As the leading provider of accountancy and taxation services to the e-commerce industry it was only natural that we found ourselves at the Walmart Global Seller Summit at the QEII Centre in London for what proved to be a highly informative day.
Walmart had traditionally made it very difficult for UK sellers to access their marketplaces and engage in cross-border trade. But it is now opening up to Europe and the UK is the first on the list. Walmart is the largest Omni channel retailer in the world and 58% of Americans visited Walmart.com in the past year. It has 120m, active customers. This, therefore, represents a huge opportunity for UK sellers.
The first session was a discussion with Darren Carithers, SVP of Marketplace Development at Walmart and Ravi Karia, Commercial Director of Pertemba, Universal Textiles who originally started selling on Walmart Canada and were the first UK company to sell in the Walmart USA marketplace. We learned that it is no longer a requirement of Walmart that a UK seller has a US presence or open a US company, thus removing the main barriers to UK businesses. There is a challenging Service Level Agreement that sellers have to agree to, more stringent than selling on Amazon. All deliveries must be sent tracked and delivered within an agreed period. If fulfilling from the UK this is 9 days or 7 working days. Fulfilment services can be provided by Walmart Fulfilment Services (“WFS”). This enables fulfilment within the USA with 2-day deliveries so it has to be an option to be seriously considered given the positive impact this is likely to have on sales. You will also need a US returns address, which can, of course, be provided by WFS.
One of the issues faced by marketplace sellers is brand protection, and this is in development. A portal to register brands is expected soon.
Settlements are every two weeks and fees are similar to Amazon, usually 15% but there are some exceptions such as consumer electronics and video games consoles at 8% and personal computers at 6%.
The application process takes around 10-15 minutes to complete.
There was more detail in the afternoon sessions which are summarised below.
How to Get Started
Sole traders are not accepted and you will need to provide your corporate address, company registration number, unique taxpayer reference, a bank statement or utility bill and a form W8-BEN-E. This is an Internal Revenue Service (“IRS”) form used by foreign entities to confirm their tax status. It enables Walmart to remit your settlements without deduction of withholding tax.
You will need to register with a payment provider in order to receive your settlements and this must be Payoneer or Hyperwallet. You will therefore need to open an account with either of these, which you can do within the Seller Centre. New sellers will experience a 14-day hold for the first 90 days or less if you achieve $5,000 in revenue.
You are required to provide details of your pricing model, shipping methods and regions you are able to ship to and you will need to decide on your chosen method of integration for your product catalogue (e.g. API, bulk upload, or solution provider such as Linnworks).
Finally, you will need to provide information on your product catalogue – categories, price, and inventory.
As mentioned above you will be able to provide 2-day shipping across the contiguous US (the USA excluding Hawaii and Alaska). This will significantly improve your sales – Walmart estimate 50%. It also means you can offer seamless returns and replacement handling and will be able to offer free shipping to customers. You will also have access to phone support and strategic advisory services 7 days a week.
Getting Started with WFS
This is a five-stage process – start selling on Walmart and then join WFS, set up your WFS products in Seller Centre, ship your products to a WFS facility and then let WFS pick, pack and ship your orders. Returns are then handled by WFS with options of in-store or home pickup. In terms of delivering to a WFS facility, this can be any of those available. Eligible products do not include perishable or regulated products.
The Cost of WFS
There is a WFS calculator that enables you to determine the cost of fulfilment, which is based on item weight. There is also a storage fee. There is a maximum weight of 150lb, length of 108 inches and length + girth of 165 inches.
What about the Taxes?
As mentioned above, completion of form W8-BEN-E will enable Walmart to remit to you without deduction of withholding tax. As a UK company, managed from the UK, your profits will be taxed in the UK.
Outside of the UK and EU sales taxes are known as Goods and Service Tax (“GST”), and there are similarities to VAT. If you sell into the EU on marketplaces you will already be familiar with the marketplace rules in the EU, which make the marketplace responsible for accounting and paying any applicable VAT. The same is true in the USA. Walmart will therefore account for and pay any GST for you. GST is added to your listing price, so whatever you list a product for the price to the consumer will be + GST.
One of the big differences between UK VAT and USA GST is the fact that each State is a separate GST jurisdiction. The marketplace rules have been implemented State by State over a period of several years and there is one straggler, Missouri. You will therefore most likely need a Missouri GST registration if using WFS (because storing inventory in a State creates an obligation to register). However, marketplace rules are expected to be in force from 1 January 2023. If you need to register for taxes in the USA you will need an EIN number, which you will need to apply for first.
The only other tax you are likely to have to pay is in the state of Washington which has a Business and Opportunities (“B&O”) tax of between 1.38% and 1.5%. Walmart will not do this for you. Using WFS and therefore storing inventory in Washington will create an obligation to register for B&O tax. If you are not using WFS then the sales threshold for registration is $267,000.
The tax compliance burden is therefore relatively light. Depending on the nature of your product you will of course have additional legislation to comply with.
What about Product Liability?
Product liability is something that was barely touched upon during the Summit. We all know that the USA is extremely litigious, and this is a hugely complex area. In The USA product liability is a mix of state and federal laws and the common law which makes it difficult to determine what the law actually is, whether you are the manufacturer or seller.
Any entity in the supply chain can potentially be liable for a defective product. This includes the raw material supplier, component part supplier, finished product manufacturer, distributor, and retailer (including an online third-party marketplace retailer). Walmart will require that you have and maintain product liability insurance to ensure you are protected against legal costs and any liabilities resulting from potential claims or lawsuits that are related to your products.
If you would like to discuss how Elver E-Commerce can help your business grow and succeed, please give us a call on 01942 725419 or use the contact form.