For an American or English seller who is looking to branch out into the German market, Gil does have a process he steps through to help set you up. If you’re an American seller, the logical second step would be to set up in England, and vice versa for English sellers.
Once you’ve done that and you’re at the point where you have 10-20 products selling well in the English and/or American market, then it’s time. You need to strategize which market in Amazon Europe is interesting for your some of your products. Gil says it would probably be Germany, but afterward start looking at France, Spain, and Italy. He recommends looking at it as a whole picture. It’s already hard to set up so you might as well go for all the markets.
However, don’t think you can slap everything you have in America on the German market. You have to have a good look at the products and the market. Use BSR knowledge and professional help to get the listings translated and do the marketing. Gil uses a tool called Amalyze, which helps him monitor his PPC. Right now it only works in Germany. This is one area where he suggests getting professional help. It’s surprising to see how many American sellers have only American words in their PPC, which doesn’t help them with German consumers.
If you’re going to make the effort to go somewhere, you might as well make the whole effort. It’s going to be an effort for the American seller to sell as a whole, so you might as well consider all of the marketplaces, go to town and do it properly when selling on Amazon Europe.
Some of the things American needs to think about from the start are how they structure their company, where they pay their taxes and whether they will use the Pan-European FBA program or not. In Europe, even though there are different countries and different marketplaces, they’re all part of the European Union (at the time of recording.)
If you’re looking to start selling in Europe, get somebody to tell you about the Pan-Eu program and how it works with VAT tax before you set up shop. After that is done, and you’re registered, get somebody to help translate and do the listings, customer support and marketing efforts in their language. If you are selling 5 or more products, you are really selling a brand. Don’t destroy your brand image by selling in Germany with weird translations and getting bad reviews.
Gil helps people navigate the difficulties with branching out into the German marketplace. So far he has worked with people who were already registered in Germany, had their account going there and also in the rest of Europe. They started by looking at their whole portfolio of what they were selling in America and, based on the 80-20 rule, figured out which would be the best 20% of products to start selling in Europe.
They followed the process that was discussed in Part 1 of this interview: get it translated, put the keywords in, launch and start PPC. After doing this with just the top 20% of products, they added more and more products to the European market for them. However, they didn’t do this for their whole portfolio because not all the products make sense.
Some things don’t translate well due to climate differences, such as camping gear, which doesn’t do well in the UK but does really well in Germany. Also sometimes it’s due to cultural differences. For example, tablecloths do really well in Spain because the Spanish value their formal family meals. Even though it’s a very small market, the product does much better there than even the rest of Europe.
For Gil’s sports brand, he does sell across Europe, however, 70% of that revenue comes from Germany. The rest is divided by France, Italy, and Spain, and does not include the UK. For one of his clients, France and Spain took a larger cut, up to 30% and Germany was 60%, while Italy and the UK made up 10%. Germany will be the strongest market and in comparison to England, it will likely be the easier market. Do your research as it depends on the product as well as exchange rates of various currencies (e.g. Pound to Euro compared with Dollar to Euro).
Gil’s general advice is to just try it out. As a UK seller, you can even export from the UK, without having to get a VAT number or anything. Get a German listing, list on the German market, optimize all of that for your 3 best products and they’ll probably be less competitive than in England. Find somebody professional to help you with the translation and optimization. Give it a real chance to work, and test it from there.
Start with your 3 best products, and then over time, you can either decide to get the rest of your products into Germany or expand those first 3 products to Spain, France, and Italy. By the time you have 1000 orders per month all over Europe it’s time to get PanEU going because you save that €1 on every order. Test out Germany and take it from there. You can store your inventory in the UK and send it to any Amazon buyers in Europe without a big risk. You only pay a little bit extra for the export.
If you’re just starting out, under a revenue volume of €30,000-70,000 and not VAT registered yet, it’s not an issue because as long as you aren’t storing things in the EU you don’t have to register for VAT. In the UK it’s £83,000 so VAT is something you can afford to worry about down the line if you’re just starting out.
For those more advanced, Pan EU involves VAT registration in a number of countries. Gil does have a PanEU program for his sports brand because he has more orders than 1000 per month and is selling everywhere. Just from a numbers perspective it already makes sense.
The PanEU FBA program means instead of shipping from one location, Amazon can store the product anywhere in Europe. If you store something somewhere in Europe, then you need to be VAT registered in that country. That’s how it works. If you want to do PanEU, you do need to register in France, Italy, Spain, Germany, England, Poland and the Czech Republic. Gil stresses that you cannot do this part yourself. Trying to get in contact with the financial departments of all 7 countries and complete all the paperwork on your own isn’t a good idea, so Gil works together with a German partner for that, or he suggests the company Avalara.
The whole package for Gil for the first year was €3000, but that includes the registration in all the countries and the monthly fee for doing his VAT. They won’t transfer the cash for you. Once a month, Gil gets all the VAT numbers and transfer the money to 8 different countries. It’s complicated but he is very happy with his online banking options with his bank. He recommends you check this with your bank in advance. If your bank says you cannot transfer money to Poland then there’s a problem. But there are companies that can help you with that.
It’s a slight admin headache, but there is advantages of doing things using Pan-Eu FBA. First, you will have a better time of Prime. Even if you export and it says Prime, it tells the people who buy it that it will take 3 days and is shipped from England. Most people agree the Amazon algorithm will push your product a little more if you’re available in one day. So if somebody in France buys it and it’s already there in France in the fulfillment center, it’s an advantage. Plus, every order you do that doesn’t use Pan-Eu is €1 extra.
It’s tricky to stay in touch with German consumers. By law, it’s not allowed to send any commercial email without double opt-in. Amazon has a double opt-in, but you as a seller do not. You’re not allowed to send any emails that contain anything commercial. Even asking for a review or feedback is considered commercialized mail and is not allowed. The only email you can send is when you send the invoice. However, even in that one, you can’t ask for reviews or feedback. If you obey the rules in Germany, you’re not really allowed to have any follow-up contact with your customers. However, a lot of people do skirt this or blatantly ignore this rule.
This does explain why there are so few reviews on German listings compared with similar products with a similar volume of sales in the UK. Either you still do it or you find a way to know your customer. For example, you can go to Facebook groups for your target market, reach out and get opt-ins that way. You can do Facebook ads to an opt-in funnel, for a coupon code for example. Then you will get the customer’s double opt-in. Then you can communicate with them.
Accounts don’t get suspended for sending follow up emails. Amazon doesn’t really care about it so much, but it’s the German law. You would get a letter that says you should not do that anymore and have to pay a fine. It’s like a Cease and Desist letter along with a fine. It’s sent by lawyers, usually coming from your competitors. The fine is €500-1000 as a general rule. It’s always the question of risk vs. reward and for many. A fine is preferable to an account suspension for anyone doing serious numbers.
Gil believes Germany has probably finished a big percentage of its growth curve. Although the German market will keep growing it won’t be at the pace as it did over recent years. Over the next year or two, Amazon Spain, Italy and France will probably start growing. That’s assuming Amazon focuses on growing the markets there, but the whole of Europe will keep growing overall. This means that now is an awesome time to get involved and get some shelf space in Amazon Europe.
On 5 July, Gil and Michael are speaking at the Amazon Event run by Web Retailer Andy Geldman. It’s at Bar Rumba in Southsby Avenue, the heart of London’s West End, and starts at 6 or 7 pm. Get in touch with me for more information, or visit The Private Label Masterclass on Meetup for details. You will need to be registered to attend.
Gil’s content is in German, but he does have an Agency that helps the American or English seller who is looking to get into the German market. You can book a free call with him at www.commerceand.eu or find him on Facebook at Gil Francis Lang