Amazon started as online book store and has grown to be the worlds largest online retailer.
Is Amazon dodging German union strikes with Czech and Polish FBA offer?
Amazon are inviting selected sellers to take part in a Central European Fulfilment Network (EFN) pilot program.
We understand that sellers are being offered incentives to give Amazon the option of storing their German inventory in Fulfilment by Amazon (FBA) warehouses in either Germany, Poland or the Czech Republic. Units stored in any of the three locations would be considered as a single pool of inventory within Amazon’s German Fulfilment Network.
We’re not sure of the qualifications to be invited to participate in this program, but judging by the incentives you’d expect to fulfil a minimum of 3,000 units from your German inventory (and preferably have potential to ship more than 8,000 units per year) in order for Amazon to consider inviting you.
Why? Amazon industrial relations in Germany?
Under direction from the Ver.di Trade Union, workers at Amazon’ Bad Hersfeld, Leipzig, Graben and Rheinberg facilities have regularly been striking over the past several years. Amazon pays their workers (well they say) on pay scales above the standard average for logistics workers. Ver.di claims workers are underpaid and wants them classified as retail workers, reclassifying workers would mean that Amazon would have to pay them more.
Ver.di claims that Amazon refuses to recognize the legally guaranteed German right of workers to a collective agreement and have insisted that Amazon should be prepared for a long conflict. However by placing inventory in warehouses in Poland and the Czech Republic, Amazon would be operating outside of the reach of Ver.di and probably have considerably lower labour costs.
As all stock held in Germany, Poland and the Czech Republic will be considered as a single pool of German FBA inventory, it seems unlikely that Amazon’s intention is to launch Polish and Czech country sites (although launching a Polish site could be an attractive proposition). It seems much more likely that Amazon simply want to access lower labour costs under less stringent union control than is currently available in Germany.
Incentives to join Amazon’s Central European Fulfilment Network pilot
Amazon’s standard FBA fees (including any applicable removal fees) for units fulfilled from Germany apply in respect the seller’s entire German Inventory Pool. However, Amazon are so keen to get invited sellers to sign up for this program that they are offering substantial incentives to encourage participation:
The Fee Incentives
Sellers who are invited and participate in the pilot program will receive a credit into their accounts of €0.05 for each FBA unit shipped from their German Inventory Pool during the first two years.
In addition if a seller ships 8,000 or more units from their German Inventory Pool will receive a credit of €2,800 into their Amazon account.
Tax Service Promotion
Amazon are offering to engage a tax specialist on behalf of invited sellers to handle VAT registrations in Poland and the Czech Republic. For the first two years of the program they will also supply free of charge VAT and Intrasat reporting for products stored in Poland and the Czech Republic. This service is valued at €2,000 which will be reclaimed from sellers by Amazon if they fail to ship more than 3,000 eligible units from their German Inventory Pool.
As an alternative to free tax services, sellers can opt to receive €2,000 per promotion year which will be credited to the seller account as soon as their 3,000th unit of the year is shipped.
Inbound Shipping Promotion
For the first two years of the promotion, sellers will not be charged for inbound shipments via DHL when using Amazon’s Partnered Carrier Program.
For shipments which aren’t eligible for the Partnered Carrier Program with DHL, Amazon will credit the seller €0.04 per unit into their Amazon account.
Have you been invited to join this new amazon scheme?
I have been invited but am unlikely to go ahead as really don’t like the prospect of two further VAT registrations. I really dislike the admin side of this game and having 4 VAT registrations would cause me headaches to say the least ! The financial incentives whilst good aren’t really enough to encourage me. €2,000 per year wouldn’t cover my accountant costs (DE costs £200 per month) and I am not a fan of the company they are offering for free
I will be going ahead. I will find a native speaker for both countries to help with the sales tax registration and the online return registration (if available). It takes time and patience but this is the hard part whereas submitting returns is the easy part in my opinion. Also, it costs a lot less.