Selling on international online marketplaces

International online marketplaces like Amazon, AliExpress, eBay, Zalando, and Bol.com are here to stay. Shopping at home and abroad is increasingly going digital. Offering your products on online marketplaces has advantages and disadvantages. You also have to deal with extra costs, VAT and European rules.

The majority of all online sales to consumers are through online marketplaces. This share is expected to continue to grow in the coming years. An online marketplace is a digital third-party platform that matches supply with demand: it is a place where buyers and sellers can meet and strike a deal. The owner of the platform manages the marketplace and supports buying and selling. In this article, you will read about what to consider when offering products on an international marketplace.

5 benefits of online platforms

Listing your products on online platforms has a number of advantages.

1. No big investments are needed. You pay the online platform a fee for every item you sell, also known as commission.
2. You save costs. You do not have to build and update your own website with a local domain name.
3. You get to piggyback on the marketing efforts and reputation of the platform. So, you will not have to invest in getting visitors to find your website, for example. The online marketplace is doing the marketing for you.
4. The marketplace takes care of all additional administration. Many online platforms facilitate the complete purchasing process with a so-called fulfilment service. This service covers the ordering process, payment, customer service, and logistics.
5. Foreign sales platforms are a relatively quick and easy way to gain access to foreign markets. You tap into new target groups and get more turnover. 

International marketplaces

Foreign consumers know and trust a marketplace in their own country. Listing your products on such a marketplace accelerates your contact with the foreign customer. As a result, your brand grows faster nationally and you build brand awareness more easily.

5 disadvantages of marketplaces

There are also disadvantages to doing business with online platforms or marketplaces.

1. If your product sells well, there is a chance that the marketplace will start selling a similar product itself.
2. Selling your products on a foreign online platform will get you less brand recognition than selling products on your own website. The same goes for contact with your customers, as the platform will take care of most communications.
3. It is important to accurately monitor your inventory levels. Because delivery issues are an easy way to get ‘penalised’. Your ranking on the online platform may suffer as a result. In extreme cases, your account could even be closed.
4. Marketing and all the other work done by the marketplace comes at a cost: a cut of your profits. Some sellers complain about the high commissions that some marketplaces demand.
5. Selling your products on online platforms creates greater price transparency, as your products are listed alongside similar products from other sellers. You will also have to share your content and product descriptions with the platform.

Anti-competition

Online platforms are powerful players and can distort the market. The European Commission has taken actions the past few years against several platforms. Keeping a close eye on the latest market developments will help you decide whether to start your own online shop or sell products on a marketplace.

Required investment

It costs a lot less to start selling products on a marketplace than to build your own (mobile) online shop in a different language with a local domain name. A quick glance at the costs of selling products on a marketplace:

• An account costs a flat monthly fee, which varies from one marketplace to the next. Make sure to compare your options before making a final choice. Listing products on a platform is usually free.
• It will take several weeks before you receive your first payment, so you will need a financial buffer to pay for costs.
• You pay a fee for every item you sell. This will usually be a percentage of your revenue. The percentage differs per marketplace, as well as the type of product sold.
• If the marketplace does not offer similar products yet, remember that you may have to pay extra for a translation and product description.
• Many marketplaces offer a fulfilment service. They keep your products in stock in their logistics centre and handle all logistics. This service usually costs a flat fee per parcel, but dispatching orders yourself would also come with shipping costs. Having products in stock locally may have tax consequences, as you may have to apply for a foreign VAT number and file a VAT return abroad. 

VAT

Platforms may ask you to prove that you are registered for VAT in the country of sale. Because to some marketplaces  so-called ‘platform fiction’ applies. This means that platforms that facilitate transactions may also be responsible for collecting VAT. Many Dutch entrepreneurs stock products on German marketplaces. These platforms then often have additional requirements.

Germany

German marketplaces like Amazon and eBay require Dutch sellers to submit a VAT certificate if you want them to keep your products in stock. This certificate states that your company is registered in the German VAT register with a Finanzamt (in German) and is issued upon request. If you sell products on a marketplace but are not subject to VAT in Germany, submit a statement declaring that you do not need a VAT number.

Online marketplaces in Germany also have a general duty of disclosure. This is Article 312 of the German Civil Code (in German). As part of this duty, marketplaces have to disclose if sellers are businesses, among other things.

European regulation

The EU has the European 'platform-to-business' regulation. This regulation offers entrepreneurs more certainty when doing business with digital platforms. These rules give entrepreneurs more certainty when doing business with digital platforms. Online platforms without headquarters in the EU must also comply with these mandatory rules. For example, Amazon, Facebook and Google. These mandatory rules are there only for platforms with business providers whose customers are consumers.

More information can be found at Business.gov.nl. And Rijksoverheid also has frequently asked questions (in Dutch) about this regulation.

European proposals

In December 2020, the European Commission (EC) published two proposals for new regulations for platforms, the Digital Service Act (DSA) and the Digital Market Act (DMA). With these rules, the EC wants to strengthen the position of internet users by limiting the power and monopolies of the largest players. The largest online platforms receive extra supervision and rules. In addition, providers of digital services are given more responsibilities towards their users. the Digital Markets Act and Digital Services Act form new, modern legislation for Europe's digital economy. 

DAC 7

DAC7 came into effect on 1 January 2023 with the EU Directive on Administrative Cooperation. In the Netherlands, DAC7 is implemented within the Implementing the EU Data Exchange Directive Digital Platform Economy Act. Under this new act, platform owners are required to provide information about sellers on their marketplaces to the Dutch Tax Administration, which must then share this information with other EU member states.

DAC7 applies to any business selling products or services on an online European platform or a digital marketplace with European customers. The platform will provide your account number, name, and address information to the tax authorities.

Stepping stone

Selling your products on a foreign marketplace can be a stepping stone to a foreign online shop of your own. You can also use your sales figures to do market research, which will reveal if there is a market for your products in a particular country. If your products prove to be in demand, you can always decide to start your own online shop later.