The US eCommerce landscape is facing a major shake-up. With new tariffs increasing costs on imports from China, Mexico and Canada, eComm businesses that rely on international supply chains are experiencing higher costs, squeezed margins, and potential pricing challenges. While these changes no doubt feel like a roadblock for SMBs, they also present an opportunity… expanding into Europe and the UK.
For mid-sized US eCommerce brands, Europe is no longer just an interesting expansion idea, with comparatively lower tariffs, a high-spending consumer base, and cheaper digital media, the region offers an attractive alternative to navigating the rising costs of doing business in the US alone.
This article is the first in a two-part series which will break down why Europe is a viable market, what challenges to anticipate, and how to successfully launch into the region with the right strategy.
The second article in the series will focus on how you will need to adapt your paid media and marketing strategy to drive growth in the region.
Expanding internationally might seem overwhelming, but the numbers make a strong case for Europe as a prime market for US eCommerce brands:
Expanding into Europe isn’t as simple as flipping a switch. To build a successful presence, brands need to navigate logistics, pricing strategies, and regulatory requirements, no mean feat. While this may sound daunting but with the right plan, it’s more achievable than ever.
Getting your products into customers’ hands efficiently is crucial for international expansion. Some brands start by fulfilling orders from US warehouses while testing demand before setting up a European operation. But high shipping costs, longer delivery times, customs and taxes often mean it's not a long-term solution.
Instead, if you’re already using Amazon in the US, their European FBA program allows you to expand with minimal logistics hassle. Or Third-Party Logistics (3PL) Partners with fulfilment centers in the UK and EU can streamline shipping and reduce costs. Check out Fulfilment which compares quotes from across over 200 providers in a matter of minutes.
Unlike the US, where sales tax varies by state, Europe has a Value-Added Tax (VAT) system, which means businesses must register and collect VAT in countries they sell to. The rates vary by country (for example 20% in the UK, 19% in Germany), so planning ahead for pricing and compliance is essential. Factoring in VAT along with regional tariffs while maintaining attractive pricing can be a challenge, but brands that get it right build trust and customer loyalty faster.
Luckily there are several tools you can integrate into your eCommerce site to automate VAT and tax compliance to simplify your process:
Additionally, it's important to note the One Stop Shop (OSS) scheme is part of the EU VAT reforms introduced on July 1, 2021. It allows businesses selling goods to consumers (B2C) in multiple EU countries to report and pay VAT in one country instead of registering for VAT in each member state separately. This streamlines the VAT reporting process, making it easier for eCommerce businesses to expand across Europe.
European consumers expect localized payment options, so show local currency pricing if you want to increase conversion rates.
You will likely need to diversify your payment options in Europe as many Europeans prefer Klarna or PayPal over credit cards for example.
Remember, localization is a big one for your approach to marketing too. You may not be able to lift and shift your brand messaging, product descriptions and ad copy effectively as each country in the region has its own cultural idiosyncrasies.
The General Data Protection Regulation (GDPR) governs how businesses handle customer data in the EU and UK. So, if you collect and store customer data in the EU, ensuring compliance is essential to avoid fines and legal risks. Additionally, European consumer protection laws, like the UK’s return policies, may require adjustments to your existing processes.
GDPR also impacts how brands use retargeting and personalization in their go-to-market strategy. Websites must obtain explicit user consent before collecting data, limiting third-party cookie tracking. As a result, brands need to shift towards first-party data strategies, such as email marketing and contextual targeting, to effectively reach and re-engage audiences with their digital marketing.
While these requirements add complexity, they also help build customer trust, which is key for long-term success in the market.
These are just some of the considerations US eComm brands should make when thinking about expanding into Europe and the UK. Once you’ve got everything in place, scaling your brand with digital advertising is the next step. Luckily, Finch knows a thing or two about this! So check out our next article on how to leverage performance marketing, programmatic and SEO to win in Europe, coming soon.