In Europe, Amazon has different FBA sales models, one of which is the European Fulfillment Network (EFN). It allows you to expand your market reach to more Amazon markets in Europe, even if your products are physically stored in only one country.
When you want to sell your products on Amazon Europe, there are a few things to consider. The first of these is the choice of sales model, where there are effectively three options.
If you want to sell everything yourself and ship the products to the customers who have ordered them, then FBM (Fulfillment by Merchant) is the way to go.
The second way is MCF (Multi-Channel Fulfillment), where companies use Amazon as a warehouse where they can store all or only some of their products.
The third option is FBA (Fulfillment by Amazon), where Amazon handles the warehousing, delivery and returns of products on behalf of the seller. Amazon does the work for you, saving you time as a seller and allowing you to focus on more important aspects of your business.
EFN combined with the FBA model.
One of the most popular sales methods in the FBA model is EFN (European Fulfillment Network). EFN combined with FBA means that the seller delivers the goods for sale to only one Amazon warehouse (one country), but the product listing appears in more than one market. For example, the goods may be located in Germany, but the listing will also be visible to customers in Italy (Amazon.it). This is very simple, for example when:
- You want to test the demand for a product in a new market.
- If the main market for the product is Germany, for example, but there is demand for the product in other countries, but not so much that it is worth stocking products in other countries.
The EFN model requires only one VAT number
Under EFN, products are sold from a single warehouse, even if they are shipped to several European countries. In this case, you only need to apply for a VAT number in one country: the one where the warehouse is physically located. In contrast, if the warehouse is located in two countries, for example the UK and Germany, the company must have a VAT number registered in both countries.
Pros and cons of the EFN model
The advantage of the EFN model is a lower threshold to start selling on Amazon in more countries. It is easier to start selling in Europe as the VAT number only needs to be applied for one country and shipping plans are only made for one country.
Pros:
- Simplicity of inventory management
- Streamlined inventory control
- FBA model allows a company to sell on all Amazon marketplaces in Europe
- Only one Amazon seller account required
- Only one VAT number is required.
- Increased product visibility
- Shipment to Amazon warehouse is cheaper when a batch is sent to one address
Cons:
- Higher storage costs
- Higher shipping costs
- Longer delivery times
- Lower quality of product listing translation
When to consider EFN?
Generally speaking, EFN is the best option for smaller sized businesses with sales of less than 500 products per month.
When sales figures start to increase, the seller can start to consider other FBA sales models such as CE (Central Europe Program) and PAN-EU (Pan European FBA).
