Cross-Border E-Commerce Expansion Via Amazon Global Selling
Strategies to Manage Tariffs, Currency Conversions, Logistics, and Regulatory Compliance
Small and mid-sized companies are now able to participate in cross border e-commerce, as it is no longer just for multinational companies. While digital marketplaces are developing, Amazon Global Selling is at the forefront of driving international e-commerce.
Using Amazon Global Selling, companies can use a single seller account to list and sell products to various worldwide Amazon marketplaces, such as the U.S., U.K., E.U., U.A.E., Canada, Australia, and Japan. However, international expansion is more complicated than simply moving a product listing from one marketplace to the next. There are seller-customs duties, price controls, logistics’ networks, taxes, and omission of regulation to consider.
What is Amazon Global Selling?
Through Amazon Global Selling, sellers list products on Amazon and designate markets outside of their country. There are two primary fulfillment models that sellers can choose from:
1. Fulfillment by Amazon (FBA) – Amazon takes care of storage, packing, shipping and customer service returns.
2. Fulfillment by Merchant (FBM) – Sellers handle the storage, shipping, and customer service.
Different tools that help with go global expansions are:
International listing tools
Seller Central accounts
Currency calculators
VAT and tax calculators
Global logistics programs
However, even with these tools, success is dependent on effective planning at all levels of the business.
Choosing the Right Amazon Marketplaces
Taking the Amazon Marketplace Expansion leap is on the global stage. However, every international market presents a different level of business opportunity. Before going to a new geographic market, sellers should evaluate:
Demand of the market for the seller’s product
Seller’s product competitive competition
Seller’s product competition Government regulation
Distance of the Seller’s product and logistics costs
Depth of country income and price sensitivity of the seller’s product
The U.S. and U.K. markets have high demand for the product, but high levels of competition. Meanwhile, the UAE and Saudi Arabia markets have relatively less competition.
The key to going global is to do it one step at a time to create the maximum opportunity for success.
Cost of Importing and Hiring a Global Shipping Company
Importing cost is a macro problem that all global sellers face. When a seller interrupts their market, the products are subject to import duties, and this depends on the seller:
Country
Product
Value of the product
Country of origin
Not accounting for these costs can severely reduce the profit margin.
Managing Costs related to Tariffs
1. Correct Tariff Code Classification
All products have to receive a Harmonized System (HS) Code that establishes what duty rate any product incurs. Misclassification can lead to excessive fees, delays, and penalties.
2. Delivered Duty Paid (DDP) Shipping
With DDP shipping, duties and taxes are paid before shipping, providing a better experience to customers and reducing delivery problems.
3. Take Advantage of Free Trade Agreements (FTAs)
Trade agreements between countries can eliminate or reduce duties. Considerable savings can be made, provided that the correct paperwork is submitted.
4. Cost Modeling Before Expansion
Create landed-cost models that consider:
Production cost
Transportation
Duties and tariffs
Sales tax or VAT
Amazon fees
This establishes if a market is financially viable before the launch.
International pricing and currency strategy
Global selling-related currency obstacles
When selling across borders, merchants encounter:
Exchange rate volatility
Fees related to conversion
Delays in currency settlement
Amazon provides a proprietary currency converter for sellers, allowing them to get paid in their preferred, local currency.
Practices for Handling Business Currencies
1. Market-Specific Dynamic Pricing
Rather than using automatic currency conversion from your domestic price, consider pricing products based on:
Local competitors
Consumer buying ability
Local taxes and charges
2. Reduction of Currency Conversion Costs
Analyze the conversion rates of Amazon and a third-party payment processor to maximize your net payout.
3. Protecting from Currency Risk
The impact of currency fluctuations on profit can be substantial for high-volume sellers. Some sellers implement:
Multi-currency accounts
Forward contracts with banks
4. Track Marketplace Profitability
Use Amazon business reports to isolate and track profits by currency using the external accounting tools for margin analysis.
International Shipping and Logistics
Cross-Border Selling Fulfillment Models
1. Fulfillment by Amazon (FBA)
Amazon’s worldwide FBA network enables regional inventory storage, which boosts delivery speed and enhances Prime accessibility.
Benefits:
Enhanced shipping speed
Improved conversion rates
Streamlined customer support
Drawbacks:
Complexity in inventory planning
FBA storage fees and long-term add-ons
Transfers of cross-border inventory
2. Fulfillment by Merchant (FBM)
FBM offers greater control of inventory and shipping, but strong logistics abilities are necessary.
3. Amazon Global Logistics (AGL)
Amazon Global Logistics provides comprehensive freight forwarding from manufacturers to the Amazon fulfillment centers.
Optimizing Global Logistics
Utilize demand forecasting in order to minimize stock obsolescence.
Begin with smaller inventory deliveries.
Select regional fulfillment centers with purpose.
Prepare plans for changes in demand by season.
Factor in the costs of reverse logistics and disposal.
In international markets, efficient logistics manifests as a substantial competitive edge.
Regulatory and Legal Considerations
Product Compliance and Safety Standards
Regulations governing products differ from country to country. Common compliance areas include:
Safety of the products from which the components are made;
Product labeling guidelines;
Regulation of environmental pollution;
Consumer protection legislation.
As an example, the European Union mandates the CE marking; the United Kingdom requires UKCA marking, and certain products sold in the United States must meet FDA standards.
VAT, GST, and Sales Tax Considerations.
Cross-border e-commerce makes sellers responsible for many tax-related issues, which, along with other aspects of the process, are particularly complex.
Issues of concern include: storing inventory in European Union countries and having to register for VAT; compliance with UK VAT regulations after Brexit; GST rules in Australia and Canada; and sales tax nexus in the United States, which presents challenges to cross-border sellers.
Sellers remain responsible for compliance when using Amazon VAT calculation and reporting tools.
Localization: Language, Culture, and Customer Experience
Increased Conversions with Localized Listings
Local audiences may not relate to translations. Successful localization consists of:
Researching keywords in the target market’s language
Adapting cultural references in marketing
Measuring in the preferred local units
Using locally relevant visuals
Customer Support and Returns
International shoppers want
Support in the local language
Policies that are easy to understand and outline the process of returns
Refunds that are processed quickly
Using FBA simplifies returns and customer service, but sellers should still monitor feedback and reviews closely.
Cross-Border Expansion Risk Management
Common Risks
Non-compliance with regulations
Loss of value due to currency fluctuations
Inventory shrinkage
Account lock due to violation of policies
Chargebacks and other payment fraud
Risk Management
Engage customs brokers and tax advisors
Keep thorough documentation of compliance
Spread your business across multiple marketplaces
Stay current with Amazon’s policy changes
Use brand protection measures
Scaling and Long-Term Growth Strategy
Successful global sellers treat Amazon cross border e-commerce as a long-term game, not a short-term play.
Key growth strategies include:
International expansion of private label brands
Development of cross-border regional supplier networks
Demand forecasting driven by data analytics
Localized advertising investments
Gradual market-by-market margin optimization
When integrated with Amazon Global Selling, cross-border e-commerce becomes most powerful.
Conclusion
Customize your approach when managing the complexities of cross-border e-commerce, including tariffs, currency conversions, logistics, and compliance. It is the only way to effectively manage the growth potential of selling on Amazon Global.
Your business can turn Amazon into a global sales engine by identifying the right target markets, optimizing Amazon’s pricing and global logistics, and complying with international sales regulations. Selling globally in a digital economy is not optional; it is a competitive necessity.
FAQs
1. What is Amazon Global Selling?
This is a program that lets sellers offer products to customers on Amazon’s worldwide marketplaces from a single seller account.
2. Do I need to create a seller account for each country?
No. Amazon’s Seller Central allows you to manage all of the international marketplaces you want from a single account.
3. How do I manage Tariffs and customs so that I do not run afoul of the law?
Those depend on the product, and the country of origin and destination. You must document your customs behavior in a manner that reflects the duties you calculate on your Seller account.
4. Does Amazon handle VAT and sales tax?
In some regions, Amazon has tax compliance, collection, and reporting tools, VAT included, but sellers still must do the tax registration thing and pay the compliance dues.
5. Which fulfillment method works best for international selling?
Most sellers prefer FBA due to speed and added trust from customers, although for those with a solid logistics setup, FBM may work better.
6. How does currency conversion work?
Amazon has a currency converter for sellers to get payments in their target currency, although some fees apply to currency conversion.
7. Is product compliance mandatory for all markets?
Yes. Each has their own regulations, and the consequences for not compliance could go as far as removing the listing or in some cases, suspending the account.
8. Can small businesses succeed with Amazon Global Selling?
Of course. A lot of small and medium sellers also start with 1 or 2 markets and go on to successfully expand internationally.
