By Niall Kiernan, Senior Director of Product Marketing, Vertex

In today’s digital landscape, online marketplaces are an enabler for many businesses to achieve their growth ambitions. From Amazon to eBay, Etsy to Vinted, businesses of all sizes are now utilising online marketplaces, and recent years has seen exponential growth in this area. Numerous factors, including the proliferation of mobile devices and widespread availability of high-speed internet, have resulted in this escalation. Combined with consumer demand for convenience, along with the impact of the pandemic, the success of online marketplaces can be seen in the numbers. In 2021, retail eCommerce sales amounted to approximately US$ 5.2 trillion worldwide. This figure is forecast to reach US$8.1 trillion dollars by 2026.

It is clear that online marketplaces are a vital source for businesses to continue to flourish but there are still major roadblocks which can hinder a business’ efforts to capitalise on the booming sector. According to research commissioned by Vertex, which surveyed 479 finance professionals globally, seven out of ten sellers using marketplaces to trade online believe that indirect tax challenges could deter them from using them again in the future.

The complexity of ensuring a frictionless eCommerce experience

Whilst over half of respondents in the survey agreed that marketplaces are getting easier to use as a sales channel, ensuring that both operators and sellers can enjoy a frictionless experience is one of the biggest challenges in the space. Respondents indicated that they are looking for more support and guidance on issues including: how to ensure transactions and the transfer of money can be more seamless (65%), tax liabilities (64%), and compliant invoicing (63%). But what are some of the specific roadblocks both marketplace operators and sellers are experiencing?

1. The cross-border trade conundrum

85% of marketplace operators surveyed indicated that they are looking to increase their seller base, however there are numerous tax complications when trade crosses borders. Four out of seven operators stated they have struggled to manage tax liabilities and tax complexities around seller shipping locations. Online marketplaces are very much a global affair, with cross-border transactions being the norm.

The difficulty here is that both operators and sellers must comply with the different tax regimes of the countries they operate in, which can be a complex and burdensome process. Seller respondents reported a wide range of issues when they sell through marketplaces, including balancing their tax liabilities and knowing where and when they are liable for tax.

2. Complexities in every step of a transaction

Dig beneath the surface and the process of a transaction is much more complex than initially meets the eye. From listing fees to shipping and handling charges, or the previously mentioned cross-border trade complexities, every step in the transaction process brings multiple challenges to both the operators and sellers themselves.

45% of sellers surveyed want their marketplace operators to improve the process of finance and tax automation to overcome these barriers, but of the operators, only 56% manage all tax liabilities on their seller’s behalf. If marketplace operators want to ensure they have a healthy population of sellers, this figure needs to increase.

Tax technology for a trouble-free tomorrow

Although there are clear and significant indirect tax challenges for online marketplaces, the space remains an attractive channel for businesses to achieve their growth ambitions. 81% of businesses are taking advantage of online marketplaces to attract new customers and sell into more countries and upon further inspection, they attribute this expansion into marketplaces to reach a wider geographical market (57%), to being more competitive (50%) and to tap into cross-border sales opportunities (48%). It’s clear that sellers are wanting to utilise online marketplaces to expand their customer base globally and if operators want to increase their seller base and take advantage of the growing demand for this, and 85% of those surveyed do, then they need to ensure that their platforms offer a seamless experience for their sellers.

By investing in an end to end tax management solution which can handle all types of indirect tax requirements, you will be able to support sellers on their own individual growth journeys. In addition, you can rest assured that it will also enable them to feel confident that their chosen platforms can meet all the indirect tax requirements as they increase their cross-border sales.

To learn more about the taxing times for the marketplace and seller relationship, download the latest report by Vertex.

Depending on your background, entering your 20s can be a bit of a precarious time. Among the things you’ll need to get to grips with is the idea of having your own money to spend. Whether you’ve just left education, or you’ve been in the world of work for a while, it pays to understand finance. The bad news is that your financial education, if you’re like most people, won’t have amounted to much. The good news is that you’ve spotted the problem early, and you can look to try to correct it.

You might put money aside in an ISA, or some other optimised savings account. You might, at this point, be looking around and wondering how you compare to everyone else (which is only natural). Research indicates that around 15% of people in the UK don’t have any savings at all, while 33% have savings of less than £1,500. If you’re young, then you’re more likely to fall into these brackets.

We should note, however, that not everyone’s starting from quite the same level. If you haven’t gotten a leg up from your family, then you’ll be at a disadvantage – but it needn’t be a lasting one, if you develop the right financial habits.

Make it a habit

Keeping your spending in check is a lot like keeping your weight under control, or learning a musical instrument. The things that you do every day without thinking will tend to add up to your long-term success or failure. Build the right financial habits, and you’ll be in good shape. Avoid frivolous spending. Ask yourself whether you really need a given product or service before you buy it. Don’t mistake an asset for a liability, and don’t kid yourself about the difference between the two.

Be realistic

You probably don’t want to waste your twenties by living a monastic lifestyle, especially if your friends are constantly going on holiday or going out in town. So, set yourself realistic limits. In some cases, you might be able to save on the necessities in creative ways. If the cost of learning to drive is prohibitive, for example, then you might look at learner driving insurance, and practicing in your own car.

Emergency funds

You never quite know what the future will hold – and you don’t want to have to sell anything when disaster strikes. If you do, then you’ll be forced to incur the costs an inconvenience that go along with selling. Think about how long you’ll be able to survive on the cash in your current account, and maintain the balance accordingly.

Saving goals

Your spending should ideally be goal-oriented. Think about what you’d like your credit score to look like, and think about how many cards you want to take out. If you think you’re going to have trouble keeping track of your funds, then you might look into budgeting apps that might help you out. As a benchmark, you might look at setting aside around ten per cent of your income for the future.

Retirement savings

While you might not be thinking about your retirement quite yet, it’s worth setting a little bit aside for this period in your life. It makes economic sense, as the government will inflate your savings by up to 25%, up to £4,000 saved every year. This lasts right up until you’re 40 – so, get saving now!