PAN-EU on Amazon: Everything you need to know about the requirements, benefits, and pitfalls

Introduction

The PAN-EU (Pan-European Fulfilled by Amazon) program is an advanced service that allows sellers to store their products in Amazon warehouses across various European countries. With integration into the Amazon platform, products can be offered to customers across the continent, giving sellers the opportunity to increase their reach and sales. However, this program comes with certain requirements, costs, and risks that should be considered before implementation. In this article, we will discuss what PAN-EU is, its requirements, advantages, and disadvantages, to help sellers make an informed decision.

Requirements of the PAN-EU program

To take advantage of the PAN-EU program, sellers must meet a number of requirements that include both tax registrations and compliance with EU regulations. Here are the main ones:

Registration in the PAN-EU program: Sellers must formally register in the PAN-EU program, which includes having VAT numbers in at least four countries: Germany, France, Italy, and Spain. It is also necessary to have VAT OSS and registration in the VIES system, which allows for the verification of VAT numbers within the EU.

Recycling registrations: Additionally, sellers must register with recycling schemes in Germany, France, and Spain to meet waste management and recycling requirements in these countries.

Compliance with EU regulations: Products offered under PAN-EU must meet all safety, certification, and packaging requirements applicable in each EU country. Non-compliance with regulations may lead to sales bans or other sanctions.

Advantages of the PAN-EU program

PAN-EU offers numerous benefits that can attract sellers looking to expand in the European market:

Wide reach: Through PAN-EU, sellers can reach customers in many European countries without the need to set up separate warehouses in each one. Amazon stores products in its warehouses and distributes them according to demand, increasing visibility and potential sales.

Fast delivery: Storing products in Amazon warehouses located across Europe enables quick delivery to customers, which is a key element that enhances customer satisfaction and loyalty. Products are available under Amazon Prime, further increasing their attractiveness.

Resource management: Amazon manages inventory levels and ensures proper product distribution across warehouses, which helps avoid stock shortages. This is a significant convenience for sellers who do not have to manage logistics and warehousing independently.

Cross-border costs: With PAN-EU, sellers can avoid cross-border fees, which is significant when handling large numbers of orders sent to different countries. Storage and shipping costs are lower compared to traditional warehouse management in multiple locations.

Disadvantages of the PAN-EU program

Despite numerous advantages, the PAN-EU program also has certain drawbacks that are worth considering:

Storage costs: Storing products in warehouses incurs additional fees, which may be higher than traditional storage costs. These fees can accumulate, especially if products do not sell quickly, leading to significant financial burdens.

Tax complexity: The PAN-EU program can generate additional tax and administrative complexities. Each EU country has its own tax regulations, which means that registration and tax settlements must be made in several jurisdictions. This can lead to increased administrative costs and the necessity to use tax advisory services.

Risk of excess inventory: Storing products in warehouses in different countries can lead to the risk of excess inventory, especially if demand for a particular product is uneven across regions. Poor inventory management can result in additional storage costs and reduced profitability.

Is PAN-EU right for you?

The PAN-EU program can be a very beneficial option for Amazon sellers looking to expand their business into European markets and increase the sales of their products. With a wide reach, fast delivery, and efficient resource management, PAN-EU gives sellers the opportunity to reach more customers and increase competitiveness.

However, this program also comes with certain challenges, such as tax complexity, storage costs, and the risk of excess inventory. Therefore, before joining PAN-EU, it is worth thoroughly analyzing the requirements, costs, and potential benefits to ensure that it is the right strategy for your business.