Are you planning to start selling on Amazon Germany in the coming months? It’s a great idea! E-Commerce in Germany is expected to be at least 147 billion in 2023, another all-time high and only exceeded by China, USA, Japan and the UK. Over 80 million people have access to the internet, of which at least 55 million will buy something online in 2023 and these figures will only continue to grow in the coming years. So, entering this market is one of the best decisions any entrepreneur can make at the moment.
However, although there are many advantages to entering Amazon Germany, there are also several drawbacks that any new company will face, so we have compiled this list of essential things you need to know and take into account before starting to offer your products and services in Germany…
Taxes: Although we already know and hear repeatedly that VAT is important (yes, it is), this is only one tax and one legal procedure, things can be more complicated and complex than they seem. That is why it is essential from the beginning to find a company or accountant specialized in e-Commerce and Amazon. Even better if it is specialized in Germany’s legislation.
There are already many companies on the internet that assist with these procedures and support sellers who want to expand to Germany and Europe. Although there are many good ones (Amazon works directly with many of these companies), there are others that are only made to take the most number of clients with the least effort possible. They take weeks to respond to emails and very rarely explain to you what is happening or how things work. And this is the problem, it is not just about finding someone to do the procedure and be legally responsible to the authorities on your behalf, you have to find someone who is really a “advisor” not just a facilitator. You need someone who will help you answer your questions and understand the system, it is the only way to save money in the long run. I once paid €450 for a procedure that took me 10 minutes to do online the following year. This is very common. And if you don’t understand what is happening, everyone will want to take advantage of you if we consider that your costs will continue to increase as you expand to more countries and markets and your revenue and number of invoices increase.
Regulations: Every couple of months, a new regulation enters the European Union that sellers must comply with. Similarly, every couple of months, the way certain regulations used to work changes. Amazon is very good at helping sellers comply with these regulations, but even so, there is always something the seller may not be aware of and that is not a problem; until it becomes a problem.
In Germany (France also), for example, the most essential thing to be able to sell is to comply with the VAT, EPR and EU responsible person. The EPR depends on the categories in which you are selling and this is just the beginning, depending on your products, you have to carefully look at the labels and information that your packaging must have and the certificates that your product must comply with. It is not the same to sell textiles as to sell products for babies. In the beginning, it may not matter and Amazon will not notice, but sooner or later, your product will be verified and if it does not comply with the European Union’s packaging and safety measures (regulations), they will close your listing and you will not be able to restore it. It is easier to comply with regulations and requirements from the beginning than to try to do so when Amazon has already marked your account.
Doing this is expensive and takes a lot of time, but doing it will put you in the top 1% of sellers and shield you from any problems that may arise, so it is worth thoroughly studying your category, your product and doing what you have to do before you start selling.
Amazon commissions: If I had to start from scratch on Amazon, the only thing I would do differently is search for a product with a better margin that can be sold for at least 30 euros. Why? Because the commissions that must be paid to Amazon are brutal and in the coming years … they will continue to rise.
Including advertising, what Amazon keeps for each sale is sometimes up to 40%. If you add VAT (19% in Germany) that Amazon will automatically deduct, then you end up with 41% of everything you sell. This is my case, and we make almost half of our sales in FBM, so our commissions are lower than sellers who only do FBA. So it is very important to take this into account, because these high commissions are the ones most likely to bankrupt your business if you are not prepared, especially at the beginning when you have to invest more in advertising and lose margin to position your product.
Despite this, very few people are talking about this, and although they tell us about the many benefits of doing FBA, very few tell us about how difficult it is to face these commissions, which makes the business model not suitable for some products. Take this into account, do not be naive and think you can beat Amazon or that Amazon will lower its commissions.
And although the list can continue, in my experience these are the three vital things that anyone who wants to sell on Amazon Germany or Europe should consider if they want to have a well-founded and healthy business that can be maintained and grow in the long term.
Do you agree? Is there something you consider important as well?