ParcelHero: The phasing out of Amazon’s cross border services is a logistics nightmare

As Brexit looms, Amazon is starting the process of separating UK and EU sales from 14 November. UK shoppers buying gifts from EU sites and British traders selling to Europe face potential increased costs and confusion, warns the international shipping specialist ParcelHero.

Amazon has hastened its Brexit bail-out by confirming that traders will no longer be able to remove stock across the EU and UK border from 14 November.

Amazon has just announced record sales figures for its third quarter, with profits tripling. Its net sales increased by 37% to $96.1bn (£74.4bn) in the third quarter but its shipping costs rose by $1.4 billion and are now $5 billion higher than the same period a year earlier.

To keep rising costs in check, it is taking early action to limit the impact of Brexit on its operations by announcing the early ending of ‘inventory removal orders’ from its Fulfilment Centres for stock that is being returned across the EU-UK border.

This could create price rises and complexity for British shoppers buying EU-sourced goods, warns the international courier services expert ParcelHero. This is particularly the case if items need to be returned. It also means UK-based sellers with stock in Amazon Fulfilment Centres on the Continent will have to decide what stock to continue selling far in advance of Black Friday.

Worse is set to follow, claims ParcelHero. From 18 December, traders could find themselves spending a lot more moving stock to and from the UK, because Amazon’s Pan-European programme will no longer include the UK. From that date, UK traders will have to organise and pay to send their stock to EU Fulfilment Centres. Likewise, EU retailers who want to continue selling in the UK will have to pay to get their items shipped into Amazon’s UK warehouses.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says: “The phasing out of Amazon’s cross border services from 14 November is a logistics nightmare for sellers and the extra cost could push prices up for consumers. Currently, sellers can monitor what stock is selling best in which country and remove any items that are not shifting from Amazon’s Fulfilment Centres. It costs a lot to store goods in Amazon warehouses so traders try to avoid that at all costs. Amazon’s inventory removal orders were the cheapest and simplest way to remove unwanted stock.

“One bone of contention following the changes will be the return of goods bought from an EU-based seller. Previously, British shoppers wanting to send back a gift would have dispatched it to the nearest Amazon UK warehouse. However, EU sellers will no longer be able to remove items from UK warehouses, so it is even possible UK buyers may be asked to pay for the return of unwanted goods to an EU fulfilment centre. EU sellers will still have to refund the cost of returning a faulty item to the EU, however and some traders fear they may be forced to pay for a return label even when an item is marked as ‘Customer Damaged’. That means European traders may simply allow UK buyers to keep faulty items – as well as send a replacement – rather than face expensive storage and transport costs. EU-based sellers will, most likely, set their accounts to allow the buyer to keep items and simply raise their prices to UK shoppers to cover the loss.

“Conversely, the same is true for UK-based retailers selling into the EU and it may cost them dearly. UK traders fear some EU consumers could falsely claim their purchase is faulty, knowing they won’t be asked to return the item. At the same time, the seller will have to send them a replacement.

“These are not the end of the problems Amazon is heaping on UK users ahead of Brexit. From 18 December, Pan-European Fulfilment by Amazon (FBA) inventory transfers end. UK businesses using Amazon’s Pan-EU services will need to send stock separately to both a UK centre for local sales and – at their own cost – to an EU centre for European sales. Currently, Amazon takes on the cost and hassle of distributing stock for storage in the UK and across Europe, but this will no longer be the case. For traders, this will mean a stark choice: split up stock and pay potentially increased transport and storage costs or stop selling to the key Amazon Pan-EU markets of Germany, France, Spain and Italy.”