How has AliExpress been doing in Spain after the introduction of VAT a year ago?

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How has AliExpress been doing in Spain after the introduction of VAT a year ago?

July 1, 2021 was marked in red on the AliExpress calendar. Much to the chagrin of those accustomed to bargains on the Chinese platform, one of the most used by Spanish customers, that day the rules of the game changed and the AliExpress bargains simply became less bargains. The reason? The entry into force of a European regulation that ended the tax exemptions from which it had benefited until then.

That was a year ago and the big question now is: How has the Alibaba platform fared?

What exactly changed in July 2021? Well, basically AliExpress lost one of its great assets. Until then, the purchase of products that cost less than 22 euros in online stores located outside the EU were exempt from paying VAT. The conditions were also favorable for merchandise with a somewhat higher price range, between 22 and 150 euros, which, although they did pay the 21% consumption tax, were duty-free.

What did those exemptions translate into? in which your articles they played with advantage by competing with similar ones sold by online businesses located in the European Union. On July 1, 2021 that changed. For AliExpress and for the rest of online stores that operate outside the EU. From that day on, any merchandise, regardless of whether or not it cost more than 22 or 150 euros, became subject to the payment of tariffs and VAT, which directly affected final prices.

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Was it felt in operations? Yes. This has just been recognized by the Chinese parent company, Alibaba Group, which in a statement issued at the end of May with the results of the first quarter and the fiscal year, admits that the community measure has been felt in its orders and income.

In the report the group founded by Jack Ma explains how during fiscal year 2022 the orders of its platforms lacing, aliexpress, Trendyol Y Daraz experienced a combined year-on-year increase of 34%. The data is good, but it actually hides two very different trends within the Chinese multinational. And the key to understanding them is, precisely, the rates.

Differences within Alibaba. “This reflects strong order growth for Lazada at 60% and Trendyol at 68%, which was partially offset by flat order growth for AliExpress due to the EU’s removal of the waiver. of value added tax for cross-border packages less than 22 euros, as well as for supply chain and logistics interruptions due to the conflict between Russia and Ukraine”, details.

When the quarter is analyzed, the picture is even worse for AliExpress, with an even more pronounced gap. “Combined order growth from these businesses was around 7% year-on-year, driven by strong growth from Lazada at 32% and Trendyol at 48%, which was partially offset by lower orders. from AliExpress”, points out the Chinese firm. As causes, he once again indicates the change in the EU and the war in Russia.

This is how buying on AliExpress has changed with the new VAT rule (and why you can't trust the price that appears on the web now)

in Xataka

This is how buying on AliExpress has changed with the new VAT rule (and why you can’t trust the price that appears on the web now)

Footprint on group income. The trend, logically, has an impact on the income chapter of the international retail trade business, which in general terms grew by 4% throughout the first quarter of 2022 to total around 1,560 million dollars. Of course, with an unequal contribution from its different subsidiaries. The rise is basically explained by income from lacingbased in Singapore and primarily focused on the Asian market.

Things were somewhat worse in Trendyol, affected by the depreciation of the Turkish lira against the renminbi, the official currency of the People’s Republic of China. Also in AliExpress, which suffered a “decrease in orders” that the multinational attributes once again to a cocktail of factors in which the new fiscal scenario stands out: the change in VAT rules in the EU and the interruptions of the chain of supply and logistics caused by the war in Russia, a conflict that started, let us remember, practically at the end of Februarywith the quarter already well advanced.

Bet on offline presence. Beyond the drift of orders, the last few months of AliExpress in Spain have been marked by a clear commitment to physical presence. Between November 2021 and June 2022 the company has opened several stores in Spain: the Lago shopping center, In sevilla; that of the trough, in Madrid; and the most recent, La Gavia, in Madrid, a space of 300 square meters that adds its eighth local for sale in Spain.

In recent months it has also committed to logistics with a new sorting center in San Fernando de Henares of 19,000 square meters (m2), which widens a muscle that the Chinese multinational seems determined to strengthen even more. In February Information published that Alibaba is after new locations to shore up its operational network in the country.

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…And the Spanish market. To understand that bet it is important to understand the context. Beyond the setback that the payment of VAT and tariffs may have caused, the company is coming off a very good 2020, driven by the rise of online commerce that fueled the pandemic.

AliExpress closed 2020 with triple digit growth to consolidate Spain as its third largest market in terms of turnover. The firm has also boasted that in 2021 it achieved increase 200% the volume of merchandise sold by Spanish companies and the presence of national businesses grew by more than 35%: from 8,000 in 2020 to 11,000 a year later.

The background of the group. The latest financial data shared by Alibaba draws a complex scenario. how to pick up Retail Detailsthe online commerce giant saw its revenues in the quarter grow by 9%, a positive figure that marks, however, its lowest growth rate since the group went public in 2014. EBITDA dropped noticeably. As for the fiscal year, it closed with an increase in income, but below the objective. The firm is not immune to the international scenario, including China’s “Zero COVID” policy.

Pictures | CardMapr.nl (Unsplash)


The news

How has AliExpress been doing in Spain after the introduction of VAT a year ago?

was originally published in

Xataka

by Carlos Prego.

July 1, 2021 was marked in red on the AliExpress calendar. Much to the chagrin of those accustomed to bargains…

July 1, 2021 was marked in red on the AliExpress calendar. Much to the chagrin of those accustomed to bargains…

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