E-shopping outside the EU may soon become more expensive and less profitable. On July 1, the EU will introduce VAT on shipments worth up to € 22. This could be an opportunity for Polish retailers who are trying to reach customers online.
When the era of cheap shipments from China ends, the shopping platforms there should expect significant losses. During the pandemic, the Spanish, French and Poles ordered the most cheap trinkets from China, which means that the international platform of the Chinese group Alibaba, to which the Chinese Aliexpress sales service belongs, was valued at around 550 billion dollars.
A chance to be competitive
New consumers appear on the market – Lazy Conquerors – for whom shopping is not limited to just clicking the “buy” button, but is the whole process. For them, this experience extends to other aspects, such as attractive loyalty programs or an extended warranty.
It was difficult to compete with suppliers from China
We bought on AliExpress because it was very cheap. Small, so-called groupage shipments came to us almost for free, or at no cost. Given the fact that VAT was not available at these prices, it already completely distorted competitiveness.
Until now, Polish and European sellers could only be tempted by the speed of delivery and warranty service. The rest of the strengths were on the side of the Chinese companies.
From July 1 this year, the rules for settling VAT on online trade will change across the EU. And now a lot should change and the competitiveness of the European and Polish supplier will increase.
The influx of goods from China to Poland will weaken and prices on platforms such as Alliexpress will not be as competitive.
The new tax changes are undoubtedly a blow to Chinese suppliers, on the other hand, they will allow them to compete not with the price but with the quality of the product.
The most important changes from July 1, 2020 in charging VAT
- elimination of the EU-wide exemption from import VAT, the so-called small parcels with a value of up to EUR 22
- a significant extension of the scope of B2C transactions, which for VAT purposes can be settled using the simplified One Stop Shop procedure
- imposing the obligation to collect and pay VAT on taxpayers facilitating, through the use of an electronic interface (e.g. an online trading platform, portal, etc.), to make in the territory of the EU
EU Member States, including Poland, are required to implement solutions provided for in the e-commerce VAT package in national tax regulations, the purpose of which is to overcome barriers, including sealing VAT, in cross-border e-commerce between entrepreneurs and consumers (B2C) justification of the Ministry of Finance, which informs that the change is a result of the implementation of the EU e-commerce VAT Package.
Requirements of Polish customers
Polish consumers have high expectations – “fast delivery” means a maximum of 1-2 days. According to the PostNord report, efficient delivery is also important to us. On the other hand, Asian marketplaces with long delivery times are still popular.
This shows that buyers are able to lower their expectations if they get something “extra”, such as a much lower price or cashback.
Polish e-commerce market can be as attractive as the Asian market if companies are open to new solutions and above-average customer service
Companies in Poland may therefore be competitive in terms of delivery time and price, but they have a chance to attract consumers with an interesting offer related to purchases in their store. These could be the key elements of the recipe for taking over customers from the Far East giants.
Today’s e-consumer is a conscious, intelligent person; knows how to compare prices, not just limited to the most cost-effective offer. A customer ordering from China so far, in a Polish e-shop will not only need an equally attractive offer, but also efficient service. On the other hand, it makes efficient cash flow important for e-commerce entities, enabling them to maintain financial liquidity