Skip to main content

Amazon's UK sellers are facing a 2% fee hike after the company decided to pass along the entire cost of a new national digital tax (AMZN)

* Amazon will be raising the fees for sellers on its UK marketplace by 2%, starting in September. * The change follows the passing of a new digital services tax in the UK, which levies a 2% tax on revenues of companies that run search engines, social media services, or online marketplaces in the country. * The moves shows Amazon is passing along the costs of the new tax on to its small business sellers, and raises questions on the effectiveness of such measures. * Visit Business Insider's homepage for more stories. Amazon announced on Tuesday that it plans to charge more fees to the sellers on its UK marketplace, in response to the country's new Digital Services Tax. In a note to sellers, Amazon wrote that it will add a 2% fee to all merchants using its marketplace or storage and fulfillment services in the UK region. The new fee will go into effect on Sept. 1.  Amazon said the fee increase is driven by the passing of the DST law, which levies a 2% tax on the revenues of companies that run search engines, social media services, or online marketplaces, and generate over £500 million in sales. Until now, Amazon absorbed this cost, it added. Here's what the note said: "In spring of 2020, the UK government introduced a Digital Services Tax ("DST"). While the legislation was being passed, and as we continued our discussions with the government to encourage them to take an approach that would not impact our selling partners, we absorbed this cost.  Now that the legislation has passed, we want to inform you that we will be adjusting referral fees, Fulfillment by Amazon (FBA) fees, monthly FBA storage fees, and Multichannel Fulfillment (MCF) fees in the UK to reflect this additional cost. We will not apply the increased charges retroactively, but starting 1 September 2020, the above fee types will increase by 2%." While Amazon is passing along the costs of the new tax to the thousands of small business owners selling on its UK marketplace, it raises questions about how effective such measures are. Amazon made a similar move in France last year when it raised seller fees by 3% in response to the country's new digital tax. The UK law is aimed at ensuring big companies pay more taxes, as most of their European headquarters are located in tax havens like Luxembourg, and leveling the playing field between them and the small- and medium-sized businesses in the region. The UK is Amazon's third-largest market in the world, after the US and Germany. Amazon generated over $17.5 billion in sales from the UK last year.  In a statement to Business Insider, Amazon's spokesperson said the company advocates for a global agreement on taxation, instead of a government-level law that varies by the country. "Like many others, we have encouraged the Government to pursue a global agreement on the taxation of the digital economy at OECD level rather than unilateral taxes, so that rules would be consistent across countries and clearer and fairer for businesses. As we've previously indicated, the way that the Government has designed the Digital Services Tax will directly impact the businesses that use our services," it said. No other choice Still, sellers in the UK are likely to continue using Amazon's services — even if it becomes more expensive — because of its sheer size, according to Tom Baker, founder of FordeBaker, an agency that helps Amazon sellers.  He said Amazon may become a slightly less attractive option for online sellers, as their profit margins will shrink, but they can't afford to abandon the marketplace given it's the largest e-commerce site in the country. They can't raise their prices on Amazon either, he said, because doing so could drop a seller's search ranking on the site — or risk having certain products suspended due to Amazon's policy of keeping low prices. "The size of the pie is just too big," Baker said. While it's no surprise that Amazon is passing on the cost of the new tax to its sellers, Baker said it's a "missed opportunity" for the company to show support for the small businesses that account for a large chunk of its sales. Roughly 60% of all products sold on Amazon now come from third-party sellers, and the company has been promoting itself as a staunch supporter of small businesses lately as regulatory scrutiny has grown over its market power.  "It could have been an opportunity for Amazon to make a stand for SMBs and show their support for the backbone of the UK economy," Baker said. Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
https://bit.ly/2Xz1EgA

Popular posts from this blog

A full breakdown of what channels you get with every Sling TV package, plus all the add-ons

  * Sling is one of the most affordable cord-cutting services on the market, offering two packages —  Orange and Blue — with 30+ channels starting at $30 a month or combined for $45 a month. * Orange offers the Disney Channel and ESPN, while Blue offers a slate of Fox channels, NBC, Bravo, and Discovery. Both Orange and Blue offer CNN, TBS, Food Network, and BBC America. * You can also add on multi-channel packages, like Sports Extras, Kids Extras, or News Extras, starting at $5 a month. Premium add-ons, like Showtime, Starz, and Epix, are also available for an additional monthly charge.  * If you're new to Sling TV, you can receive a free 14-day trial for a limited time. * Here's a complete breakdown of the channels offered on each Sling package.    If you're hoping to get the most bang for your buck once you cut the cord with your cable subscription, Sling is one of the most affordable live streaming services on the market.  The service has two packages with ...
Read more

Here's an exclusive look at the pitch deck London fintech Lanistar used to raise $19 million at a $190 million valuation

* London-based fintech startup Lanistar has raised a £15 million ($19 million) funding round from Milaya Capital.  * Founded in 2019, Lanistar is building a personal financial management platform that will launch later in 2020.  * "We're expecting a huge amount of growth upon our launch and have already seen strong interest among our sign ups," Gurhan Kiziloz, founder and CEO of Lanistar, told Business Insider. * Visit Business Insider's homepage for more stories.  The coronavirus lockdown in the UK has brought the importance of managing money into sharp relief. A recent study from Money.com shows that 71% of UK households have saved cash during lockdown, and, with uncertainty about jobs and the economy looming, money management is now front of mind for many. Lanistar, a banking platform with a focus on personal finance, is one company offering tools for consumers to better manage their money. It has just raised a £15 million ($19 million) funding round from Mil...
Read more

Why an early exec quit unicorn food delivery startup Deliveroo to launch a food business in the middle of a pandemic

* A former Deliveroo exec has launched a market food hall startup in the middle of COVID-19. * Dan Warne was managing director of the unicorn startup until 2019, but has now launched Sessions Market as a community food hall concept to rejuvenate UK towns after the pandemic. * Warne says he hopes to bring his experience from Deliveroo, particularly about customer behavior, to the analogue world of food halls. * The first venue, Shelter Hall on Brighton seafront, launches July 4. * Visit Business Insider's homepage for more stories. On Saturday, the UK's bars, restaurants, and cinemas will fling their doors open to customers for the first time since a strict lockdown commenced in late March. Given continued public health concerns around the coronavirus pandemic, it might be unwise to open a new food business right now. But Dan Warne, a former high-level executive at British unicorn startup Deliveroo, has launched Sessions Market, a series of community-orientated food hal...
Read more