Approximately 24% of Amazon's global sales come from its European operations and it's clear that they to enable businesses to maximize cross border ecommerce sales within the region. Amazon's European Fulfillment Network is one way they can help to do that.
This article will discuss what Amazon EFN is, its advantages and disadvantages, the related fees, and why it is important for your business.
What is the Amazon EFN?
The European Fulfillment Network (EFN) allows you to store your products across several Amazon Fulfillment Centers inside a single country, such as France. All orders are shipped from these warehouses to different European nations.
Despite having your inventory concentrated in only one region, the EFN program allows you to sell on many European marketplaces, such as the United Kingdom, Germany, Italy, France, Spain, Poland, Sweden, and the Netherlands. A buyer can purchase on Amazon.es, and Amazon will manage the shipment from their French location.
You provide inventory to several fulfillment centers strategically situated within a certain country under this arrangement, and Amazon assigns these centers to your account.
Amazon uses dynamic computation to select the best fulfillment center for each product and delivery based on item size, weight, sales history, and location. This allocation can be customized for each shipment, resulting in a more efficient fulfillment procedure.
If you are a US seller, you can streamline your ecommerce operations by shipping your goods to a particular location, such as the UK, and begin selling on this particular marketplace. While concentrating your efforts on this specific market, you can expand your sales to other countries.
What are the benefits of Amazon EFN?
For small and medium-sized firms (SMEs), the European Fulfillment Network (EFN) is the most efficient and straightforward way to conduct business with Europe via Amazon. There are many advantages:
Streamlining fulfillment
Amazon EFN enables orders from different markets to be fulfilled utilizing a single inventory pool, offering increased visibility and control. This outsourced and streamlined approach provides an excellent option for scaling operations without duplicating labor-intensive administrative tasks for each region.
Listing on multiple European marketplaces
With EFN, you may list your products on all European marketplaces with a single VAT number instead of requiring one in each country. This simplifies the listing procedure while also broadening your reach without adding complexity. Amazon provides resources to help with VAT compliance in Europe.
Automatic enrolment
Enrollment in EFN is automatic if you use Fulfillment by Amazon (FBA) in at least one European store. This automated method enables a smooth and immediate changeover, avoiding unnecessary delays.
Testing new marketplaces
Amazon EFN simplifies the process of testing new European markets by providing an easy fulfillment option. By centralizing your inventory, you can explore cross border ecommerce in Europe without the complexity of managing separate supplies, making it easier to enter unfamiliar territory.
Amazon EFN enables ambitious enterprises to expand their operations while avoiding logistical complications. EFN is a strategic choice for SMEs wishing to grow their footprint in the European ecommerce environment due to the seamless integration of processes and the ability to connect to numerous markets easily.
What are the drawbacks of Amazon EFN?
While there are several advantages to enrolling in Amazon EFN, there are some potential drawbacks.
Cost
While Amazon EFN is convenient, it comes at a price. Fulfillment fees may be greater due to cross-border fees, and sellers must carefully consider whether the benefits justify the costs, particularly for high-volume or low-margin products.
Shipping times and Prime status
There is a disadvantage for sellers who use Amazon Prime to lure customers with speedy shipments. When items fulfilled by Amazon EFN are shipped worldwide, they lose their Prime status. Customers' expectations and satisfaction levels may be affected as a result. Sellers should consider the value of Prime eligibility in their business plan or consider new USPs.
Shipping times are affected by various factors, including the buyer's location, product availability in neighboring fulfillment centers, and the overall effectiveness of Amazon's logistics network.
Shipping timings may not always be affected by EFN because the program's purpose is to streamline the fulfillment process and enhance delivery times for clients across Europe. Other factors, such as customs clearance, local postal systems, and seasonal demand, can still impact shipping timeframes.
What are the Amazon EFN fees?
Understanding the Amazon EFN fees is critical for making informed judgments regarding your fulfillment strategy. Storage fees, order handling fees, and transit fees will all apply. These can differ depending on criteria such as product size, weight, and the specific European market.
Here is an example rate card that explains how fees are calculated. Amazon regularly changes its fees to enhance the seller experience and innovate its programs.
EFN cross-border fulfillment fees can be up to $41 per item (depending on the product) with an oversized surcharge of around $2.33.
While not explicitly related to EFN, Amazon's seller fees will be adjusted in 2024, with an average rise of $0.15 per item sold, new inbound fees averaging $0.27-$1.58 per product, and lower FBA fulfillment fees of $0.20-$0.61 per unit. Furthermore, referral costs for specific garment items will be decreased, as will monthly storage rates by $0.09 per cubic foot.
These adjustments are intended to improve Amazon's and its merchants' cost-efficiency and service delivery.
Amazon Seller Central customers can check out this page on international order fulfillment.
Final words
The Amazon European Fulfillment Network is an accessible option for companies expanding into the European market. The benefits of consolidated inventory management, easier VAT administration, and a low barrier to entry into new markets are substantial. However, these advantages must be balanced against the possible drawbacks of higher costs and the loss of Prime status for international shipments.
Before deciding on Amazon EFN, thoroughly consider your business model, product category, and target audience to see if this fulfillment option fits your needs. While Amazon EFN may not be suitable for every seller, the simplicity of entry into numerous European markets makes it an excellent tool for companies wishing to profit from the vast potential of the global ecommerce landscape.
