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Will Chinese sellers on eBay become less competitive?
With the news that eBay are going to clamp down hard on Chinese sellers on eBay who make use of overseas warehouses, both here in the UK, in the US and around the world, what will the likely effect on Chinese listings and their volumes of sales is the question eBay sellers are asking.
Firstly there is no question that goods from China are relatively low cost and if you’re competing head on in certain categories it’s always going to be tough, but when Chinese sellers on eBay avoid VAT and commit location abuse it’s even harder.
Historically, Chinese sellers on eBay have at various times in the past lied about where their products were located and (a generous term) ‘forgotten’ to pay their VAT. eBay, in partnership with HMRC are focussing heavily on VAT registration for overseas sellers with the incentive of joint and several liability – if the Chinese sellers don’t pay their VAT and eBay don’t stop them selling then eBay themselves could be ordered to make good the difference.
Now eBay have announced that they are monitoring Chinese sellers who may be being less than honest about where their items are located. eBay are also insisting that Chinese sellers specify and use regular UK carriers (the same Royal Mail, Hermes, Yodel, DPD etc that UK sellers would use) for the majority of their shipments and that they upload tracking. If a Chinese seller genuinely has their goods in a UK fulfilment house, we know fulfilment houses offer a superb service with late pickups and speedy fulfilment so their is no reason that a Chinese seller couldn’t be as efficient as a UK seller. If a Chinese seller is shipping from China then their item location should be China and clearly flagged for UK buyers as shipping from China and at last the “Item Location: UK Only” search option should work.
What UK sellers need to bear in mind is that many Chinese sellers on eBay have multiple data specialists who will obsess over details and price in every cost down to the last penny to compete. With a generally lower cost of goods, these sellers will make a pragmatic decision on whether to fulfil from the UK, pay their VAT and use UK couriers, or if it’s economically better for them to ship from China and declare that they are doing so.
The ultimate result is likely to be that prices from Chinese seller rise a little as they factor in the increased expenses of shipping from the UK vs the lowering in search results from shipping from China. However, a word of warning, due to their low cost of goods in the first place couple with the massive volumes that they sell in, Chinese goods are still likely to be lower priced than the same product from a UK seller – especially in categories such as consumer electronics accessories etc.
Unless you have massive buying power and order quantities to match the discounted rates that Chinese sellers receive, the net result could be slightly higher prices from Chinese sellers but still tight operating margins in order to compete. The changes from eBay are likely to narrow the price differential but not close it entirely. Indeed those Chinese sellers who choose to genuinely ship from the UK could see their advantage in search increased as buyers have more confidence purchasing from them.
The next month will be interesting as Chinese sellers figure out their next strategies. The best will survive and prosper and the worst will seek new ways to circumvent the rules and carry on trying to evade VAT and fudge their Item Location. We’re hopeful that eBay’s new initiatives to compel all sellers, both Chinese, UK and around the world, at least move the needle and we see more compliance and those who continue to flout the rules being kicked off the marketplace altogether.
We are seeing Chinese item location mis-representation sellers changing their despatch and delivery times to ‘comply’ with the new directive. If they actually sending from the UK is another thing. The algo will detect this on the end of the first evaluation period on April 6.
Don’t forget that quite often people avoid sellers from China due to long dispatch times and of course the often poor reputation they have for shoddy goods! So it is not just about price. By making them truthfully show where they are it should also help.
The stupid discount they get with royal mail and china mail doesn’t help though.
Still, we should be grateful for small mercies. Not everyday that ebay works in UK sellers favour, and every little helps.
This has to be the most positive post about ebay i have written in years!
I am slightly more optimistic since it is not all about the competition power yes all the things Chris mentioned in this article I agree but there are more to it and I think Chris should write the second article about this title.
Below are the few things I can think off.
1- %50 ( Perhaps more ) UK buyers purchase their product assuming the item location is in the UK. I believe this fact alone should make a big difference.
2- From the search filter choosing the “UK Only” along should easily double ( If not more ) the chance of UK sellers.
3- Yes for expensive products Chinese sellers can still ship the goods by faster shipment method but we shouldn’t underestimate the number of UK buyers who had a bad shopping experience in the past or who are up to the front prejudice against Chinese sellers just because the stories they heard or read in the past or online shoppers aware about the advantages off buying from local sellers ( warranty, return, shipment speed, communication)etc. so all it needs for these UK buyers to see correct item location
4- Some buyers might just want to support British businesses ( I am one of them 🙂
5- We should not only focus on eBay UK listings! There must be millions of eBay China and eBay Hongkong listings will get revised for the shipping method! Chinese eBay site listings must show accurate shipping speed means they will have to offer a longer shipping method or much more expensive shipping options. if not they will fall behind the service metrics means some more for competition for UK sellers who offers high standard services.
6- What about the nearby countries or countries where UK/USA/Canada/Australia/EU buyers purchase the products confidently?
I don’t know exactly which other countries but I know for a fact Chinese sellers must apply all these latest location and shipment changes to eBay Germany and USA.
I can’t speak for all sellers but I sell around %30 of my products to EU ( mostly Germany ) and %10 America ( mostly USA ) %95-98 of my competitors in those countries are Chinese sellers I am sure I will feel the benefit of this latest eBay changes in those countries too.
I recently purchased an item on eBay from a location deceiving Chinese seller for £1.99 inc shipping, Small Parcel size. It eventually arrived with a Royal Mail 24 post label.
How is this a level playing field Royal Mail? Can I have their shipping rates from you?
I have closed my account after Ebays obsession with protecting those guilty of misleading and down right abuse of their customers.A customer service highly trained
In the art of passive aggression methods that are totally deplorable.IF Ebay are genuinely interested in how long standing customers they only need to look at Trust Pilot reviews.
However the fact that their pocket has been hit is the only reason that they now are feeling repentant just shows how repugnant they are
I ordered an item early last week from a Chinese seller who said the item was located in the UK and it would be with me by Friday, it still hasn’t arrived. Normally I wouldn’t buy from a Chinese supplier for this very reason but with ebay’s crack down I thought I would give them the benefit of the doubt, next time I won’t. Unfortunately there were no UK suppliers selling it.
I have conducted a poll on a facebook group I am in for UK and Ireland sellers about click through rates. The general consensus is CTR is down. There has been 14 respondents to date and EVERY one has said CTR is down on 6 months ago.
Be assured this item location misrepresentation issue is affecting LOTS of UK sellers. The quicker its stamped out the better.
A barometer is the Trending rates on PYL. They seem to be tumbling, especially in the highly competitive markets like phone cases, where it’s dropped from 21% to 7% in 4 days.
I think that means if Chinese are relocating back to China they are not eligible for PYL and thats why less competitive trending rates.
Joe public (and me) have couple of crap experiences with Chinese sellers stating the item is in UK when it takes 2 weeks to arrive. The next time they go to buy something they skip ebay and go straight to Amazon.
I have watched our ebay sales over the last couple of years go down.. but our Amazon sales are increasing.
Little bit late to make to changes.
The HMRC led fulfilment house due diligence scheme (FHDDS) is now active legislation and is a further nail in the coffin for any Non EU sellers trying to circumvent paying the relevant duties and taxes. For any good honest sellers that outsource or are thinking of outsourcing their fulfilment operations then the message here is clear:
ONLY OUTSOURCE YOUR FULFILMENT TO A WAREHOUSE KEEPER THAT IS FHDDS ACCREDITED !