The best countries for export: which markets are chosen by Ukrainian manufacturers in 2024

Andriy Matyash, managing partner of the 4B law firm, which specializes in supporting Ukrainian entrepreneurs abroad, in the author's column for ain.ua tells which countries are most often chosen by our manufacturers to expand their business.

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Ukrainian business is currently experiencing difficult times. However, despite this, manufacturers are trying to find a way out of the situation - they are actively entering foreign markets. Moreover, they work both offline - in the countries with the largest concentration of compatriots, and online, choosing the Amazon marketplace to sell their products. Currently, it is the world's most popular e-commerce platform, which allows you to reach a large number of markets with minimal costs.

Rating of the most popular markets

Amazon is a real giant of online trade, which has 21 marketplaces in different countries of the world. According to Statista, in 2023 the undisputed leaders in terms of net sales were the market of the USA ($395,64 billion), Germany ($37,6 billion) and Great Britain ($33,59 billion). For comparison: the share of all other global markets of Amazon accounts for only 19% of revenues - about $108 billion.

These countries occupy the first positions according to other indicators as well. For example, the Amazon USA marketplace attracts almost 3 billion visitors every month, Germany and Great Britain - about 400 and 500 million, respectively.

It is not surprising that Ukrainian manufacturers are trying to gain access to such a wide target audience and achieve high levels of sales. Let's take a closer look at the markets of these countries.

Amazon USA: features and benefits

In addition to the fact that the US market is recognized as the largest among all Amazon markets (it provides almost 69% of the marketplace's revenues), there are other reasons that encourage our manufacturers to choose the American trading platform:

Popularity among consumers

According to JungleScout, 53% of Americans prefer shopping online on Amazon. The closest competitor of the marketplace - Walmart - lags behind the leader by as much as 20%. Another resource - eMarketer - reports that 61% of US residents start their search for the necessary product on Amazon. That is why Ukrainian entrepreneurs prefer Amazon USA - for them, this is a guarantee that their products will be seen by tens of millions of consumers.

Loyalty and convenience of the taxation system

I'll start with the fact that the US tax system itself is convenient - especially when compared to Europe. The fact is that, although the income from sales in the USA is subject to Sales Tax (similar to our VAT), its rate is quite low - on average 5-7%. In addition, this tax is not collected when goods are imported into the country - it is paid only by the final consumer.

In the context of shopping on Amazon, taxation in the US market has another advantage. It consists in the fact that large American marketplaces automatically add the amount of tax to the price of the product, that is, collect and pay Sales Tax independently. This attracts entrepreneurs, because in this way they can save time and money on the services of an accountant.

Organized logistics

The USA is the most popular world market, so logistics from Ukraine and China have been established for this country. There are many companies here that specialize in working with Amazon. They perform a set of tasks, in particular, the preparation and packaging of the cargo, its shipment to the fulfillment centers of the marketplace orders.

Despite the above advantages, the Amazon USA market also has one drawback - a significant level of competition. According to statistics, there are 1,11 million active Amazon sellers in the United States. Compared to other countries of the world, this is a lot - in the rest of the markets, their total number is about 1,5 million.

But our manufacturers easily overcome this problem. To do this, they monitor the quality of their products and pay special attention to creating an effective advertising strategy.

Pros and cons of trading in Germany and Great Britain

Germany and Great Britain are two constantly competitive Amazon markets in Europe. And although the level of their net sales is significantly inferior to the American marketplace, it is still profitable to trade here for several reasons:

1. Consumer confidence. Amazon DE is the most visited e-commerce site in Germany. According to statistics, in February 2024, 397 million users visited its pages. While eBay DE - the main competitor of Amazon in this ranking - was visited only 109 million times during the same period of time.
   As for the British market, Amazon also holds the lead in the number of visitors. Approximately 500 million visits are recorded on the marketplace every month. If we take into account the number of residents of Great Britain - 69 million people, this means that all of them visit the pages of the trading platform about 7 times every month.
2. Relatively low competition. Although Amazon's German and UK markets are the second and third largest after the US, there is quite a low level of competition. On Amazon DE there are an incomplete 245 million sellers, and on Amazon UK - 281 million. Let me remind you that in the USA their number exceeds 1,1 billion.
3. A large number of Ukrainian immigrants. For manufacturers of any country, the main target audience is their compatriots. After all, due to common habits and mentality, it will be easy to create a product that will meet their needs and requirements. There are currently 1,1 million Ukrainians in Germany, and 253 in Great Britain.

However, work on European marketplaces, in particular on German and British Amazon, may be related with some difficulties. First of all, this is explained by the peculiarities of taxation and legal registration of business. Let's understand in more detail.

1. Subtleties of taxation of income from sales. In Germany and Great Britain, as in many other European countries, sales revenue is subject to VAT - the European equivalent of our value added tax and the American Sales Tax. However, there is still a difference with America. First, it consists in a rate. The standard VAT rate in Germany is 19%, in Great Britain - 20%.
   Secondly, VAT in Europe must be paid when importing goods and at every stage of the sales chain: both in the B2B segment and in B2C. In addition, entrepreneurs must independently control the payment of tax to the state treasury.

2. The need to create a legal entity. In 2022, Amazon added Ukraine to the list of countries that can trade on European marketplaces. Theoretically, this means that Ukrainians are allowed to work at the site as individuals. However, in practice this is impossible, because the tax services of Germany, Great Britain and other European countries do not issue VAT to residents of Ukraine.

So, to work on Amazon DE and Amazon UK, registration of a legal entity is mandatory. However, for Ukrainian manufacturers there is a way out of this rather complicated procedure. It consists in the fact that in order to trade in Germany or Great Britain, the company should not be registered in these countries. You can choose the jurisdiction that is convenient for you. So, it is quite possible to enter the European market with an LLC registered in Ukraine.

The markets of Germany and Great Britain are quite attractive for Ukrainian entrepreneurs. There is little competition and a wide target audience, including many of our compatriots. Regarding taxation, the principle of VAT collection is very similar to Ukrainian VAT, so you don't have to get used to something new - just entrust taxation to professionals.

Where to start entering new markets: top recommendations

In order to conquer foreign markets successfully, it is important to know where to start and how to proceed. I hope some tips on this process will help you grow your business effectively.

Explore sales and revenue prospects

To immediately understand whether your product is relevant for a certain market, analyze the demand for it in the corresponding marketplace. The Amazon Best Sellers section, which is available on each regional platform, will help with this. Search for the product category you are looking for and see if your product is in the best seller category. Here you can find your way about pricing.

Other Amazon tools like Movers & Shakers are easy to use for the same purpose. There is a list of products, the level of sales of which has increased the most over the last day. Also try third-party resources, including Google Trends, Keepa, and Jungle Scout.

Understand the legal issues

Is it worth creating a company to enter a specific market? In which country is it better to register a legal entity? How to get tax benefits? You can get answers to all these and many other questions from us at blog, since the beginning of the war, we have been filling it with materials that give Ukrainian entrepreneurs the opportunity to deal with all legal issues of doing business in foreign markets.

Find a logistics contractor

Contact a proven company that provides a wide range of services. In particular, such contractors will be able to help you with customs clearance of goods.

Create an effective marketing strategy

There are three ways to do this. If you have the necessary knowledge and skills, you can promote your products yourself. There is also the option of outsourcing this part of the work or creating a marketing department within the company. Hire qualified employees or organize training for your own personnel. Today, many businesses already provide services for training teams to manage Amazon projects, where your specialist can get all the necessary knowledge.

Register a Seller Central account

When all the legal, logistical and marketing issues are resolved, all that remains is to register an Amazon seller account - here we have shared a step-by-step guide for you to do it yourself. Please note that the marketplace thoroughly checks all documents and information provided. Therefore, to avoid refusal of registration and blocking, it is better to entrust this matter to specialists. By the way, you can also consult with them about further work on the trading platform - in particular, using the FBA service, intellectual property protection, financial issues, and so on.

Let's summarize

In 2024, the most popular markets among Ukrainian manufacturers are the USA, Germany and Great Britain. Work on each of them has its own nuances, including the peculiarities of taxation and legal registration of business, setting up logistics, and others.

In order for the development of a new market to go as quickly and without problems as possible, enlist the support of professional lawyers. They will help in solving all issues related to business expansion and will accompany you at every stage of your development.

Read also on Newsky "Bulgaria and Romania have joined the Schengen zone, but still with restrictions" and look at "Boring Pence" YouTube channels.

To always be aware of events, subscribe to TG channel Newsky. We also recommend current discussions of friends of Ukraine in North America on Rashkin Report YouTube channels.