Following the new EU VAT rule concerning the sale of digital goods, and Etsy’s total silence and lack of solutions to its sellers (including me), I am going on a quest to find a new marketplace to set up shop in, one which will handle the VAT for me. I have not found articles listing possible options to answer my needs, so I will attempt to create one myself.
This is a post in progress – I will keep updating it as I discover new possibilities. If you have any suggestions – please let me know.
On 1.1.2015, a new European Union rule came into effect, regarding the sale of digital services and goods. As I understand it, this new law says sellers are responsible for paying the VAT rate in the country where the buyer is located. This has caused much confusion and greatly affects digital goods sellers. Digital goods = Apps, eBooks, PDFs, songs, MOOCs, extensions, themes, eZines and much more. I have summed it up in this blog post: Etsy, EU VAT MOSS, brand experience and me You can read more about the new rule and the chaos it has stirred here: http://euvataction.org/
Since I have a shop on Etsy, I looked up to them for answers, solutions and suggestions. But Etsy really let me down this time. They only informed me on this law a day before it came into effect, and have since kept oddly silent. Despite clearly being identified as a marketplace, as defined by the EU rule, and therefore responsible for the tax in the eyes of the law, they were not going to take responsibility, stating the following:
Some Etsy shop owners have asked if Etsy will be handling VAT payments on digital goods under the new rules. Historically, Etsy has acted as a venue on which individual entrepreneurs run their businesses, with Etsy sellers responsible for paying appropriate sales taxes for those businesses. We are treating VAT the same way, with sellers expected to collect and pay VAT.
My personal decision was to temporarily close my shop (put it in Vacation Mode), until I am better informed on what Etsy is intending to do. Since no announcement was made to date, I am now re-thinking of where my business is heading. Some factors affecting my decisions:
I have decided from the start not to filter customers. This is partially based on the rumors I heard that Japan is considering implementing a similar law, and possibly the USA as well.
Starting 1.1.2016 the EU intends to implement similar VAT rules concerning physical goods as well, so no matter what I sell, I need to find a solution.
I am a one-person business, with barely any sales as to date, so handling the VAT myself is not a viable option for me (my accountant’s fees are already more than my profits). In Israel, my country, I am below the VAT threshold.
I am intending to start selling eBooks in the near future, so I need to find a long-lasting solution.
While manually sending files by email is allowed by the new EU rule, I think it is a step back, a hassle, and not a lasting solution.
Criteria for a new venue
Therefore, I am looking for a new venue through which I can sell my products. I am looking for:
A marketplace which will handle the VAT itself. So in effect I will be selling to this marketplace, and it will be the seller to my end-customers.
Possibility to automate digital purchases.
Preferably a place which does marketing and uses SEO for promotion, so my shop will be found in searches. I’ve encountered several places who take care of the sale itself, but this means my website will have to be found in searches. I am a small fish, so my chances to come up high in searches aren’t promising.
I am sure as the need grows, new marketplaces will come up to answer this need, but I cannot wait, and am looking for existing solutions.
Reasonable fees.
Seller friendly – being freshly burnt, I would love to find a place which listens and cares about my needs.
Changes are new possibilities!
Disclaimer: Please take into consideration this list is not conclusive and does not list all features of each place. Nor does it list all existing platforms.
Digital Goods Store are changing their business model, in response to the VAT rule and to answer demand. They say they have re-thought where they are going, and are becoming a marketplace, where you can browse shops and items. They seems to be very attentive to users from their recent blog posts. The new marketplace is not available yet, they say it is due to open any day now. So far they have only served as a selling software platform. This sounds to me like a good option, although they take a pretty chunky percentage of sales.
As many of you are aware we are changing our business model because of the new EU VAT law … We realise many digital sellers are stranded right now because of this VAT mess and see Digital Goods Store as a potential solution, all we can say is we are very close now to rolling it out …
From what I understand, You can register there and sell on your own website. If you want to be featured in their new marketplace, there will be some criteria, as they say they want to maintain a bar for quality.
My checklist – bottom line:
Handling VAT.
Possibility to sell via marketplace shop.
Digital & physical items.
Prices:
No registration fee or monthly fee for regular users
15% of each sale for new sellers.
10% later on and for existing sellers.
Pro version for 39.99$ a month.
New sellers limited to 6 products
Seller-friendliness: Responsive, attentive and friendly from blog posts I’ve read.
Payment method: Paypal
24.1.2015 Update
The site, and blog, are still down: “Error 503 : Service Temporarily Unavailable”. I’ve been getting this message for about a week now. I suppose they are still working on making it work..!
Payhip is an e-commerce platform for eBooks. You can create your store, have product pages, but it’s not a marketplace where one can browse different shops and items. So you generate your own traffic, and link here. They offer the option for each seller to decide whether you want the price to include VAT or add it on top of the price for EU customers, which is nice. Explained here: http://payhip.com/support/eu-vat/ From what I found on their site and blog, I don’t feel I have enough information to understand who they are and what they offer exactly.
… So we decided to change our business model altogether to handle VAT on behalf of our authors.
As of the 1st of January 2015 Payhip will become a true distributor of ebooks and other digital items. Our terms and conditions will change to state that Payhip will buy a license from you as an author to give us permission to resell your books for you at your chosen price.
I didn’t realize there could be a third option! Paddle is an eCommerce platform, not a marketplace, but they do handle the VAT. Here’s what they say about it:
… An alternative option is to use an eCommerce platform — like Paddle.com for instance — that handles VAT on your behalf …
Selling through a marketplace might take away the complications of dealing with the new VAT regulations, but it sacrifices the other perks of selling independently — including higher profits, improved control and direct interaction with customers. http://blog.paddle.com/how-to-deal-with-new-eu-vat-regulations/
And another quote to describe what they do:
Paddle’s tools have been created to take away the stresses of distributing apps & games, and that’s why we even handle customer support, file hosting & delivery, VAT and more. You continue to focus on making your apps & games awesome; let us worry about the rest.
I have to admit I’m interested in this option, although its lacking the promotional aspect of a marketplace, coming up in searches. They do offer a service called Discovery, which sounds to me like a sort of AdSense service, showcasing suggested content to registered users: http://docs.paddle.com/article/69-paddle-discovery
Seller-friendliness: Seem to be attentive to their users. I like that they notified in the blog about the EU VAT change as early as September.
Payment method: Paypal, Credit cards.
15.1.2015 Update
Last night I created an account on Paddle. It is very different from what I thought it would be. there is no front shop at all, the process for “creating” the shop and listing a product was not intuitive or user-friendly, and left me very confused.
Being used to Etsy’s great options, I looked for editing my profile and the look of the shop, for helpful instructions on how to set it all up. Finding none, I went along with the prompt to list a product. I was blindly led step-by-step through creating a listing, but there were no indicators of the number of steps, no guidance for what every choice means, and at the end I was looking for an option to de-list or to deactivate the product, but found none. Then I looked for a way to cancel the account completely, but couldn’t find a way to do that either. It was difficult to find the Help section (even through a Google search), and when I finally got there, it had answers to very few topics, and not the ones I needed…
FastSpring is not a marketplace where you can browse between shops, but you can create a customized store-front. They seem a possible choice to me. Seems their best advantage is a great customer service (to sellers and customers).
From what I understand, you sell to them, and they pay you. Since they are in fact the sellers, they take care of tax, including EU VAT, collection. Here’s what they say to their buyers:
EU laws require FastSpring to charge VAT Tax (sales tax) on purchases of electronically delivered products for buyers based in the European Union. FastSpring is required to charge VAT Tax at the VAT rate of the buyer’s country.
FastSpring has you covered in three ways: 1. FastSpring already charges VAT based on your customers’ location. This means you won’t have to file any special paperwork or change an existing process. 2. FastSpring will continue to file the VAT tax collected for your company. 3. FastSpring will keep your VAT documentation for 10 years (required by the new law). http://info.fastspring.com/blog/2015-vat-changes
Not a marketplace, although you can create a storefront.
Digital items.
Prices – choose from 2 plans:
8.9% per transaction
5.9% + 0.95$ per transaction
Seller-friendliness: Seem to be getting very good reviews for customer service.
Payment method: Credit cards, bank transfer, Paypal, and a whole bunch of other methods, in multiple currencies(it seems they are an alternative to Paypal)
At the moment I’ve stopped the search for new venues, but I keep updating this post every day or so. I attempt to present accurate information, but if you find a mistake here, or would like further information, or have any other suggestion – Please let me know.
2 thoughts on “Alternatives to Etsy: My quest to find a new marketplace to sell on: A post in progress”
Hello,
I am an owner of a relatively new website called Artyah.com. We cater to Artists that want to sell their handmade goods and Antique sellers. We offer sellers unlimited free listings and a unique, classy gallery design. Easy to use format, auction or fixed store pricing. I am writing to ask if you can include us in your next feature or story about ebay alternatives. Thank you – Craig Weiss Artyah.com
Thank you Craig for the notification about this new marketplace.
However, from what I understood of your terms of service, you do not take responsibility for the tax payment. So sellers are responsible for paying the tax? Is that correct?
Hello,
I am an owner of a relatively new website called Artyah.com. We cater to Artists that want to sell their handmade goods and Antique sellers. We offer sellers unlimited free listings and a unique, classy gallery design. Easy to use format, auction or fixed store pricing. I am writing to ask if you can include us in your next feature or story about ebay alternatives. Thank you – Craig Weiss Artyah.com
Thank you Craig for the notification about this new marketplace.
However, from what I understood of your terms of service, you do not take responsibility for the tax payment. So sellers are responsible for paying the tax? Is that correct?