Facing Amazon selling challenges? Discover how to tackle cross-border trade regulations with practical tips and insights to keep your business compliant.
Selling on Amazon is tough enough without the extra headache of cross-border trade regulations. From tariffs to product restrictions, Amazon sellers face a maze of compliance hurdles that can derail even the most successful business.
But here’s the kicker: these rules aren’t just complicated—they’re constantly changing. One day, your product is cruising through customs, and the next, it’s stuck in limbo because of a new regulation you didn’t even know about. Not to mention the steep fines and penalties if you mess up.
Our Amazon agency is committed to helping sellers address the complexities of the marketplace. In this article, we’ll dive into the biggest regulatory challenges facing Amazon sellers and provide practical solutions to help you stay compliant and successful.
While Amazon makes it technically easy to set up and expand into its global marketplaces through tools like the “Sell Globally” tab and “Marketplace Product Guidance,” the real challenge lies in navigating the varying regulations and restrictions in each marketplace.
Amazon Sellers' Reluctance in International Market Expansion
Marketplace Pulse1% of U.S. Amazon sellers expand their businesses outside of North America
Other interesting highlights from then Marketplace Pulse research
• 12% of U.S. sellers sell on Amazon Canada, while 5% sell on Amazon Mexico.
• Many sellers use the Remote Fulfillment with FBA service to reach customers in Canada, Mexico, and Brazil without sending inventory directly to those countries.
• Canada has a higher number of successful U.S. sellers than Canada-based sellers, likely due to its proximity to the U.S.
• Japan, Germany, and the U.K. are Amazon’s largest international marketplaces, each significantly larger than Canada or Mexico.
• Less than 1% of U.S. sellers are active on Amazon’s European marketplaces, despite their size.
• More sellers from Japan and the U.K. sell in the U.S. than the other way around.
• There is minimal overlap between Amazon in Europe and the U.S.; European sellers represent a small portion of U.S. sales, and few U.S. sellers achieve significant success in Europe.
Several factors contribute to sellers’ hesitation, including trade tariffs and the complexities of cross-border logistics. However, the semi-consignment model used by companies like Temu and SHEIN, where sellers ship products to foreign warehouses and retain ownership until sold, offers a way to reduce costs and risks.
Amazon is also exploring similar strategies to help sellers expand internationally, making it easier for small and medium-sized enterprises to enter new markets without overwhelming costs.
Why Sellers Should Overcome Their Uncertainties in International Market Expansion
Expanding internationally might seem challenging, but it’s essential for growth. Here’s why:
Untapped Potential: Markets like Japan, Germany, and the U.K. offer significant revenue opportunities that you’re missing out on by staying local.
Diversification: Expanding abroad diversifies your income, reducing risk if one market faces downturns.
Competitive Edge: Fewer sellers venture into international markets, meaning less competition and more opportunity for you.
Global Brand Recognition: International expansion strengthens your brand and builds global customer loyalty.
Amazon’s Support: Amazon’s global fulfillment network and strategies like semi-consignment reduce the complexities of going global.
Are You Ready to Conquer International Amazon Markets?
Assess your readiness to expand your Amazon business into global markets. Answer a series of questions about your current business operations and knowledge of international trade to determine if you’re equipped for global success.
Amazon Selling Challenges on Cross-Border Sales Tax and VAT Laws
Amazon’s handling of sales tax varies by country. In the U.S. and the EU, Amazon typically collects and remits sales tax on behalf of sellers, simplifying the process. However, outside these regions, sellers are responsible for calculating and collecting taxes themselves.
Does Amazon Collect Sales Tax for Sellers?
Challenges and Solutions for FBA Sellers
1. Multi-State Sales Tax Compliance
| Challenge | Solution |
|---|---|
|
FBA sellers may have inventory in multiple states, creating a tax nexus in those states and requiring them to collect and remit sales tax accordingly. |
Sellers can rely on Amazon’s Marketplace Tax Collection service to manage sales tax where applicable. Additionally, using tax automation tools like TaxJar or Avalara can help manage obligations across different states. |
2. International VAT/GST Compliance
| Challenge | Solution |
|---|---|
|
FBA sellers outside the U.S., EU, or UK must include VAT/GST in their pricing and manage tax remittance independently, which can be complex. |
Sellers should consider using Amazon’s VAT Calculation Services if available or consult with a tax professional to ensure compliance in international markets. |
Challenges and Solutions for FBM Sellers
1. Sales Tax Collection Responsibility
| Challenge | Solution |
|---|---|
|
Unlike FBA sellers, FBM sellers are directly responsible for calculating, collecting, and remitting sales tax in all states or countries where they have a tax nexus. |
FBM sellers can use tax software to automate the process or work with a tax consultant to ensure they meet all obligations accurately. |
2. Tracking International Sales Taxes
| Challenge | Solution |
|---|---|
|
FBM sellers must track sales and taxes for each region they sell in, particularly in countries where Amazon doesn’t automatically handle VAT/GST. |
Sellers should maintain meticulous records of sales and taxes collected, possibly using accounting software tailored for ecommerce, to simplify the tax return process. |
Shipping and Fulfillment; Customs and Import Duties
Selling globally on Amazon requires navigating a complex maze of customs rules and import taxes. Whether you choose to fulfill orders yourself (FBM) or let Amazon handle it (FBA), the specific challenges and solutions will vary.
Customs and Import Issues for FBA Sellers
1. Handling Customs and Import Duties
| Challenge | Solution |
|---|---|
|
FBA sellers are responsible for ensuring compliance with customs regulations and paying any applicable import duties when exporting products to international fulfillment centers. Failure to comply can result in delayed shipments or additional fees. |
Sellers should work with experienced logistics providers, such as customs brokers or freight forwarders, who can navigate complex customs processes and ensure timely and secure transportation of inventory. Sellers must act as the exporter and importer of record and should be prepared to cover any additional duties and taxes. |
2. Customs Duties and Fees Management
| Challenge | Solution |
|---|---|
|
Amazon does not cover customs duties and taxes for FBA inventory, leaving the seller responsible for these costs. Shipments arriving at Amazon fulfillment centers with unpaid customs duties will be returned to the sender. |
Sellers should ensure that all customs duties and taxes are fully paid before shipping. Engaging a logistics provider to manage these payments can help avoid issues and ensure smooth processing. |
3. International Compliance
| Challenge | Solution |
|---|---|
|
Selling in multiple countries requires compliance with the customs laws and import regulations of each destination. This includes understanding and managing VAT or GST obligations. |
Sellers should utilize Amazon’s VAT Calculation Services, where available, and seek guidance from tax professionals to ensure compliance and avoid costly legal issues. |
FBA Specialty Programs That Can Help Sellers
1. FBA Export
This service allows sellers to reach international customers shopping on Amazon.com. Products eligible for export are stored in U.S. fulfillment centers. During checkout, customers are shown a price that includes international shipping and import fees. Amazon handles the shipping at no additional cost to the seller.
2. Remote Fulfillment with FBA
This option enables sellers to reach customers in Canada, Mexico, and Brazil via Amazon.ca, Amazon.com.mx, and Amazon.com.br. At checkout, customers see a price that includes estimated import duties, taxes, and fees. The seller does not incur additional shipping costs.
3. FBA Worldwide
Sellers can reach customers in different countries by exporting their inventory to Amazon fulfillment centers in those locations. For example, the Pan-EU FBA program allows sellers to export inventory to one EU country, and Amazon will distribute units across other EU countries to meet demand.
Customs and Import Issues for FBM Sellers
1. Managing International Shipping
| Challenge | Solution |
|---|---|
|
FBM sellers must navigate the complexities of international shipping, including varying customs regulations, higher shipping fees, and potential delays. |
Sellers should clearly communicate shipping times, fees, and any applicable duties to customers. Choosing reliable carriers like UPS, FedEx, or USPS can help manage these challenges. Sellers must also act as the exporter of record and ensure compliance with all relevant customs regulations. |
2. Cost Control
| Challenge | Solution |
|---|---|
|
International shipping costs can be significantly higher than domestic rates, influenced by package dimensions, weight, delivery time, and destination. |
FBM sellers should calculate shipping costs in advance and incorporate them into their pricing strategies. Leveraging Amazon’s Service Provider Network for discounted rates can also help mitigate costs. |
Cross-Border Ecommerce Intellectual Property and Trademark Laws
Selling globally on Amazon requires a strong grasp of intellectual property (IP) and trademark laws. These laws safeguard your brand and prevent others from copying or misusing your products or brand identity.
Understanding the Challenges
- • Global Variations: IP and trademark laws differ significantly between countries and across borders, making compliance difficult.
- • Counterfeit Products: Protecting your brand from counterfeit goods is an ongoing battle.
- • Brand Hijacking: Unauthorized sellers on the platform may attempt to sell under your brand name.
- • Copyright Infringement: Using copyrighted images or content without permission can lead to legal issues.
Challenges and Solutions for FBA Sellers
- • Dependency on Amazon’s Protections: While Amazon offers tools like Brand Registry, relying solely on them may not be sufficient.
- • Proactive Brand Protection: Register trademarks in target markets and monitor for infringements.
- • Clear Communication with Amazon: Provide detailed information about your brand and intellectual property to Amazon.
Challenges and Solutions for FBM Sellers
- • Full Responsibility: FBM sellers have greater control but also bear full responsibility for IP protection.
- • Trademark Enforcement: Actively monitor marketplaces for counterfeit products and take legal action if necessary.
- • Copyright Compliance: Ensure all images and content used comply with copyright laws.
Essential Steps for All Sellers
- • Register Trademarks: Protect your brand by registering trademarks in key markets.
- • Monitor Marketplaces: Regularly search for counterfeit products and unauthorized sellers.
- • Utilize Amazon’s Tools: Leverage Amazon’s Brand Registry and other IP protection features.
- • Build Strong Relationships: Collaborate with anti-counterfeit organizations and law enforcement.
- • Educate Your Team: Train employees about IP protection and the importance of safeguarding brand assets.
- • Consider IP Insurance: Protect your business from financial losses due to IP infringement.
- • Work with an IP Attorney: Seek legal advice to understand complex IP laws and develop a comprehensive protection strategy.
- • Document Your IP: Maintain records of your intellectual property to support claims if needed.
Environmental and Safety Regulations
Expanding your business globally on Amazon also involves complying with a complex web of environmental and safety regulations. These rules are in place to protect consumers and the environment, while also safeguarding your business from legal issues.
Environmental Regulations
Product Compliance
Comply with local environmental regulations, such as the EU’s REACH and RoHS directives, which manage hazardous substances and waste. Implement sustainable practices and work with local waste management organizations.
Extended Producer Responsibility (EPR)
Manage the recycling and disposal of your products, as required in some countries, like Germany’s Verpackungsgesetz. Partner with local recycling organizations and keep accurate records of compliance.
Safety Regulations
Product Safety Standards
Ensure products meet safety standards, such as CE marking in the EU.
Labeling Requirements
Provide accurate safety information and hazard warnings on your labels.
Case Study: Expanding to the Canadian Marketplace
Client Success: Our Amazon experts guided a client through the complex process of expanding into the Canadian market, specifically addressing strict regulations on personal sound amplifiers and overcoming Amazon’s administrative challenges.
Key Actions:
- • Regulatory Compliance: Conducted a thorough analysis of Canadian market regulations and resolved listing issues to meet eligibility requirements.
- • Account Setup: After 18 months of inactivity, we successfully set up the client’s account, enabling them to start selling and even launch new products in Canada.
- • Troubleshooting & Resolution: Overcame Amazon’s administrative barriers, ensuring the client’s products complied with Canadian regulations, leading to seamless market entry.
Read more about what our team of Amazon experts did for our client.
Don’t Let Regulations Hold You Back: Conquer Global Markets with Us
The global marketplace offers vast opportunities, but international trade regulations can be complex. At My Amazon Guy, we simplify this process, helping you overcome regulatory hurdles and tap into Amazon’s global potential.
This article has outlined the key challenges, from customs regulations to product safety standards. Despite these hurdles, the benefits of expanding internationally are substantial.
Imagine reaching new customers in markets like Japan, Germany, and the U.K. – areas often overlooked by U.S. sellers. Picture diversifying your income and building a global brand.
Our full service Amazon agency is here to guide you through these regulations and develop a strategy for global success. Contact us today to start your journey into international markets and achieve your business goals.
