It’s the final week on the blog this year as Christmas is just around the corner! I’m sure many of you are already in the holiday mood and don’t want to spend much time on business. Despite this, sales right now are reaching new records every day as the last few weeks before Christmas is a real shopping bonanza on Amazon! I have personally achieved phenomenal sales in December, but more on that in the new year.
It has been a few months since I expanded my Amazon FBA business to Europe via the Pan-EU program. So far, I have covered my results for these markets:
The last one on the list is Spain! I must say that, surprisingly to me, Spain has performed the worst out of all four marketplaces. When I first started the process, I had high hopes for the Spanish market as I thought it would be a more active marketplace—especially knowing how many expats are living there, etc. As it turns out, that’s not the case. Well, at least not for my products because Spain hasn’t performed as well as expected.
Before we get into actual sales numbers, there’s one important thing I want to mention. When you register for VAT in European countries, Spain is the most difficult one. Why? Because it’s the only country that requires registration documents to be notarised AND Hague Apostilled.
When I started this process, I even didn’t know what the Hague Apostille was! Turns out, it’s a “stone-age-old” system where foreign documents are verified in a specific way by a notary. It’s mostly used for official/government documents, but Spain requires this verification for VAT registration documents.
This is the main reason why my VAT registrations were so delayed. While I got my German VAT certificate in the summer, I put off the Spanish registration to the last minute. In the end, it was not that bad or complicated, so I should have just done it earlier, but the fact remains the same: you will need to have your documents go through the Hague Apostille process for registration in Spain.
The mistake I made is that I used a local notary, which only complicated the whole process even more. I later found out that people are using this online service, which is much cheaper and quicker.
Basically, you can mail them your documents and receive them back within a few working days.
I highly recommend you use a service like this instead of going through your local notary office because it will be much faster and cheaper.
Now, there’s another interesting thing worth mentioning about the VAT registration process in Spain. Unlike other countries, when you get your VAT number issued, it’s not automatically put into the VIES system. Spain asks you to do backdated returns before that happens.
Now, as my application date was 1st January 2019, I have to do all the returns before my Spanish VAT number is published in the VIES system. I still haven’t finished this process. VATGlobal.com, the company that does my VAT accounting, promises that this will be handled any week now.
IMPORTANT!!! I have arranged a special deal with VAT Global for my blog readers. You will receive a special discount on the VAT registration and returns fees IF you mention this code when contacting them: ANDYVAT2020
Why is this important? Simply put, you can’t add VAT numbers in Amazon’s VAT invoicing system before they’re published in the VIES system. Well, you can do that, but Amazon won’t approve your number.
The problem is that until you can use the VAT invoice system on Amazon, you will have to create invoices on your own and send them out to customers who request them from you. In Spain, just like in Italy, I have found that many businesses are purchasing from me, so I’m frequently asked for a VAT invoice.
On average, I get at least one such request every day, and even though it’s not a huge task, it is an extra hassle. You know how it is. We’re used to complete automation on Amazon, where everything works seamlessly on autopilot, so when you have to manually create an invoice, it feels like such a hassle.
If you’re working with an accounting software on your own, you can use that to create those invoices. If not, here’s a good, free software you can use to create such invoices: Invoicely.com
I’m really looking forward to my VAT returns for 2019 being complete so I can switch to the Amazon invoicing system. But for now, I’m just manually creating the invoices when customers request them.
Ok, now let’s get back to the actual sales numbers.
My Amazon Spain €14,000
Just like with Italy, my first month of sales were extremely poor. In October, I only sold 11 (!!!) items, so I was already thinking it was a mistake to sell here in the first place:
FBA fees in Spain are not as high as in Italy, but my lower selling price of just €9.99 means that my profit per unit sold is just €3. This means that I have to sell at least 33 units each month just to cover the VAT accounting fees.
Luckily, in November, things turned for better! I sold 441 units, making €4,367.59 and a profit of roughly €1,323. I spent around €300 on PPC ads, which left me with a net profit of around €1,000 for the month:
While these are the worst sales number out of all five marketplaces I am now selling on, it still means that the profit I made in November will almost cover the VAT accounting fees for the whole year of 2020! Everything after that will be extra profit in my pocket.
Profit I would never have seen if I hadn’t registered for the Pan-EU program. Just to remind you, my minimal goal when I started this whole process was to at least cover the VAT accounting fees in each country so it’s not an extra expense to sell there.
And December has started off even better! So far, I have sold almost 1000 units, and even after the PPC costs, my profit stands at around €2500!
Again, this is all pure, extra profit that I would never have seen if I had not expanded internationally.
Remember, I didn’t come up with new products or new brands. These are the exact same products I have been selling in the UK. All I did was sign up for the Pan-EU program, sort out the VAT numbers, translate the listings, and that’s it! I even used the same images, so no extra work or expense there!
I don’t know yet how the month will finish. I’m running low on stock at the moment and Christmas is not too far away, but even if I only make €3000 in profit this month on Amazon Spain, it was still well worth the hassle!
The fact is, if you’re already successfully selling on Amazon UK and NOT expanding to the European marketplaces, you’re leaving real money on the table. It’s as simple as that.
If you think about it, the EU marketplaces combined are several times bigger than the UK! It’s a massive market that is not yet overflowing with sellers. So, what are you waiting for?
Yes, I understand that the VAT registration cost and the monthly returns cost is a risk. It was a risk for me, too. But I recommend that you look at it the same way I did. Simply calculate how many units of the product you need to sell each month to cover VAT accounting fees. I bet the number is not that high. My products are super cheap, so I have to sell 30+ units to cover the costs, but if you make a £10 profit per unit sold, all you need is 10 sales per MONTH in each marketplace to cover those fees. Everything above that is pure profit.
If you’re using Jungle Scout and see that the demand is there for your product and you know it converts well in the UK, the risk of it not selling on the EU marketplaces is very slim. Just do the research and if numbers are there, go for it!
Just look at my LAST 30 days of sales – almost 100 000 EUR!!!
Lastly, don’t forget that this is not a lifetime commitment! Even if you fail in the EU (very unlikely), you can always deregister from VAT, deregister from the Pan-EU program and continue selling just in the UK.
Or, it could be that you find new products/opportunities in the EU marketplaces and build a new brand/product just for sales in Germany or France, for example. This can actually work out great due to much lower competition in these countries, and I will talk more about this business model next year.
If you need help with your VAT registrations and monthly returns in Europe, I can recommend the company I’m working with: VATGlobal.com They have been very professional, fast and efficient in the work they do, as well as in their communication, which is a huge plus.
I have also arranged a special 15% discount for my blog readers! To qualify for this special offer, please mention this coupon code when contacting them: ANDYVAT2020
If you have any further questions about anything I have covered in this post, please leave your thoughts in the comments section below. I will personally answer all of them.
And if you haven’t started selling on Amazon FBA yet, now is the perfect time to do it! Start 2020 with a new Amazon business with the help of my Amazon Sharks video course. Now completely updated for 2020, Amazon Sharks is the most comprehensive UK FBA training course with 20+ hours of video lessons! As an added bonus, you get my personal support and FREE lifetime updates! So, make sure to check it out!