This post is by Alex Ogilvie, Managing Director of Seller Dynamics. Seller Dynamics is a multichannel management system, listing stock on marketplaces including Amazon, eBay, Rakuten and Fnac. It also features an automatic repricer, handles shipping and generates purchase orders for suppliers.
Few would have predicted a year ago that Donald Trump and Nigel Farage would be posing together for a thumbs-up photo on the top floor of Trump Tower in New York last weekend.
Both have views that would see the world order change when it comes to international trade. Leaving the EU creates a set of challenges that Theresa May’s UK cabinet are clearly finding difficult to find a clear, unified position on. While the stated intent from the Trump campaign is to draw to an end certain US trade deals that he and his team see as simply too generous.
What will this mean for marketplace sellers, particularly those selling internationally?
The US and Trump
Donald Trump has been very specific in his criticism of certain large technology players in the USA. The public discourse between Amazon’s CEO, Jeff Bezos, and Donald Trump has been frank to say the least. During the campaign Bezos, owner of the Washington Post, stated that Trump was “eroding democracy”.
While in a Fox News interview in May of this year Donald Trump had this to say about the Amazon founder:
…he thinks I would go after him for antitrust because he’s got a huge antitrust problem. Amazon is controlling so much of what they’re doing… What he’s got is a monopoly and he wants to make sure I don’t get in.
Since the election result Bezos has wished the President-elect every success, but it would be naive to think that the matter is closed. Tech stocks, Amazon among them, have suffered after the result and found it hard to rebound.
With Trump raising concerns about Amazon and also about the trading relationship with China it would be easy to be concerned, but let’s think through some of the likely outcomes of the new trading world we appear to be entering.
First of all let’s look at China. China contributes more to global economic growth than the US. While there will be some strain in the US-China relationship, any significant change is likely to have a damaging, and long-lasting, effect on the US. Retailers who rely on the relatively free movement of goods from China may well get nervous, but we all rely on that free movement, so a wholesale change doesn’t seem likely, it would simply hurt too many businesses.
As for Amazon, an anti-trust case – if taken forward and found against Amazon – would most likely see the company broken up into its constituent parts. If that were to happen it should not necessarily be a disruptive event for marketplace retailers, as the services would all still exist. But we are a long way from that position, and if that action were taken it would generate a significant reaction from the other large US corporations who enjoy global success.
It may well be that the threat of an action is all that Trump desires, and gives him a bargaining position when it comes to agreeing a tax position with Amazon and other giant US corporations.
The UK and Brexit
Returning to the UK, marketplace sellers may well be nervous about their future international sales, but that seems unwarranted. Brexit may well cause problems but the marketplaces will deal with it. Trump has an eye on Amazon, but so does the UK government, though with a very different outlook in mind.
With so many retailers taking advantage of the cross-border trading services that eBay and Amazon both provide, a huge and powerful lobby group has emerged. Don’t underestimate the power of that group. You can see how powerful it is by the actions of a few government departments.
The UK’s tax authority HMRC is now holding the marketplaces themselves to account, if overseas sellers do not pay the VAT due on their sales. eBay and Amazon have both made this obligation clear to their sellers, and it follows the very vocal complaints of retailers crying foul over the VAT issue. It’s a perfect example of a very powerful lobby group making its voice heard at government levels.
The UK’s Department for International Trade should also give retailers and marketplace seller’s significant comfort. The DIT (previously UKTI) have long been supporters of marketplaces and see them as a low-risk way for retailers and manufacturers to test, develop and expand into new markets. Make no mistake, the DIT see marketplaces as a highly-valued sales channel.
Will Marketplaces Create Stability?
Whatever happens post-Brexit, the marketplaces have shown their worth to government. Indeed if international trading becomes more complex because of Brexit, or new US trade arrangements, it would seem reasonable to assume that the marketplaces will alter their processes to cope and ensure retailers can continue to trade easily.
In a changing world we may well find that it’s marketplaces that give retailers the stable trading environment they need, as world trade agreements come up for review and change.
It may not have been the original intent, but marketplaces have created a force that governments are now finding hard to ignore. It’s retailers themselves who give marketplaces their power. Don’t underestimate that voice.