After many months of speculation and intensive negotiations, the UK formally left the European Union at the start of this year. This means that while a trade deal was secured, the UK has left the European customs union as well as the single market regardless, opening the gates for the return of pesky duties and taxes on imported goods. The knock-on effects of this can be observed across all sectors, including in e-commerce! What impact will this have on extra taxes and duties incurred on Amazon orders coming from the UK? Does this mean, in turn, that English keywords will see more traffic on Amazon.de in the future? Let’s find out!
According to a survey carried out by tech review website goosed.ie in 2018, around 1.6 million of the 4.9 million Irish population used Amazon at this time. This was down 2% from the previous year, but it would be reasonable to assume that with the recent Coronavirus pandemic this figure is likely to have increased significantly since then.
A free trade agreement finalised in mid-December between the EU and UK ensured no tariffs or quotas in future, however in the case of Ireland and many other EU countries, this widely reported free trade agreement does not include goods and services taxes and customs/import duty charges, meaning consumers in Ireland now incur additional customs duty on personal goods over €150 on Amazon.co.uk, as well as VAT (Value Added Tax) charges from July 1st this year on goods regardless of their value.
Is it really worth it for Irish consumers to redirect their Amazon Purchases?
Below we examine a test product that holds the answer. Product Example : JBL Partybox 300 Speaker
|Initial cost on Amazon.de:||€433.14||Initial cost on Amazon.co.uk:||€440.14|
|Postage & Packaging to Ireland:||€33.16||Postage & Packaging to Ireland:||€6.75|
|Import Fees Deposit:||€94.01|
|Exchange Rate Guarantee Fee:||€11.51|
|Order Total on Amazon.de:||€466.30||Order Total on Amazon.co.uk:||€553.20|
Result: Switching to Amazon.de for this product has saved the Irish consumer a whopping €86.90, or almost 20%!
Irish consumers serve only as a small piece of the Amazon.de cake (a recent report on Amazon users in Germany alone showed that almost 50 million Germans use an Amazon account regularly!). It is, however, almost certain that an increase in English search terms inputted into the Amazon.de search bar will influence the algorithm in the coming months.
What does the future hold?
The fall-out from Brexit has spread to many facets of our global economy. This does not exclude consumer behaviour on Amazon, and it is only reasonable to assume that come July 1st 2021, when further VAT is placed on imported goods from the UK, the vast majority of Irish Amazon users will have already moved their purchasing to Amazon Germany. Herzlichen willkommen bei Amazon.de, Irland!
Curious about how you can take advantage of this recent development to increase your Amazon sales and improve your Amazon business? Contact our factor-a experts directly.