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Expanding cross-border can be a great move for your e-Commerce business if you take the time to make sure you are fully prepared. Europe offers some of the biggest e-Commerce markets in the world and branching out could easily more than double, if not triple your customer base. However, there is a lot to consider when taking your first steps outside of the UK to sell in a new country. Localisation of listings, customer service in multiple languages, international returns, finding the right products for a different target market and so on. But there’s one thing that tends to get left out. And that’s international VAT. As a UK business you’ll probably be familiar with VAT and the joys of dealing with tax authorities, but you might not be aware of the differences when selling internationally. Before you take the proverbial leap, find out how your VAT obligations could change and how to protect your business to ensure its longevity:

How to tell if you have a VAT obligation

As an e-Commerce business looking to expand into the EU, here’s a checklist to help you figure out if you will incur a VAT obligation. If any of the following will apply to your business, you may be required to register. Are you:

  1. Holding stock in an EU country?
  2. Selling on an online marketplace within the EU?
  3. Crossing over a set EU Distance Selling Threshold within a calendar year?
  4. Dropshipping from a supplier in the EU?
  5. Importing goods into the EU for onward sale?

If you answered yes to any of these questions, it might be time to VAT register! If you’re not clear on whether the above applies to your business – here’s a further breakdown of each trigger:

Holding Stock in an EU country

First things first, keeping stock for onward sale to private consumers in a European Union country immediately incurs a VAT obligation. This registration is required as the onward sale of your goods will become a taxable supply in that country.

If, for example, you ship your stock to Germany and hold it there, your VAT registration would be due from the date your stock entered Germany and may require you to backdate in order to be compliant. You don’t need to register for VAT in the countries your stock travels through as it journeys to Germany if you can prove Germany was always the intended destination, unless it is imported from outside the EU into a different EU country first.

Selling on Marketplaces in the EU

In a recent bid to crack-down on non-compliance, tax authorities across the EU have been putting the pressure on marketplaces to ensure their sellers are adhering to local VAT law. In Germany and France this has even prompted changes to their VAT legislation, making marketplaces liable for the VAT owed by non-compliant sellers. This, in turn, has caused some platforms like Amazon to require proof of VAT registration (in the form of a German VAT Certificate) from their sellers. Failure to provide this has led to some sellers having their accounts suspended or even shutdown. Further to this, marketplaces are also required to share your sales data with the tax authority. This means they will be able to assess your liability for themselves and hold to account any who are not compliant.

This trend is expected to be taken up across other European Union countries in the near future. With marketplaces now taking a share of the burden, sellers are going to have to prioritise compliance in order to run a successful business. Having your marketplace accounts suspended or fines levied on you will make profitability much harder to achieve.

Distance Selling Thresholds

When selling from one EU country to another, if you sell over the amount specified by the Distance Selling Threshold of the country you’re selling into, you will be required to VAT register.

So, for example, if you sell more than €35,000 worth of goods into France from the UK, you will need to register for VAT in France. If you’re selling high value items, you can cross these thresholds pretty quickly, so it’s important that you’re monitoring the volume of sales. Your registration will be required from the day you cross over the threshold, and whilst it is possible to backdate the VAT owed, it’s much better to be prepared before incurring this VAT obligation. It’s important to note that these thresholds reset every year, so forecasting your sales could be vital in keeping your business compliant.

Also of note, is that you will not be required to pay VAT in both countries. When you cross that threshold and have to register in another European Union country, you will pay VAT on those sales in that country and NOT in the UK. If you’ve crossed the thresholds without knowing it and have been paying VAT to HMRC when the VAT was due to the tax authority of the destination country, it is possible to reclaim that money back and pass it on to the correct authority. However, this can be a slow process and it would be much more efficient to track your sales and pre-empt the shifting of VAT registrations.

Drop shipping from a supplier in the EU

If you’re dropshipping, you might think you’d avoid any VAT obligations because you don’t ever handle your products. Unfortunately, this most likely isn’t the case. As a dropshipper, even if it’s only for a millisecond, you will own the products you’ve purchased from your supplier before ownership is passed on to your customer. In this time, if your supplier is in the EU, you will have triggered a VAT obligation through holding your stock in a European Union country. Also, the Distance Selling Thresholds still apply to drop shippers so exceeding these will result in the need for a registration!

What does compliance look like?

So, if you’ve incurred a VAT obligation, what does VAT compliance actually mean? You can contract with a VAT agent like ourselves who can handle everything and do the leg work for you. Or, you can handle the VAT yourself, though please be aware, there’s a reason (or several) most people leave this stuff to the experts.

If you need to VAT register, the first step will be collecting the relevant documents and providing them to the tax authority alongside the registration paperwork. Then, there will be the VAT returns that need to be filed periodically. Some authorities require these annually, whereas others request them quarterly or even monthly. The calculated VAT on each sale across your products will need to be included (remembering that the VAT rate can vary between countries and goods). Also, you’ve got to keep an eye on those Distance Selling Thresholds!  Normally, the paperwork will be requested to be filled out in the language of the country you’re registering in and some of it must be filled out by hand.

Hopefully this has helped to give you a clearer picture of what’s involved when complying with International VAT law and trading cross-border. Although there is a lot to consider, expanding your business into the EU can be hugely beneficial! Don’t let the VAT hold you back. With the right knowledge and some preparation, you can have your business ready for the next step and new markets.

 

You can read more of our blogs by following the link here! 

This guest post was written by Holly Hawes, Brand and Marketing Manager at www.simplyvat.com   – the international VAT services provider helping ecommerce businesses expand compliantly.

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There are a lot of things that make Huboo an extraordinary company. Despite us only having been a working business for a few years, we’ve been able to achieve so much in a short space of time. From opening our first warehouse, to receiving venture capital investment, and partnering with like-minded companies to start creating an amazing community for our clients; it’s safe to say that we are proud of the work we do and keep doing.

Continue reading “Humans of Huboo: The one with it all under control”

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InterCultural Elements has come together with Huboo to give you helpful hints for selling this holiday season.  If you’re like most sellers, you’ve already gotten a start selling abroad and perhaps already have decent sales.  If so, pick and choose the tips which will help your business best.

If you’re only thinking of starting foreign expansion, you may be a bit late to reap the full potential of one of the biggest e-commerce seasons. Rushing into uncharted marketplaces just to cash in on fourth quarter (Q4) sales is never a good idea.

Setting up for Christmas and the holiday season in general is a long game, so follow the instructions below now and you’ll be ready to take full advantage of 2020. Lucky for you, here are our tips on how to prepare for the gift-giving season, honed over 12 years of experience in helping retailers maximise their online sales!

TAKE IMMEDIATE ACTION!

 

Prepare and optimise your listings

If you’re selling on domestic marketplaces, test out your listings to see which ones attract the most buyers. Finding listings that bring good sales takes time. Sometimes you don’t get the buy box despite being the only seller offering the product for up to 3 months, and this prevents you from running Amazon Sponsored Product Ads. You’ll want to have the optimised listings in place come the holiday season and a slight error can sometimes cause tens of thousands in your profit.

But why stop at domestic marketplaces when buyers around the world will be shopping for gifts in Q4? Don’t trust Amazon Build International Listings (BLT) to translate your items, as the quality can be poor and bad listings are a staple for e-commerce expansion failures. Professional translation is a must when taking your online business abroad. Well-translated and localised listings help you attract buyers and establish credit as a seller among foreign customers. This is crucial as the holiday season approaches. 77% of holiday shoppers report that they’ll buy again from brands they know and trust.

On-board your products

Knowing what customers in different countries like is one of the fundamentals to your Q4 success. On-board your products as early as possible and identify the best sellers in each country. Most sellers work around a certain marketing budget and the allocation of the budget has to be carefully calculated. Knowing what products sell best in which countries helps you determine how much you’ll spend in cost-per-clicks (CPC) to promote those items. As CPC tends to increase with the holiday season, not knowing which items to focus on can lead to wasted budget in bidding to promote less favoured products.

On-boarding your products early also gives you time to test out different pricing strategies. Since logistics is one of the major concerns for sellers when selling abroad, it’s best to work out the logistic threshold, both time-wise and cost-wise before the holiday season starts. Knowing this gives you a clear picture on your margins and whether it’d be profitable to promote certain items. As a matter of fact, 71 % of consumers admit that special discount is the sole determinant in deciding which seller to buy from.

Keep in mind that some popular categories such as toys have an on-boarding stop around the holiday season. Don’t rely on throwing your items onto Amazon last minute; do it now and find your best sellers!

Brand owner? Invest time into creating A+ Content

First impressions are valuable. Professional appearance can make all the difference between your item laying under the Christmas tree  during the holiday season or being abandoned in your online shopping cart. Having a description that is supported by professional images and marketing relevant text is key to your Q4 success.

STARTING SUMMER 2020

For many sellers, late Q3 through early Q4 is an excellent time to kick-off your holiday promotions. 86% of customers begin searching for gifts as early as September, so stock up and get ready for the selling spree.

Ramp up your CPC early

Although the competition fires up as early as September, CPC remains consistent until November. Use this to your advantage and launch your campaigns before prices spike to target early shoppers. Adjust your keywords and budgets accordingly to maximise conversions.

Stock up on inventory

Be ready to supply more units of items that sell well. Many sellers underestimate the sales during the seasonal period and run into trouble fulfilling orders as a result. Double check your items to avoid errors like faulty batches being sent out which can result in angry customers flooding your customer service department’s inboxes.

In addition to the inventory, ensure you have enough help during this period to handle fulfilment and customer requests. Do you have enough employees to help with packaging? Do you have native customer service agents from all countries you sell in to resolve claims and requests effectively? Consider outsourcing if having someone in house is not an option.

So, here are our tips on how to prepare for the holiday season. If you have optimised your listings and are already set up in different marketplaces, it might be worth a try to boost your sales this coming Q4. Otherwise, start preparing now and aim for 2020 for a great gift-giving season!

This was a guest blog written by Jia Li, who is the e-Commerce Marketing Specialist at Intercultural Elements. If you want to read our previous blog, you can click right here!

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Most sellers on Amazon have a common misconception that if they have the cheapest pricing, they will sell more. It certainly is not true, nor will anything ever be that simple. The majority of the sales (about 85-90%) are generated from Amazon’s Buy Box, and to get the Buy Box you do not need to have the cheapest prices! There are certain metrics involved when it comes to the Buy Box, with things such as seller’s feedback, shipping type, delivery time, dispatch rate, defect rate and, of course, the price that will all play a role. If your overall metric is better than your competitor, you can position your prices higher and still be in the Buy Box. And to set the right price, you need the help of a re-pricer!

Most re-pricers’ out in the market have similar strategies where they undercut the cheapest seller. Amazon has their own re-pricer, which most sellers use without comprehending the downsides of it. With Amazon’s repricer, sellers always end up hitting their minimum price.

If you and another Amazon seller using Automotive Pricing both have the same pricing rules on ASIN, your price will settle to the final level dictated by both your own and your competitor’s rule. This limits your re-pricing potential. For example, if you both have the rule to stay 10p behind the lowest price, your re-pricing will simply register all your prices like this, as opposed to allowing more intricate and fine tuned re-pricing rules. You are also unable to set rules against sellers with different shipping types. You can read more about this right here. 

Luckily, there are a few re-pricing systems that have a better solution, enabling sellers to increase their margins. We all know what the Buy Box is and a lot of re-pricers developed a strategy to get you inside, but most of them stop there. eSagu is a company from Cologne, Germany, that developed unique strategy that gets you inside the Buy Box and then starts increasing your price. The software communicates with Amazon in less than 2 minutes, and is one of the fastest repricing systems in the market. With information about the Buy Box available every 120 seconds, sellers can update their prices several times before other competitors even notice the changes. The software also has a feature that can trigger other systems to increase the competitors prices preventing everyone from selling on their minimum price, hence avoiding price wars.

eSagu went one step further – with an experienced team that has worked with Amazon sellers for more than a decade, eSagu can provide a personal account manager for each client, who not only treat their client’s shop as their own, but helps them to set up the best strategies to maximise profit. eSagu offers a free trial, providing the full service for 10 days, to show people how it will work for them and their business. It takes 10 minutes to set up the whole system, and can really improve your margins, maximise profit, and bring a whole new edge to your e-Commerce selling. So, what are you waiting for?! Click here to sign up!

 

This was a guest blog written by the wonderful folks at eSagu. Be sure to check them out and what they are able to do for you. Like all of our partners, we’re confident they can be another key player in your eCommerce success. Be sure to check out our last blog by following the link here!

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