Shipping eCommerce orders direct from Asia to Europe

Lots of companies based in Hong Kong and Shenzhen have built great businesses and made excellent profits over the last ten years by selling products to consumers in Europe through Amazon, eBay and direct to consumers through their own web sites. For the last few years, many companies selling direct to consumers in Europe have used Fulfilment By Amazon (FBA) or European third party logistics companies to store stock and deliver their orders to local consumers. However, times are changing, European governments are becoming more aggressive in their demands for tax revenue from companies who hold stock in their territory, and the cost of using services like Amazon FBA are going up every year. Additionally, more and more Hong Kong and Shenzhen based sellers are offering their products to customers worldwide. Despite Trumps tariffs in the USA markets in Africa, Canada and Australia are strong and once goods that are made in China are shipped to Europe they cannot be easily shipped to customers elsewhere in the world. The solution is obvious – keep the main part of your stock in China and ship it directly to customers around the world as they order it, that’s what world leading brands like Apple do. Shipping stock to end users in Europe directly from Hong Kong and Shenzhen has never been easier. Smooth Parcel gives you the ability to ship from Hong Kong to end users in Europe, Delivered Duty Paid (DDP) in 3 days for as little as $9 per kg. Your business can enjoy improved cashflow, lower costs and greener business practices by shipping goods directly to consumers from Shenzhen and Hong Kong, you really should consider it – you know it makes sense! There are other, darker reasons to get your stock out of Europe, make no mistake, Europe’s governments want your money. They are used to taxing sales in their regions by 20-25% and they want to tax your sales to ‘their’ consumers in the same way. Country after country in Europe has announced a VAT clampdown during 2018 and 2019. Take a look at these links. https://www.ft.com/content/f037bd6c-c6d6-11e6-9043-7e34c07b46ef https://www.dlapiper.com/en/uk/insights/publications/2016/03/budget-2016/clampdown-on-vat-avoidance/ http://www.vat-germany.com/vat-registration/online-sellers/amazon-ebay-sellers/ The only way to avoid these clampdowns is to ship goods directly from Asia to the end user, you will pay taxes and duty on import, but that’s it, clean and finished, in 2010 storing stock in Europe is for people who like to pay taxes… There was a time when cash funding for new businesses was easy to come by, but those days are behind us. If you store stock in overseas 3PL warehouses the stock there is simply cash that you can not use for other purposes. Shipping from a UK 3PL to a UK based consumer takes 1-2 days and costs $5-15 USD all inclusive, costs of using FBA are much higher, shipping the same item from Hong Kong to a consumer directly with Smooth Parcel costs $10 and ties up no cash – you choose …. VAT and duty charged in import to the EU is normally paid ‘up front’ when you ship goods into a 3PL warehouse – so you are out of pocket there too. And lastly, the real cashflow benefit - remember, if you ship with Smooth Parcel you do not incur any shipping costs until AFTER you have been paid by your customer. When you make your products, and ship them to FBA or a 3PL warehouse based in Europe you pay for the raw materials and for the production, you pay to ship the stock to Europe, you pay taxes on import and you pay to book it into the 3PL, to store it and then you pay a courier fee to ship it to your customer. That’s a lot of fees! It can feel like your profit is being sliced to death by the process. Many of the fees charged by 3PLs are unclear and hard to predict. If you ship direct you pay once, a single fee for shipping and taxes, you know in advance what you will pay and how long delivery will take. When you place stock into a FBA or another 3PL warehouse in Europe you make yourself a target for the tax authorities in that country – you will be forced to register for VAT just because you have stock in a warehouse in Poland, Germany, France, Spain or Italy. Once that’s done you have to give over 20-25% of your sales value in taxes to the country where your stock is sold. Your products serve both as a target and as a hostage. Direct delivery with Smooth Parcel works differently, we declare the goods in each parcel on import and pay over any taxes and duty that are due at the point of entry. When we do that you have already been paid by your customer and collected the taxes in turn from them, so you are never out of pocket. When shipping directly it is not always necessary to declare the full sale price of the goods for tax assessment, Smooth Parcel can help you to decide what level of value should be declared on each order that you ship to help minimise your tax liability. Amazon have been increasing the cost of holding stock in their FBA warehouses and shipping from them quite considerably. Standard rates for the Amazon warehouses in Europe have risen by more than 50% over the last 3 years. In addition, tax authorities across Europe have begun to target sellers using the Amazon platform and Amazon are co-operating with the authorities to move the liability from Amazon to overseas sellers like you. Amazon is a very strong sales platform, you need to use it as part of a strong sales plan in Europe and using Amazon FBA for some stock is helpful, but you should not use FBA for all your stock. When you sell to customers around the world stock held in overseas warehouses is usually placed there because of forecast sales or sales run rates – which are inevitably subject to changes. It is not uncommon for stock to have to be shipped from Europe to customers in the USA or vice versa, even shipping stock from Europe to Australia is not uncommon. These unnecessary long-haul shipments cost money and contribute to global warming. By shipping mainly from a warehouse close to the factory where the goods are made you can reduce unnecessary shipments, keep your costs low and be good to the environment, what is not to like about that? If you like what you have read here, contact us for more information or sign up for a free account with Smooth Parcel.