The company runs a large online auction platform and shopping website that connects buyers and sellers in over 190 countries. Their website has millions of sellers with 1.9 billion global listings and over 132 million active buyers.
THE CHALLENGES
All UK based sellers on the company’s ecommerce platform, that have a taxable turnover above a limit, must pay the applicable Value Added Tax (VAT) to His Majesty’s Revenue and Customs (HMRC), which is the UK’s tax, payments and customs authority. Non-UK based sellers that have a minimum of 1 product which is listed from the UK, also have to pay the applicable VAT. To ensure regulatory compliance with the HMRC, the company has to ensure that all sellers who meet either of the above criteria submit a valid VAT ID for transacting on their online marketplace.
The company had built a compliance reporting framework which identifies sellers that have to pay VAT but have submitted non-compliant VAT IDs. These sellers are first given a warning and have 30 days to submit the correct VAT details. The sellers that do not comply with this warning are then blocked from the online marketplace and all their existing products are removed from the marketplace.
On a weekly basis, the compliance reporting application flags between 30 to 40 sellers for having invalid VAT IDs. However, in a particular week, the compliance solution reported 2000 sellers for not having submitted correct VAT ID details.
The company needed an analytics partner to identify why there was an approximately 5000% increase in the number of sellers with invalid VAT IDs to ensure that no sellers were wrongly warned or removed from the marketplace.
THE SOLUTION
The team of business analysts from Prescience Decision Solutions analysed the findings of the compliance reporting solution to understand if the 2000 sellers were flagged correctly or incorrectly. Based on the existing VAT ID detection logic, the solution had accurately identified 2000 sellers whose VAT IDs were invalid. The team presented these findings to the company’s business users that were responsible for handling the respective sellers that sold in the UK market.
On further detailed analysis, the team found that most of these 2000 sellers were not actually based out of the UK, nor did they have at least 1 product which was listed from the UK. Hence, sellers from across the world were automatically sent warnings to update their VAT ID, even though it was not applicable to them. Our team identified that these non-UK sellers were incorrectly flagged by the compliance reporting application because their listing details were changed in a database due to a software version update.
Our team worked closely with the company’s Engineering division to separate the set of sellers that were expected to be flagged by the compliance reporting system and the other non-UK sellers whose listing details were updated automatically due to the software issue. With this, the Engineering team was able to correct the country listing details for all the impacted sellers. Our team also utilized this analysis to identify and fix the data listing issues for all the countries that were impacted during the software version update.
The different technologies used for this engagement included
1. Microsoft SQL
2. Microsoft Excel
THE IMPACT
Based on the analysis of the compliance reporting application’s results, the company was able to quickly identify the root cause of the reported increase in sellers with invalid VAT IDs. After it was resolved, the company was able to correct this issue in other countries, thereby ensuring that more sellers did not mistakenly receive warnings or have their products be delisted from the marketplace. This helped avoid a loss of revenue from sellers being wrongly blocked on the ecommerce platform, thereby directly improving seller satisfaction and overall revenue.

Prescience Team