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PostNord to levy new fee on mail items from countries outside EU Customs Union

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Relating to last week article on “Government wanting a piece of the eCommerce pie”. This week we can see it in action with PostNord. Swedish Customs now require VAT collection on items that come from outside the EU Customs Union from the first Swedish Krona (SEK). PostNord have revised its admin fee to accommodate the changes. The collection of VAT on imported items comes into effect on 1st March.

In addition to VAT collection, Post Nord will also charge an admin fee to collect the VAT from the customer on the door step. Before these changes, VAT was only charged on goods over the equivalent to 22 euro (220.28 SEK or $27.09 USD). Post Nord also made a 125 SEK ($15 USD) charge to collect any relevant duties and taxes. With the new regulation, consumers will have to pay 25% VAT (similar to GST) on the cost of the declared value of all the items.

However, PostNord has lessen the VAT impact by revising its admin fee from 125 SEK to 75 SEK ($9.30USD) for items value below 1,500 SEK ($185USD) items with a value equal to or above the value of 1,500 SEK will still be charged at 125 SEK.

PostNordAnalysis

Based on my analysis, the greatest effect will be on low value consignments under the new levy. The total consumer cost increased by 100 Krona ($12.30 USD) or 100% for a 100 Krona item value. The effect is lesser as the item value increases. For example, 200 Krona ($36.9 USD) item value, the consumer cost increase at 63%. Between 22 euro (220.28 SEK or $27.09 USD) and 1500 SEK ($185 USD), VAT effect is indifferent on “Before” and “After” as it applies to both scenarios. However, due to PostNord reduction in admin fee we can see positive effect of a 10% decrease in consumer cost.

The impact on our own exports to Sweden will be significant with the average cost of Ecommerce items from our region being between $10 - $20 USD (81.36 – 162.73 SEK) the cost for Swedish consumers will increase significantly making importing our products less attractive.

Commentary by Maverick Chung

Source:

Sweden Customs, http://www.tullverket.se/en/private/receivingorsendingagift/orderinggoodsonline.4.792224361590183a4d34492.html
PostNord Before revision pricing, https://www.postnord.se/en/receiving/collecting-mail/from-another-country
PostNord After revision pricing, https://www.postnord.com/en/media/press-releases/postnord/2018/new-fee-to-be-levied-on-consignments-from-third-countries-from-march-1/

Governments and Banks wants a piece of E-commerce pie

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Governments and banks wants a piece of the fast-growing e-commerce pie. Singapore, Thailand, Indonesia and Malaysia governments may consider imposing an e-commerce tax on online vendors and subject items to Goods-and-Service tax. Thailand’s Revenue Department estimated a boost of 15% annual increase in tax revenue if a e-business levy imposed.

Thailand Banks are also considering developing their own e-commerce platform to get a stake in t this fast-growing market place.

Thailand’s e-commerce market is estimated to expand by 9.86% to 2.8 trillion baht. Of the total value, B2B is forecast to amount to 60%, while B2C and business-to-government (B2G) are projected at 28.9% and 11.6%, respectively. However, there are challenges the banks face. They don’t have the expertise, networks, data or logistics.

But with massively growing markets and the vast opportunities these bring. We will see more and more diverse players moving into this space.  Can they have an impact on the market or will the Governments tax initiatives dampen every bodies desire.

Commentary by Maverick Chung

Source: https://www.bangkokpost.com/business/news/1410730/the-coming-battle-for-e-commerce
Image Source: https://pixabay.com/en/visa-business-buying-card-3082813/

Amazon reports Q4 revenues up 38.5% to $60.5bn

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Amazon has a successful fourth quarter 2017 as its revenue (net sales) increased 38% to $60.5 billion compared to fourth quarter 2016. Analyzing the 4th Quarter report, we get a breakdown of Amazon’s net sales by locality and by business segment.

Amazon total net sales are generated mostly domestically 62% in North America, 30% International and 8% in Amazon Web Services (AWS). The top 3 business segments are Online stores at 59%, Third party seller services 17% and AWS 8%. See below graph.

AmazonQ42017chart1

The 4th Quarter report do not report each business segment operating income and expense; hence I will have to use locality data to analyze the efficiency of generating revenue. Refer to graph below. You can see that Amazon has positive domestic and AWS operating income, except for International businesses. Using net sales generated over per dollar of operating expenses, we will find that North America businesses generate $1.05 net sales per dollar of expense, International businesses generate $0.95 net sales per dollar of expense and AWS generates a whooping $1.36 net sales per dollar of operating expense. Indeed, AWS is a high margin business and cost of operation oversea is much higher than domestic.

AmazonQ42017chart2

Out of the 50 over paragraphs of highlights listed in the 4th Quarter report, I found 18 highlights on AWS. There is a push on promoting AWS product and service which is in line with above analysis of high margin business segment. Also, AWS is involved in Internet of Things (IoT) which is a synergy to Alexa product. (https://aws.amazon.com/iot/?nc2=h_iot) Hence we can see the management direction in Amazon Web Services. As Jeff Bezos, Amazon founder and CEO emphasises:

 “Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often — expect us to double down. We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers. Much more to come and a huge thank you to our customers and partners.”

Below are extracts from the highlights that may be informative to our members.

-    Amazon has more than five billion items shipped with Prime worldwide in 2017.
-    The best-selling products are Fire TV Stick and Echo Dot customers purchased tens of millions of Echo devices last year.
-    Amazon welcomed several new device makers to the Dash Replenishment program to enable their smart appliances to automatically reorder consumables when supply runs low, including 3M, Hewlett-Packard, Kenmore, and Bluestream.
-    Fulfillment by Amazon (FBA) shipped billions of items for small and medium-sized businesses, selling on Amazon worldwide in 2017.
-    Amazon launched Prime in the Netherlands and Luxembourg, and added the ability for customers in Belgium to join Prime and shop in Dutch. These programs offer members access to unlimited free one-day and two-day delivery, unlimited streaming of Prime Video, Twitch Prime, and early access to Prime Lightning Deals — all for an introductory price of €3.99 per month.
-    Amazon launched Prime in Singapore, offering members access to unlimited free shipping on millions of local and international items, unlimited access to popular movies and TV shows on Prime Video, and video game benefits with Twitch — all for an introductory price of S$2.99 per month.
-    Prime selection in India now offers members more than 25 million local products from third-party sellers.
-    AWS continued to expand its infrastructure in 2017 to best serve customers, launching a new region in France and a second AWS Region in China during the quarter. AWS plans to open 12 more Availability Zones across four regions (Bahrain, Hong Kong, Sweden, and a second GovCloud Region in the U.S.) between now and early 2019. AWS now operates 52 Availability Zones across 18 infrastructure regions globally.
-    AWS launched Amazon Sumerian, a new service that makes it easy for any developer to quickly and easily build virtual reality, augmented reality, and 3D applications to run on mobile devices, head-mounted displays, digital signage, or web browsers. Apps created in Amazon Sumerian will run in any browser that supports WebGL or WebVR graphics rendering, including Daydream, HTC Vive, Oculus Rift, and iOS mobile devices.

Commentary by Maverick Chung

Source: http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsother

World Economic Forum: What Trump, May, Ma and Wenig said at Davos

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I am delighted that World Economic Forum has invited not only president of USA and prime minister of UK, but CEO of Alibaba and CEO of eBay. E-commerce has grown so big that E-commerce leaders have a voice in this notable forum. Top of the agenda for ecommerce companies was regulation, protectionism and barriers to free trade on the Internet.

The general view of both Alibaba and eBay CEO is to reduce regulation on trade and protectionism. As Jack Ma put it, “Don’t use trade as a weapon, use trade as a solution to solve problems”

The positive to come out of this event has to be that ecommerce is getting a say in influencing world leaders. At a time when globalization appears to a bad word, the Industry which has done much to bring, choice, value and access to across the globe, now have a chance to leverage their experience and knowledge on a global stage.

Commentary by Maverick Chung

Source: https://tamebay.com/2018/01/what-trump-may-ma-and-wenig-said-at-davos.html?utm_source=bm23&utm_medium=email&utm_term=What+Trump,+May,+Ma+and+Wenig+said+at+Davos&utm_content=Posts+from+Tamebay+for+30/01/2018&utm_campaign=TB+-+Newsletter+-+2017&_bta_tid=10040038915476388982569550048189027076436521073683421259299820461754588882157157116740239032937768087560

Image Source: https://assets.weforum.org/article/image/large_3BuJUIgkMu4939FSSPZMc0f2qxYuUHBZAdVhrRBsDno.png

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