There are several reasons why Europe is an attractive market for US fashion brands. Firstly, if you decide to open a branch of your product in the EU, the act of expanding into one European country guarantees access to all 27 members – thanks to the free movement of people, goods and services. And, more importantly, (at least where online markets are concerned) setting up shop in Europe currently means selling to over 450 million potential customers, not to mention the UK and its purchasing power, a country where online shopping is more popular than anywhere else in the world. However, not all that glitters is gold. In order to export fashion from the US to Europe one must be aware of a series of rules and specifications that dictate the exchange between the two markets, without forgetting the special case of a post-Brexit UK.
Consumer Protection
We’ll start by examining which aspects we ought not to neglect in order to successfully sell US-made products in the EU. First of all, it’s worth keeping in mind that one of the central components of regulating trade in Europe (though not uniquely) is consumer protection. Thus, while the US has no specific rules for the safeguarding of users partaking in online trade, things are rather different in the EU. For instance, there is what is called the EU Consumer Rights Directive 2011/83, a directive that has been transposed by individual member states and is also active in the UK post-Brexit, “retained EU laws” – in reference to laws that fill the gaps left where, prior to leaving the EU, the only law was European. The directive was created with the intention of harmonising member state laws and digital consumer protection, striving for a climate of trust and setting communication standards in order to reduce costs for telemarketers, and also to facilitate consumer rights awareness. But what are the main changes a retailer in the US will have to comply with? The greatest changes consist of increased pre-contractual obligations for the seller in terms of (among other things) information which must be provided to consumers prior to a sale. In addition, a consumer’s right to withdraw is now valid for a longer period – an increase from 10 to 14 days – and can be further extended should the seller fail to specify the existence of such a right.
Privacy
Another aspect to consider is related to the protection of personal data. As of May 2018, GDPR – Europe’s main data protection regulation – came into effect in Europe (the UK included). GDPR is recognised as being one of the most respected privacy laws. The US does not have anything comparable and therefore user data can be handled very flexibly. This is why US sellers who want to sell fashion products in the EU and the UK must comply with the regulation. In short, this means data privacy and cookie policies must be in place, as well as the updating of certain general terms and conditions of use, and the sale of websites in accordance with EU and national data protection laws. And that’s not all. It is also necessary to appoint a data protection officer to supervise the application of the regulation and to take targeted action – in case, for example, a site is hacked and data is leaked as a result.
VAT
An important element of US-made exports to Europe is the VAT. As of last July, new legislation came into force in Europe regulating VAT in EU countries. But what does this mean for a US brand wanting to enter the online European fashion market? First of all, it is important to mention that e-commerce sales in both the EU and the UK are equally taxed, in both physical and online shops, at a VAT rate of 20%. This is a standard rate and is applied to all fashion and luxury products. Since the rule came into effect, all e-commerce purchases, even those made by retailers based outside the EU or the UK, are subject to VAT. Whereas, previously, goods imported from the US and sold at less than EUR 22 were exempt from VAT. This means that any US fashion company selling products via e-commerce in Europe is now obliged to register with the one-stop import registry IOSS, a national import registry which certifies registration under the new system, ensuring that VAT obligations on e-commerce sales are fulfilled.
Customs
Finally, the issue of customs duties. Customs payments in Europe are due on all shipments with a value of over EUR 150. US retailers choosing to export fashion products to the EU and the UK need to know when and which customs duties are applicable to their products, as these costs may affect business in various ways, depending on who bears them – whether the company itself bears them, squeezing its profit margins, or whether that cost is allocated directly or indirectly to the customer. I.e., by adding an expense item to the purchase or by increasing the price of the product to cover customs costs. Whatever the case, it is important to communicate the decision clearly to customers because, in the event that trade tariffs are not promptly released, delivery times and, consequently, the customer’s shopping experience will be affected, putting the brand’s reputation at risk.
To sum up, fashion brands keen to sell in Europe must structure their e-commerce websites in such a way that they comply with EU rules – especially in terms of consumer protection and the processing of personal data – as well as adhering to VAT and customs issues. To add to all this, there is the attention surrounding all cross-border trade in Europe, taking into account the peculiarities of European territory. Therefore, if you would like to open your own fashion e-commerce in the EU, you will need a website that is clear and comprehensible for each European country; a multilingual and multi-currency website with a customised customer service system for each country, for example. Arriving at this point, one might consider selling US-made fashion in Europe to be an extremely complex and time-consuming operation; costly and expensive for a single brand. It is this reason in particular that causes many US fashion brands, not prepared to give up on a flourishing and growing market, to turn to a Merchant of Record such as Go Global Ecommerce. We manage all the legal and fiscal compliance and logistical and technical tasks, and all of our specialised personnel and their know-how are at the service of any American company that would like to export to the EU, saving time and money for the business.
