Operating an e-commerce business comes with its fair share of challenges. As a seller, you have to consistently optimize your store, advertise your products, manage inventory, fulfill orders, provide excellent customer service, and more. On top of that, you need to stay up-to-date with the latest e-commerce policies and regulations that can directly impact your operations and sales.
In this blog post, we will discuss how recent changes in trade policies, tax laws, and platform regulations can affect your e-commerce store on marketplaces like Shopee, Lazada, TikTok Shop, and others. We will simplify complex policy jargons and break down actionable tips to help you navigate these changes smoothly.
New import tax policies
Let's first look at some major changes in import tax policies in countries like Vietnam and how they impact cross-border e-commerce.
Many sellers source their inventory from overseas suppliers, especially from China. So when there are new import duties or additional taxes, it increases your product costs. As a result, you may have to increase product prices which can negatively affect sales.
For example, in 2018, the Vietnamese government removed import tax exemptions on shipments worth less than $150. This meant sellers had to pay a 10% import duty on all overseas purchases, increasing product costs.
Here are some ways to deal with such import tax policy changes:
- Check if your supplier can absorb the extra tax to avoid increasing product prices
- Renegotiate shipping contracts with logistic partners to reduce other costs
- Explore domestic suppliers to source inventory and reduce import duties
- Shift to a localized inventory model instead of relying on overseas dropshipping
The key is finding ways to offset the extra taxes so you don't have to hike product prices. Work closely with your suppliers and logistics partners to optimize costs.
Evolving tax regulations
Tax laws related to e-commerce income and GST can also impact your business operations and profitability.
For instance, Vietnamese e-commerce laws now require marketplace sellers with over VND 100 million in annual revenue to obtain a tax code and pay taxes. Previously, only sellers with revenue above VND 1 billion needed tax codes.
This lower revenue threshold means many more sellers have to register for tax codes. You need to maintain proper bookkeeping to accurately calculate e-commerce income and applicable taxes.
Here are some tips to stay compliant:
- Consult an accountant to determine tax obligations
- Maintain invoicing and record keeping
- File taxes correctly before deadlines to avoid penalties
- Consider registering a company to better handle taxes
Additionally, the collection of GST (Goods and Services Tax) also influences product pricing and profits. For example, Singapore, Thailand, Indonesia and other Southeast Asian countries have varying GST rates from 5% to 10%.
As a seller, you must factor in GST when pricing products to avoid losses. Work with an accountant to ensure GST compliance based on your country's rates and regulations.
Changing platform commissions
Marketplaces like Shopee and Lazada charge commissions on sales. In recent times, some platforms have increased seller commissions, especially for certain product categories.
For instance, Lazada raised commissions for sellers in the beauty category from 8% to 20%. So with every $100 beauty product sold, now you pay Lazada $20 instead of $8.
This directly cuts into your profit margins. Here are some tips to deal with increasing platform commissions:
- Renegotiate custom commission rates based on your sales volumes
- Opt for lower commission categories if available
- Adjust product pricing to maintain profitability
- Promote on multiple platforms like Shopee, TikTok Shop to diversify
- Sell on your own website to avoid platform commissions
The key is ensuring your profit margins remain healthy despite increasing platform fees. See if you can negotiate custom rates or use various sales channels to minimize dependency on just one platform.
Shifting platform regulations
E-commerce platforms frequently update their policies around allowed product categories, seller onboarding, service fees etc.
For example, Lazada and Shopee banned the sale of some health supplements after government crackdown. As a seller, you have to quickly adapt to such policy changes.
Here are some tips to stay updated on the latest platform policy changes:
- Check platform seller center regularly for new announcements
- Subscribe to marketplace newsletters to get email updates
- Follow platform social media pages for recent developments
- Join seller communities to learn from fellow merchants
- Consult your e-commerce agency to understand impacts
You need to be proactive in staying updated with platform policy shifts instead of being caught unawares. Quickly adapt your inventory, marketing and operations to align with new platform regulations.
Action steps to navigate policy changes
Here is a quick summary of actionable steps you can take as a seller to navigate evolving trade policies:
- Monitor government trade portals for import tax changes
- Consult an accountant for tax compliance
- Forecast supply chain impacts of new import duties
- Negotiate custom rates with platforms and suppliers
- Diversify sales channels beyond just marketplaces
- Adapt inventory and pricing to align with policies
- Leverage automation tools to manage operations
The e-commerce landscape keeps evolving. By quickly adapting and taking proactive measures, you can successfully navigate changing policies as a marketplace seller.
At Lameco, we offer comprehensive e-commerce solutions to help sellers and businesses thrive on platforms like Lazada, Shopee and TikTok Shop. Get in touch to see how we can help you tackle policy changes and drive success on marketplaces!
FAQs on navigating e-commerce policy changes
Here are some common questions sellers have about dealing with evolving trade policies:
How do I know if any new import tax is applicable to my products?
- Regularly check government customs and revenue websites
- Subscribe to updates from logistic providers
- Ask your supplier to inform of any new duties
- Consult an import-export specialist
What are the penalties for not complying with tax obligations?
- Different countries have different rules. But in general, penalties for tax non-compliance include heavy fines based on taxes owed plus accumulated interest and legal actions.
Can I absorb GST costs instead of passing to customers?
- Legally, the GST must be collected from customers and remitted to the government. Absorbing GST without collecting can violate tax laws.
How frequently do marketplaces change their commission rates?
- Platform commissions tend to increase almost annually for some seller categories. Check the platform's fees page regularly for updates.
Can marketplaces ban me if I do not follow their policy changes?
- Yes, not complying with major marketplace policy changes can result in warnings and account suspensions. Make sure to align your operations.
We hope this overview gives you a good understanding of how evolving trade policies and regulations impact e-commerce stores on marketplaces. The key is being proactive, quickly adapting, and leveraging partners like Lameco to navigate these changes smoothly. Let us know if you have any other questions!