slopes, crash-testing yet another mountain bike or a pair of skis.
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