There are a number of reasons behind Europe being an appealing market for US fashion brands. First of all, if you make the decision to sell your product in the EU, simply by branching out commercially into one European country you gain access to all 27 member states – thanks to the free movement of people, goods and services. What’s more (at least in the case of online markets), expanding into Europe currently means selling to more than 450 million potential customers, as well as to the UK and its buying power, a place where online shopping is more popular than in any other country. However, there’s always a silver lining. To export US fashion to Europe, it is important to be aware of the various rules and specifications that dictate exchange between the two markets, especially where special cases such as Brexit are concerned.
Let’s begin by examining which aspects we ought not to neglect in order to successfully sell US-made products in the EU. Firstly, it’s important to remember that one of the main components of regulating trade in Europe (although not exclusively) is consumer protection. So, whilst the US has no particular rules for the safeguarding of users participating in online trade, the situation is rather different in the EU. For example, there is what is called the EU Consumer Rights Directive 2011/83, a directive that has been transposed by each member state and is also active in the UK post-Brexit, “retained EU laws” – referring to laws that fill the gaps left where, prior to leaving the EU, the only law was European. The directive was formed with a view to harmonising member state laws and digital consumer protection, aiming to generate a climate of trust and set communication standards so as to reduce costs for telemarketers, and also to facilitate consumer rights awareness. But what are the main changes US retailers will have to adhere to? The biggest changes involve more pre-contractual obligations for the seller regarding (among other things) information which must be provided to consumers before a sale. Additionally, a consumer’s right to withdraw is now valid for an extended period – from 10 to 14 days – and can be further extended in the case that the seller fails to inform them that such a right exists.
Another important point to take into account is related to the protection of personal data. In May 2018, GDPR – Europe’s main data protection regulation – came into effect in Europe (including the UK). GDPR is regarded as being one of the most highly respected privacy laws. The US has nothing directly comparable and, as a result, user data can be handled somewhat flexibly. For this reason, US sellers wanting to sell fashion products in the EU and the UK have to comply with the regulation. Essentially, this means that data privacy and cookie policies must be established, as well as updating of certain general terms and conditions of use, and the sale of websites in accordance with EU and national data protection laws. And it doesn’t stop there. The appointment of a data protection officer is also necessary for supervision in applying the regulation and taking targeted action – in case, for example, a site is hacked and data is then leaked.
A key part of US-made exports to Europe involves VAT. As of July last year, new legislation came into force in Europe regulating VAT in EU countries. But what does this mean for a US brand that wants to enter the online European fashion market? First off, it is important to note that e-commerce sales in the EU and the UK are taxed equally, in both physical and online shops, at 20% VAT. This is a standard rate and applies to all fashion and luxury products. Following the establishment of the rule, all e-commerce purchases, even those by retailers based outside of the EU or the UK, are subject to VAT. Prior to this, however, US imported goods that were priced at less than EUR 22 were exempt from VAT. This means that all US fashion companies selling products via e-commerce in Europe are now obliged to register with the one-stop import registry IOSS, a national import registry which certifies registration under the new system, making sure that VAT obligations on e-commerce sales are met.
Finally, with regard to customs duties, customs payments in Europe are due on all shipments valued at more than EUR 150. US retailers that decide to export fashion products to the EU and the UK must inform themselves about when and which customs duties are applicable to their products, as these costs can affect business in a number of ways, depending on who is privy to them – whether the company itself is privy to them, squeezing its profit margins, or whether that cost gets directly or indirectly allocated to the customer. E.g., by adding an expense item to the purchase or by raising the price of the product to account for customs costs. In any case, it is vital that we communicate the decision clearly to customers because, if trade tariffs are not released in good time, delivery and, consequently, the customer’s shopping experience will be affected, putting the brand’s reputation in jeopardy.
In conclusion, fashion brands interested in selling in Europe must set up their e-commerce websites so that they comply with EU rules – especially where consumer protection and the processing of personal data is concerned – as well as comply with VAT and customs issues. In addition, there is the attention that comes with all cross-border trade across Europe, considering the peculiarities of European territory. Therefore, if you would like to start your own fashion e-commerce in the EU, you will require a website that is clear and comprehensible for any country in Europe; a multilingual and multi-currency site with a customised customer service system for every country, for instance. In light of all this, one might deem selling US-made fashion in Europe to be an extremely complex and time-consuming operation; tricky and costly for one brand alone. It is for this precise reason that many US fashion brands, not willing to give up on a prosperous and growing market, turn to a Merchant of Record such as Go Global Ecommerce. We take care of all of the legal and fiscal compliance and logistical and technical aspects, and all of our expert personnel and their know-how are at the disposal of any American company that decides to export to the EU, saving time and resources for the company.