Cross-border e-commerce platforms are becoming more and more popular. As a supplier of electronic thermostats and temperature recorders, Hayswell Electronics is also trying to join them. This article will use eBay as an example to introduce how we, as a seller, set prices, and what additional fees you, as a consumer, will pay in exchange for the platform’s protection of you.
We are not going to explore the advantages and disadvantages of cross-border e-commerce in this article. We just want to tell you how we set prices as sellers.
Assume that the price (including margin) of a product is $10, and the shipping cost to France is $8, which is a total of $18. Let’s see what changes will happen under different transaction methods.
- The most traditional method: You choose to wire or remit to us directly through Western Union. The total amount we must get is $18. You need to pay some handling fees to your bank, and these handling fees are generally only $2-3. The total cost for the buyer is about $20.
- If you choose to trade on eBay, eBay will charge a commission of about 15%, which includes the transaction service fee and cross-border transaction fee. We also need to pay a withdrawal fee of about 1.5%. If you click on the ad on eBay before payment, we also need to pay an advertising fee of about 12.5%. The total is 15%+1.5%+12.5%=29%; (10+8)/(1-0.29)=25.35, and there is also a transaction fee of $0.4, 25.35+0.4=25.75.
As you know, France is a member of the European Union, and eBay will collect VAT in advance (assuming it is 20%), so 18*20%=3.6USD, the worst thing is that the 29% commission rate mentioned above will also be applied to the 3.6 USD, which means that the seller must add another 3.6*0.29=1.04 USD
Now let’s take a look at the final price as a seller: 25.75+1.04=26.79 USD,
We need to remind you that since we have simplified the algorithm, this result is not completely accurate, and the real data is higher than it, but this does not prevent us from seeing how much extra cost buyers will pay in exchange for platform consumer protection: 26.79/18=1.4883, yes, 48.8% of the additional cost is to protect your interests.
Even if we don’t do any advertising, then 18/(1-.165)+0.4+1.04=23 USD, 23/18=1.2776, means you still will pay an additional 27.76% protection fee.
We will not discuss whether this ratio is worthwhile, we respect the ideas of every individual and we follow the rules of the platform.
