Every week, I receive emails from people asking me if this is a GOOD time to start selling on Amazon? Indeed, 2020 has been full of surprises. Apart from the worldwide pandemic, people in the UK have to deal with another new reality: BREXIT is actually happening on the 1st of January of 2021, and that will dramatically change the way Amazon FBA businesses will be run in the UK and EU.
But—and this is a big but—does it really matter?
Should you really stay away from Amazon until things clear up?
No, I don’t think you should, and here’s why:
1) Things are never perfect. This whole situation reminds me of an average person’s attempt at starting a diet. It’s always TOMORROW. There are always excuses for why you can’t start your diet or exercise today, but we all know that TODAY is the BEST day to make a change, no matter what.
2) Logistics are actually not that complex. From what I can see, many people are worried about Brexit without fully understanding what it means for them. For example, people contact me and ask how Brexit will affect importing from China, when in fact, it won’t make any major difference.
3) The competition will only increase. The more you delay the process, the more difficult it will be to start a successful Amazon FBA business. Or to be more precise:
The longer you wait, the fewer opportunities there will be because thousands of other people will start selling on Amazon while you are waiting it out.
So, I don’t think that the situation is as dramatic as people make it seem or believe it to be.
We’ll take a closer look at each of the three biggest issues—COVID-19, Brexit and the Pan-Eu Programme—but to sum it all up: you should NOT wait for anything to happen or clear up to start an Amazon business.
It’s just a waste of time. We don’t know what will happen next year. Maybe there will be a new virus and the situation will become even more difficult than it is right now. Waiting for the “perfect” time is a huge gamble. Don’t be a part of it!
Ok, now let’s take a closer look at the most common myths and questions people ask about these difficult times and how they relate to Amazon FBA businesses.
eCommerce is one of those industries that has been booming throughout this worldwide crisis, there’s no doubt about that. Amazon’s 2020 sales have risen by 40%+ (!!!) compared to the previous year, which is unheard of growth. The reality is that people are shopping online like never before!
But somehow, people still figure that COVID-19 + Amazon = problems (ones they can’t even describe). Maybe they have heard about all the issues we faced in the first few months of this pandemic or perhaps they simply don’t understand how Amazon works, but the reality is very simple: most Amazon sellers have benefited from this pandemic and have seen an increase in their sales, including me.
And this doesn’t only apply to established sellers. This year, I have seen more QUICK success stories on Amazon than ever before. It really is like Q4 all the time right now, as conversion rates are super high and general sales volumes are massive.
Besides the general increase in sales, this pandemic has created hundreds and probably thousands of new niches related to masks, PPE in general, homeschooling, the food industry, leisure, communications, etc. That’s always how it plays out. When the world is distracted, there are lots of new opportunities available, and the savviest sellers have made millions on Amazon during this time.
Now, with the recent news of a successful vaccine in production (almost), it’s looking likely that “normal life” will begin to return some time in the first half of 2021 (most likely, it will be in the summer) and sales will decrease.
People will go back to their old habits and visit local shops more. They will spend more money on leisure and travel, etc., but does that mean that it’s not the right time to start a business? What exactly would you be waiting for? Next summer, when COVID-19 is gone? Why?
There’s no point in waiting, and you know that. Just like you know that you should start eating properly TODAY and NOW is the best time to start that exercise regime. Right now. Today. Not tomorrow or the week after.
As if the COVID-19 pandemic was not enough, people in the UK (and EU, too) have to face another “crisis” in the form of the infamous Brexit, which will finally happen for real on the 1st of January 2021.
The UK will leave the EU and the Common EU market, which means that there will be a border and Customs procedures in place starting from next year for goods movements between the UK and the EU. That is, until a “better” trade agreement is signed, which doesn’t look likely to happen any time soon.
Now, what does this mean for a person who is looking to start selling on Amazon and wants to launch their very first product?
Nothing. If you’re living in the UK and plan to launch a business on Amazon UK (which you should), Brexit won’t make any difference. You will do exactly the same things/processes in 2021 as you would have done in 2020 or 2019.
How can this be right, you may ask? Well, Brexit only really affects the movement of goods between the UK and the EU, but 99% of Amazon private label brand sellers import their goods from China, not the EU. There’s already a border and Customs procedure in place between the UK and China, so nothing changes in this regard in 2021. Even taxes and import duty on such imports remain the same.
If you’re among the 1% of sellers who manufacture goods locally, again, nothing will change for you because you won’t need to import anything from the EU anyway.
If you need to buy some materials from the EU, then ok, there will be a small extra cost for doing Customs clearance, but again, it’s nothing new or unique. It’s the very same thing we have been doing for shipments from the US, China, Australia or any other country outside the EU this whole time.
Even if you do decide to use an EU-based supplier, so what? You can still source goods from the EU; it’s not like Brexit prohibits you from doing so! Yes, you will have to pay import duty from now on, just like with imports from China, but it won’t be a massive problem as the duty rate is relatively low compared to the overall expenses of selling on Amazon.
So, don’t be afraid of Brexit. It is what it is. I don’t like it just as much as you, but you have to face this new reality and move on. Don’t let it ruin your dreams of having your own online business because, in reality, it won’t really have any big impact on your chances of success.
There’s one group of Amazon sellers who will suffer as a result of Brexit: those who use or planned to use the Pan-EU programme.
Post-Brexit Pan-EU Programme
This is the ONLY real problem—or let’s call it “situation”—that will arise from the whole Brexit saga. For people who are new to Amazon, the Pan-EU programme is an FBA programme that allows sellers to sign up and sell their goods across all of Amazon’s EU/UK marketplaces using just one inventory pool. Amazon distributes their stock across Europe based on their sales in each marketplace. And this comes at no additional cost to sellers.
Starting from the 1st of January 2021, there will be a hard border between the UK and EU, which means that Amazon won’t be able to freely move goods around like that anymore.
This will be the end of the Pan-EU programme as we know it.
I already did a post about this back in July, where I shared some of my predictions and thoughts on how Amazon will adapt for this. With 99% certainty, I was right: the Pan-EU programme will continue after the 1st of January 2021, but it will only work on the EU side for the EU marketplaces.
The UK side will be cut off and there will be two inventory pools for sellers to manage: their UK inventory and their EU inventory.
Again, if you’re new to Amazon, this won’t affect you in any way. Most likely, you won’t be using the Pan-EU programme for the first six to twelve months of your business as it requires proven sales in at least one marketplace, and there are also some tasks associated with this programme that take time to complete (you need to register for VAT numbers in multiple countries, etc.).
And that’s all there is: big chaos and a lot of noise with very little substance. People screaming about COVID, Brexit and the end of the world, when in reality, there’s nothing to be scared of. Even things that have changed or will change in the future will have a solution.
So, if you were thinking about starting an Amazon business but have delayed the process because of COVID-19 or Brexit, get back on track! You don’t need to wait for anything. You can still make it happen in 2020!
Yes, it’s probably too late to get your products on Amazon for this Christmas season, but life doesn’t end after Q4.
The best time to start is today! 🙂
All the best,
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Thanks for the post Andrew,
Question, my inventory in all EU stores has just been stripped as I normally hold it in UK. However, I’ve done a test in the DE store and it’s allowing me to replenish inventory, which eventually is destined to UK!! So getting a bit confused, I thought Amazon wasn’t going to move inventory UK-EU? Just trying to figure out how to best replenish EU inventory from the UK without massive costs. So far using the UPS service was a great way of getting the job done..
Thanks for your help Andrew,
Thanks for the post.
I learnt from a webinar presented by a firm of accountants that EU VAT rules will change and sellers will only need to register in one EU country and store inventory in that country.
Not sure if you have come across this rule change
There’s no such law/system in place yet – but yes, I have mentioned this multiple times that the EU is working on a system where we will be able to do all the EU VAT returns in one centralised place, just like it already works for digital products.
But I haven’t seen any official announcements regards this, yet.
Very informative, thank you Andrew !
You’re welcome Zia! 🙂