Resolver blog: the difficulty of digital marketplaces

Shopping online is increasingly a way of life for people across the United Kingdom. But as we become more reliant on online providers of goods and services, do we really know who we’re buying from?

I’m starting to see new trends emerge about an increasingly popular type of business – the digital marketplace.

Resolver has seen large increases in complaints about online shopping during lockdown, not a surprise due to, among other things, the demand. 

But complaints to the biggest digital marketplace platforms have more than doubled in the past three months compared to the previous quarter. In the case of one, customer satisfaction is steadily dropping month after month, suggesting that people are becoming disenchanted with this way of shopping.

With such an increase in complaints to online marketplaces, I was curious to find out the issues their customers were facing.

It’s obvious that delivery is far and away the biggest problem, and I’ve heard many stories about websites promising delivery within a specific timeframe and it simply not happening. Refunds and returns were also a big issue. In fact, delivery, returns and refunds made up more two-thirds of the complaints in the past five months.

Digital marketplaces

A digital marketplace is basically an online ‘market’ with lots of independent concession stands. So you go to a single ‘branded’ website, but the providers of the goods and services are actually other businesses.

This can be confusing. Amazon sells its own goods, but also has a digital marketplace where other retailers sell to you directly through the same site. Even shops that might seem like traditional online catalogues, such as Wish.com are actually just putting you in touch with a range of different retailers.

Is this a problem?

Every new development in the way we shop and interact brings benefits – but a different set of potential problems also arise.

Firstly, one of the fastest growing areas of complaint Resolver sees is delivery estimate times. When you buy from a digital marketplace, the time it takes to deliver may vary considerably, depending on where the seller is. With many goods made in China, for example, you may be facing a wait for delivery. But this becomes more complicated if you want to return items. It might be more expensive to return goods than it was to buy them in the first place. Many websites simply aren’t clear enough about location, delivery time, returns and postage costs.

Secondly, consumer rights become less clear. If you use an online marketplace, you’re not buying directly from the supplier of those goods or services. If something goes wrong, you lose your right to make claims under existing laws.

Thirdly, online marketplaces often become closed shops when it comes to dealing with your complaints or questions. I hear time after time that people simply can’t complain or don’t get a reply if they have managed to get in touch.

Holiday bookings – at a distance

Last week when I was answering travel and quarantine questions from viewers for BBC Breakfast, the people who were struggling to gain refunds or get a response were very often those that had booked via an online marketplace.

Many of us buy holidays online these days, as it’s often felt to be cheaper, quicker and easier. But what many people don’t realise is if we don’t use the ‘old fashioned’ tour operators or travel agents who sell us a ‘package’, we aren’t covered by the Package Travel Regulations. 

This matters. It matters because it means you have the legal right to get a refund if your packaged holiday is cancelled. It’s the law, so there should be no wriggling off the hook (although there’s another story here, so look out for this in a future blog…).

If you use an online travel firm, you are buying through the website, but the holiday, flights or hotel are provided by another business. This makes getting a refund complicated and creates loopholes that some unscrupulous businesses use to bend the rules. I’ve heard of people being told that online travel firms ‘can’t get a refund from the hotel’ or that they have to pay for their holiday in full before a refund can be considered. Both of these are unfair terms and conditions but unless you’re a lawyer or a consumer expert you’re unlikely to know!

The bottom line

Online marketplaces aren’t inherently bad – and the majority of us use at least one regularly. They can be a cheap, convenient and quick way to shop. The problem is the way these markets are structured allow owners to pass the buck to the individual seller if things go wrong. This has created numerous ‘grey areas’ where existing laws, regulations and good practice simply haven’t caught up yet.

Alex Neill is the CEO of Resolver and a long-standing consumer rights campaigner.