By Zack Andresen
Earlier in 2017, The American Association of Exporters and Importers (AAEI) released its inaugural e-commerce benchmark report, produced in conjunction with Amber Road, a global trade management software provider. The report found, for the most part, businesses are aligning with the e-commerce trend. Only 25 percent of companies surveyed for the report have yet to establish an online sales channel. And of those, 65 percent assert that they will establish a web sales plan soon.1
But to be clear, there’s a fundamental difference between dipping one’s toe in the import-export e-commerce trade pool and preparing for the tidal wave that’s beginning to sweep its way across global trade. That’s why the report also provides businesses with guidance on how to get ahead of potential import-export trade issues in order to maximize profits from global transactions and minimize disruptions to customer experience and brand reputation.
E-commerce growth continued to dominate the global retail market in 2016, reaching more than $1.9 trillion with an ongoing growth rate projected to be 23.7 percent – nearly three times the growth of retail sales as a whole, according to eMarketer.2 More than half (53 percent) of global internet users made at least one online purchase in 2016,3 at an average spend of $1,036 across the top 10 countries with the largest online markets.4
Zeroing in on cross-border e-commerce, a 2017 report from DHL forecasts it will grow at twice the rate of domestic e-commerce through 2020.5 And Pitney Bowes notes that with 40 percent of online buyers having completed a cross-border transaction in 2016, it’s clear shoppers have opened up to the idea of shopping internationally – unlocking big potential for global online retailers.6
The same growth holds true for import-export e-commerce trade outside the retail sector. U.S. B2B e-commerce alone is predicted to hit $1.18 trillion by 2021.7 Globally, B2B cross-border e-commerce has the potential to top $6.7 trillion by 2020, according to research firm Frost & Sullivan.8 It could go even higher, based on accelerated adoption of online selling in manufacturing and distribution: according to a 2016 survey, 44 percent of businesses in manufacturing offer an e-commerce sales channel, and 50 percent of those that do not are planning to implement one within the next year.9
Other research offers more evidence of untapped opportunity in B2B cross-border e-commerce. According to a report from Payvision, cross-border e-commerce makes up 21 percent of total global online trade, with value in the U.S. alone estimated at $40.8 billion. And yet while 64 percent of businesses participate in B2C cross-border transactions, only 50 percent of B2B businesses do so.10
Both B2B and retail businesses who have made the leap thus far have seen fruitful results. According to the AAEI report, a mere 5 percent of businesses showed any decline in online sales in 2016, with over 50 percent reporting an upsurge in e-commerce spend.11 Much of that can be attributed to higher consumer demand, but a number of import-export trade accelerants also contributed to e-commerce growth.
Heading into 2016, experts projected aggressive growth for cross-border e-commerce riding on the back of three major global agreements:
Originally established in 1996, the ITA pledges to eliminate all tariffs associated with IT products outlined in the agreement. In December 2015, the agreement expanded to 82 countries (encompassing 97 percent of world trade in IT products) and over 200 individual products valued at over $1.3 trillion.12
U.S. Customs and Border Protection began the roll-out of a new “Single Window” system for import-export trade reporting and compliance with U.S. laws and regulations.13
Mexico’s manufacturing program provides affordable labor, favorable tax laws and import-export trade agreements for easy distribution, particularly in North America.14
Together, the three programs showed promise for streamlining global trade.15
But a number of roadblocks slowed import-export trade in early 2016, causing global e-commerce to fall short of expectations.
The AAEI report notes bureaucratic hiccups in technology roll-outs combined with geopolitical unrest stemming from Europe’s refugee crisis, Britain’s vote to exit the EU and the U.S. election cycle slowed import-export trade in the first half of 2016.16 In addition, disruptions to cargo shipping (theft and weather) contributed to an estimated $55 billion in losses in 2015 and were forecasted to be higher in 2016,17 including shipping company Hanjin’s April 2016 bankruptcy.18
As the AAEI says, “Whether by choice or by force, there are few companies that won’t eventually embrace an e-commerce channel.” But while e-commerce is changing the way businesses operate, online sellers are still subject to the same import-export trade regulations that brick-and-mortar businesses have had to navigate for years.
Zack Andresen is a business technology writer based in Brooklyn, NY, whose work has focused primarily on Software-as-a-Service (SaaS) technology.
1.2016 AAEI e-Commerce Benchmark Report: e-Commerce Impacts Global Trade, American Association of Exporters and Importers; http://info.amberroad.com/rl_WhitePaper_AAEIeCommerce2017BenchmarkReport_LandingPage.html
2.“Worldwide Retail Ecommerce Sales Will Reach $1.915 Trillion This Year,” eMarketer; https://www.emarketer.com/Article/Worldwide-Retail-Ecommerce-Sales-Will-Reach-1915-Trillion-This-Year/1014369
3.Quarterly Retail E-Commerce Sales: 1st Quarter 2017, U.S. Department of Commerce; https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
4.“Global Online Retail Spending – Statistics and Trends,” Invesp; https://www.invespcro.com/blog/global-online-retail-spending-statistics-and-trends/
5.“Cross-border e-commerce is one of the fastest growth opportunities in retail, according to DHL report,” DHL; http://www.dhl.com/en/press/releases/releases_2017/all/express/cross_border_ecommerce_is_one_of_the_fastest_growth_opportunities_in_retail_according_to_dhl_report.html
6.“2016 Pitney Bowes Global Online Shopping Study,” Pitney Bowes; http://www.pitneybowes.com/us/global-ecommerce/case-studies/the-growing-importance-of-international-ecommerce.html
7.“U.S. B2B e-commerce is on course to hit $1.18 trillion by 2021,” Digital Commerce 360; https://www.digitalcommerce360.com/2017/06/12/u-s-b2b-e-commerce-course-hit-1-18-trillion-2021-2/
8.The Future of Online Retailing, Frost & Sullivan; http://www.frost.com/ma4e
9.2016 Manufacturing & Distribution Sales and Technology Survey Report, Handshake; http://pages.handshake.com/WCResources-REPORT-2016Survey_LP-Download.html
10.Key Business Drivers and Opportunities in Cross-Border E-Commerce: A data-driven landscape 2016, Payvision; http://www.payvision.com/cross-border-ecommerce-report-survey-2016
11.2016 AAEI e-Commerce Benchmark Report: e-Commerce Impacts Global Trade, American Association of Exporters and Importers; http://info.amberroad.com/rl_WhitePaper_AAEIeCommerce2017BenchmarkReport_LandingPage.html
12.“Information Technology Agreement,” World Trade Organization; https://www.wto.org/english/tratop_e/inftec_e/inftec_e.htm
13.“ACE and Automated Systems,” U.S. Customs and Border Protection; https://www.cbp.gov/trade/automated/ace-mandatory-use-dates
14.“Manufacturing in Mexico: IMMEX / Maquiladora Program,” Maquila Reference; http://www.maquilareference.com/category/immex-maquiladora-program/
15.2016 AAEI e-Commerce Benchmark Report: e-Commerce Impacts Global Trade, American Association of Exporters and Importers; http://info.amberroad.com/rl_WhitePaper_AAEIeCommerce2017BenchmarkReport_LandingPage.html
17.“BSI’s Global Supply Chain Intelligence report reveals 2015 top supply chain risks,” BSI;https://www.bsigroup.com/en-GB/about-bsi/media-centre/press-releases/2016/March/BSIs-Global-Supply-Chain-Intelligence-report-reveals-2015-top-supply-chain-risks-/
18.2016 AAEI e-Commerce Benchmark Report: e-Commerce Impacts Global Trade, American Association of Exporters and Importers; http://info.amberroad.com/rl_WhitePaper_AAEIeCommerce2017BenchmarkReport_LandingPage.html