Expand Your Ecommerce Business in the EU

Expanding into the highly lucrative EU market offers plenty of opportunities to grow your ecommerce business and boost profits. However, there can be challenges for those considering an EU expansion due to the various customs, tariffs, and VAT regulations. Not to mention the day-to-day difficulties of doing business in an unfamiliar country. This article provides useful insights on how to navigate these challenges and begin distance selling in Europe.

Why should I expand my ecommerce business to the EU?

By expanding your business into the EU you’ll have access to 27 Member States, some of which boast the world’s largest and most promising ecommerce markets. It’s estimated that the entire EU ecommerce industry will reach US$730.30bn in 2023, presenting an ideal opportunity for business expansion. Here are just a few reasons why you should consider selling your products or services in Europe:

1. Access to a larger market

Expanding your ecommerce business to the EU will allow you to tap into a market of over 447 million people. This presents a chance to expand your customer base and explore new avenues where you can market your products and services.

2. No trade barriers

Distance selling within the EU allows for free trade and eliminates customs duties and other trade barriers between member countries. As a result, importing and exporting goods and services becomes a simpler and more cost-effective process.

3. Improved supply chain

Expanding your ecommerce business into the EU means you’ll be able to establish a supply chain within the EU. This will reduce the time and cost involved in shipping products and materials from outside the European Union.

4. Diversification

By accessing EU markets, businesses can diversify their operations, thereby reducing the risks associated with reliance on one market. This business expansion model can provide stability during economic downturns or regulatory changes, and ultimately benefit the business.

How to grow your business in the EU

For any business looking to expand and increase sales, the possibilities offered by the EU single market are almost endless. That said, it’s crucial you conduct thorough research and have a solid plan in place before embarking on your business expansion. Below are a few things you need to consider if you want to successfully grow your ecommerce business in Europe:

1. Understand the rules and regulations

Before you start distance selling goods to the EU, it’s important you understand the rules and regulations as they relate to your products. These regulations cover various areas such as product safety, labeling, and certification. You also need to take into account customs and import/export regulations, as well as any country-specific rules that may apply. To operate your ecommerce store without any issues, it’s essential you’re fully compliant with the relevant regulations.

2. Remember customs declarations and tariffs

Businesses exporting goods into the EU single market will need to comply with the EU’s customs rules and regulations. This includes obtaining the necessary permits and licenses, providing accurate information about the goods being exported, and paying any applicable tariffs or taxes. In the case of the UK, it has reached a free trade agreement (FTA) with the EU that removes tariffs on most goods, but certain items may still be subjected to tariffs, so always check first to be sure.

3. Research the market

It’s crucial to do your research before expanding into any new market, and the EU is no different. Prior to getting your business expansion underway, analyze the competition and understand the buying habits of customers. Evaluate your competitors’ websites to get a better idea of what they offer and how they market their products. It’s also important to stay informed about the latest industry trends in Europe, identifying what’s popular and what isn’t.

4. Develop a strategy

The next step after you’ve researched the market is to figure out your strategy. You can expand into Europe in one of two ways: through a third-party distance selling platform or by setting up your own online ecommerce store.

If you want to grow your business in Europe hassle-free, using a third-party platform, such as Amazon or eBay, is a good way to go. These platforms give sellers access to a large, pre-existing customer base, so you can start selling right away. And if you’re already a seller on one of these platforms, you’ll find expanding into the EU market even easier.

Another option is to set up your own seller website, if you haven’t already. With this approach, you’ll have more control over your ecommerce business, although it also means you’ll need to invest more of your time and money into the project. Creating a website, finding a payment gateway, and managing shipping and handling will all have to be done by you.

5. Register for EU VAT

Expanding your business into the EU single market creates new opportunities, but it also means more administrative work. If you want to access the EU’s millions of potential customers, you’ll need to meet each EU country’s VAT requirements.

You’re probably familiar with the tax and VAT obligations in the country you’re based in, but what about the EU? If you’re thinking of selling within the EU, there will be many new VAT rules to take into consideration.

There are a number of circumstances where a foreign company may be required to register for EU VAT. These include when:

• Your company sells or buys goods in an EU Member State.
• Your company exports goods abroad from outside the EU or imports goods from another EU country.
• You sell goods from foreign warehouses.
• You move your goods across borders within the EU (exceptions apply).
• You deliver goods to foreign end consumers (B2C delivery).

Dealing with EU VAT obligations can be complicated and time-consuming, which is why you should consider using a specialist tax compliance service. They have experience helping companies register and comply with EU VAT requirements, and will look after all the filings and other paperwork on your behalf.

6. Apply for an EU EORI number

When distance selling goods to the EU, foreign companies require an Economic Operator Registration and Identification (EORI) number. This EORI number is a unique identifier used to track and record the customs information of any ecommerce business trading cross-border. If you have a UK-based business, it’s now necessary to have an EU EORI number as well as a UK EORI number.

If your ecommerce store is not established within the EU customs territory, you’ll need to apply for your EU EORI number in the Member State where you’re carrying out your first import or export.

7. Observe data protection laws

To sell goods in the EU, foreign companies may be required to comply with data protection laws. These laws include the General Data Protection Regulation (GDPR), which your ecommerce business must also comply with.

8. Manage your inventory

Effectively managing your inventory is crucial for a successful business expansion in the EU. It’s essential to maintain adequate stock levels to meet demand while avoiding an excessive surplus. Accurate inventory tracking is also vital so you know when to replenish your stock. This can be handled internally, or you can use a fulfillment service such as Fulfilled by Amazon or Spocket.

9. Provide multiple payment options

Payment preferences differ greatly depending on the European country, so you need to be able to offer a variety of payment options to customers. In Germany, for example, paying by bank transfer is a popular option, while in Spain, people prefer to use credit and debit cards.

10. Select shipping partners carefully

A business expansion in Europe can pose significant shipping challenges. To ensure your products reach their destination promptly and safely, you should select your shipping partners carefully. Choose a partner with a proven track record and verify whether they provide tracking and insurance.

11. Offer multilingual customer support

To establish trust and loyalty among your European customers, it’s important that your ecommerce business provides multilingual customer support. Being able to communicate with customers in their own language will allow them to better express their concerns or problems, reducing frustration and misunderstandings.

Which countries should I sell to in the EU?

With six of the world’s ten richest countries in Europe, there is huge potential to grow your business by expanding into the EU single market. It can be difficult, though, to know where to start. Which countries should you focus your efforts on first? Here are a few suggestions:

• Germany: Germany is the largest economy in the EU. It has a strong consumer market and a high proportion of the population shop online. With a reputation for high-quality products, Germany could be a good fit for your ecommerce business if it sells premium goods.
• France: The second-largest economy in the EU, France has a flourishing consumer market. Famous for its high-end fashion and luxury goods, it offers excellent possibilities for an ecommerce store operating in these industries.
• Netherlands: The population of the Netherlands is small, but a high proportion of them shop online. And with over 90% of Dutch people able to speak English, it’s an ideal country to test the waters of EU ecommerce before taking your business expansion any further.
• The Nordic countries: Denmark, Sweden, Norway, Finland, and Iceland make up the Nordic countries. Known for their high quality of life and consumer spending power, they place particular importance on sustainability and ethical consumerism.

Start your EU single market expansion today

Ecommerce is booming, so now is a great time to grow your business in Europe. Your ecommerce business will no doubt face challenges, but they don’t have to stand in the way of success. Whether you’re dealing with export problems or trying to sort out your EU VAT obligations, there’s plenty of professional advice and assistance available.

For help with getting your business expansion off the ground, get in touch with the VAT compliance experts. Book a call with Taxually to find out more.