The Impact of Brexit on FBA: What you need to know

03/08/2020

Marketplaces ChannelAdvisor By ChannelAdvisor

Information correct as of 23 July 2020 – any updates as a result of Government action will be reflected in the text.

From 1st January 2021, Fulfilment by Amazon (FBA) sellers who currently only use a UK fulfilment centre will be forced to switch to an EU-based fulfilment centre or lose access to its EU marketplace. This is a result of the UK leaving the EU’s single market and customs union. With no-deal yet in sight, Amazon has opted to separate EU and UK sales — culminating in the loss of access to the EFN (European Fufilment Network) and an end to Pan-European FBA inventory transfers between the UK and EU.

There is also speculation that Amazon may start the process of returning stock to the sellers’ UK warehouse during December in anticipation of the end of Pan-European sales.

What does this mean for brands and retailers?

Unfortunately this has several implications and possible outcomes that all brands and retailers should be aware of, including:

Increased transport and costs: Currently UK businesses selling across Europe send their stock to a Fulfilment Centre in the UK and Amazon then distributes it for storage across Europe. This means that the seller is only paying UK local fulfilment fees while using Prime same/next day delivery services throughout the EU. From next year, these sellers will now have to ship their stock to an Amazon Warehouse in Europe at their own cost, it will then be distributed as usual.

VAT changes: UK sellers will also have to deal with VAT in different countries. Since Amazon will no longer fulfill EFN (European Fulfilment Network) items across the UK-EU border, sellers will need separate VAT numbers for each country in which their inventory is stored.

Stock and inventory costs: UK businesses wanting to continue selling in Europe will be forced to split their stock, causing additional costs and potentially a higher inventory holding.

If you have any questions regarding how this affects your business, please contact us.

How does this affect non-UK sellers?

Businesses based in mainland Europe, wanting to continue to sell to UK customers after the 1st January 2021, will also have to split their stock and hold some in Amazon’s UK warehouses. And sellers from outside of Europe will need to split their stock across at least two Amazon FBA warehouses – one in the UK and another on the continent for selling to mainland Europe.

Click here to read Amazon’s FBA Update statement in full.

This is a challenging time for the e-commerce industry as we navigate the changes as a result of COVID-19 and Brexit. We understand this can be a worrying time for brands and retailers and we want to offer our reassurance that we will be doing everything we can to support our customers and ensure they are operating as efficiently as possible.

We will continue to update you as soon as we know more from Amazon about these changes and what they mean for your business.

If you have any questions about selling on Amazon and how best to navigate these changes, please get in touch: contact@channeladvisor.com.