Research Identifies Marketplaces at Risk of Losing Sellers if Steps Aren’t Taken to Resolve Indirect Tax Challenges

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London, UK – February 23, 2023

Eighty-seven percent of sellers using marketplaces to trade online report experiencing revenue increases, viewing it as a vital channel for growth. Yet, according to research by Vertex, Inc. (NASDAQ:VERX) (“Vertex” or the “Company”), a global provider of tax technology solutions, seven out of ten believe that indirect tax challenges could deter them from using marketplaces in the future. 

The research, which surveyed 479 finance professionals globally (split between operator and seller businesses) found that 81% of businesses are taking advantage of marketplaces to attract new customers and sell into more countries. They attribute this expansion into marketplaces for the following reasons: to reach a wider geographical market (57%); to be more competitive (50%); to tap into cross-border sales opportunities (48%); and to help manage tax liabilities (34%). 

Over half of respondents agree that marketplaces are getting easier to use as a sales channel, but they also share that sellers are demanding more support from operators especially when it comes to achieving a frictionless commerce experience. Respondents indicate they are looking for support to ensure: transactions and money transfers are more seamless (65%); greater guidance on tax liabilities (64%); and compliant invoicing (63%). 

Whilst operators are keen to engage, with 85% looking to increase their seller base, the complex relationship that exists between marketplaces and third-party online businesses is making this difficult, putting areas such as tax under strain. In fact, tax and financial issues are ever present on the list of challenges that operators face when expanding their seller base. 

Four out of seven operators agree they struggle not only with seller confidence in the platform but also managing tax liabilities with the seller, complex baskets and invoicing, and tax complexities around seller shipping locations. Sellers concur as they too report experiencing a wide range of issues when selling through marketplaces including balancing tax liabilities, knowing when and where they are liable for tax, and inaccurate tax calculation inflating prices. 

Every step in a transaction brings multiple complications. Forty-five percent of sellers reveal that operators should improve finance and tax automation processes to help overcome the barriers associated with indirect tax. Yet, whilst most operators are providing some level of tax support for sellers, only 56% manage all tax liabilities on their behalf. 

Niall Kiernan, Senior Director of Product Marketing at Vertex commented: “Adopting tax technology that can handle all types of indirect tax requirements will support sellers in their growth journey and enable them to achieve a seamless experience. As more sellers turn to marketplaces to open new opportunities and to increase their cross-border sales, they need to feel confident that their chosen platforms can meet all indirect tax requirements. If not, marketplaces will find that their seller base will decline. Here is where an integrated tax engine can help.”

Download the full report here.

Notes to Editor

Research results available on request.

About the Research

The research was conducted by Sapio Research UK on behalf of Vertex. Two surveys were conducted. One amongst 268 B2B e-commerce/marketplace operators with a revenue of $20m+; and the other survey was conducted amongst 211 third party marketplace sellers, with a revenue of $15m+. All respondents work within the roles of tax, finance, or accounting and were based across Germany, Benelux, France, UK/Ireland, US, Canada, Spain, Portugal, Italy, Brazil, and Argentina.

Copyright © 2023 Vertex, Inc. All rights reserved. The information contained herein is intended for information purposes only, may change at any time in the future, and is not legal or tax advice.  The product direction and potential roadmap information is not a guarantee, may not be incorporated into any contract, and is not a commitment to deliver any material, code, or functionality.  This information should not be relied upon in making purchasing, legal, or tax decisions. The development, release, and timing of any features or functionality described for Vertex's products remains at the sole discretion of Vertex, Inc.  Any statements in this release that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to various risks and uncertainties described in Vertex's filings with the U.S. Securities and Exchange Commission ("SEC") that could cause actual results to differ materially from expectations. Vertex cautions readers not to place undue reliance on these forward-looking statements which Vertex has no obligation to update.

About Vertex

Vertex, Inc. is a leading provider of tax technology and services, enabling companies of all sizes to realize the full strategic potential of the tax function by automating and integrating tax processes, while leveraging advanced and predictive analytics of tax data. Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries for every major line of tax, including income, sales and consumer use, value added and payroll. Headquartered in Pennsylvania, and with offices worldwide, Vertex is a privately held company that employs approximately 1,000 professionals and serves companies across the globe.

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