Function Junction

How Brexit Impacts eCommerce Expansion into France and Germany

The GELF team chatted recently with Chris O’Shea at Meridian Global Services, a well-established source of data and insights based on their VAT solutions – and one of GELF’s trusted market scouts on European ecommerce trends.

Initially we were curious whether online retailers and marketplace sellers expanding into the EU prioritized Germany over France – or vice versa. Then along came the somewhat surprising Brexit vote.  And the conversation shifted.

What Taxes Tell Us about Inventory Flows

Taxation may not be one of the most exciting topics for discussion at cross-border ecommerce gatherings, but there can be a lot of insights and lessons learned from the business dynamics that revolve around taxation issues, especially value-added taxes (VAT).

Meridian often sees smaller US sellers approaching them with VAT questions when they look at selling via European marketplaces. Amazon encourages these sellers to expand into other countries by putting inventory in-market via Amazon’s FBA (Fulfilment by Amazon) program.

Another trigger for brands to reach out to Meridian is when they fulfil international orders directly from their U.S. distribution centres by working with an international shipping program like eBay global shipping service that is powered by Pitney Bowes.

Once the marketplace sellers stage inventory in Europe, they need to register for value-added taxes. What’s cool about Meridian’s vantage point from its VAT control tower is that the company sees how merchants’ international expansion plans evolve on a country-by-country basis across Europe. They see where inventory is being staged by retailers that are improving the customer experience by getting product delivered more quickly.

Brexit EU


Germany or France? How Does Brexit Impact the Decision?

It’s no surprise that most US merchants start their international expansion programs by targeting Canada and/or the UK.  Once they get past some of the early expansion anxiety and see solid results from this first international push, then they look to the rest of Europe for the next stage of expansion.

The GELF did some recent planning work with a large motorsports brand that asked us to explore how to empower its dealer networks in Europe with more digital commerce technology.  We found that Germany continues to be an ecommerce growth powerhouse in Europe.

We asked Chris to weigh in on what the data is telling them when these merchants face a choice between prioritizing Germany or France — and how the Brexit impacts the decision.

Chris, what does Meridian see?  Help us understand the new dynamics post-Brexit.

It’s great for a US seller to be in a position to now decide whether to sell in Germany or France (or both). However when it comes to a choice between these two countries, things are not so straightforward.

Of course market size, competitive forces and opportunities to make good margins are all considered but often it is accessibility and the ease of selling which seem to be the tools for US sellers to grow in these markets. By this I mean marketplaces themselves being the facilitators of growth.

Amazon has unified its five European marketplaces. This allows sellers to create and manage product offers in one or all of these five countries (UK, France, Germany, Italy and Spain). Sellers can control what and where they sell and manage all European business from a single seller account.


UK Still the First Choice – For Now

The UK seems to be the most obvious European market in which to sell for US sellers. Language and cultural similarities help significantly and it is perceived as easier (although in time the UK leaving the EU may change this outlook).

This means that if a US seller is selling in the UK, now they have the opportunity to easily list and sell in four other key European markets. Why limit your choice to just France and Germany. Why not sell in Spain and Italy too?

At Meridian Global Services we see a trend whereby US sellers come to us requesting a VAT registration in the UK. Shortly afterwards we assist them with additional VAT registrations in France, Germany, Spain and Italy. They have taken advantage of Amazon’s unified European marketplaces and have both greater and easier access to these key European markets that ever before.

Another driver is Fulfilment by Amazon (FBA). With FBA we see a few things happening. US sellers often locate stock in UK FBA centres as a first step. Once they have established a level of comfort they often start selling in both France and Germany at the same time.

Brexit Creates Distribution Uncertainty

Some sellers have chosen to hold their inventory in Amazon’s warehouses to serve customers on the continent and qualify for Amazon Prime service to consumers in Germany or France. However FBA is going to get more complex for US sellers using the UK as the bridge to the rest of Europe. Currently you can hold stock in a UK Amazon warehouse and fulfill sales through other Amazon EU country sites from you UK stock.

That’s not likely to change but with the UK leaving the EU we can expect to see customs issues affecting exports to France and Germany. It may be more efficient for US sellers to hold stock in Germany and France and forget about using fulfillment from the UK. This will mean a VAT registration in France and Germany.

Time will tell but at Meridian we will not be surprised to see more US companies bypassing the UK and putting stock directly into French and German warehouses so that products are closer to consumers.

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EU Marketplace Options

Of course there are many other marketplaces besides Amazon and eBay. Many US sellers are looking at Cdiscount, FNAC and Rue du Commerce in France. For Germany, and Zalando are popular marketplaces on which to sell. In these cases a seller needs to do their homework. Again competition, margin earning potential and product demand will all drive the decision between selling on a French marketplace or a German one.

Advice? Work out the number(s). Then make a decision. Recently we have seen many US clients approach us as they are selling on Cdiscount and require a VAT number in order to sell.

Germany vs France? Not An Either/or Choice

In summary thanks to the eCommerce landscape in Europe, many US sellers make no distinction as to whether to sell in France or Germany. They often ask themselves ‘how do we sell on both’?

What do you think? How do you look at EU expansion? How does Brexit impact your planning?

Let the GELF team know!

And thanks for the insights, Chris! For further information contact: Chris O’Shea,

Tel: +1 212 554 6719



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