E-commerce has experienced such a meteoric rise over the past decade that ordering almost anything online and receiving it within a few days is now routine for consumers globally.
Retail e-commerce sales surged to $6.3 trillion in 2023, up from $1.8 trillion in 2016, and are projected to grow to $8.1 trillion by 2026, with 4.5 billion users worldwide — roughly half the planet’s population, according to data tracking site Statista.
Furthermore, by 2026, e-commerce is expected to account for 24% of all retail sales, up from 18.8% in 2021.
Although retail giants like Amazon and China’s Alibaba dominate the e-commerce market, much of this explosive growth can be attributed to small- and medium-sized businesses selling their goods and services online.
The pandemic accelerated this trend even more. In 2021 alone, the number of e-commerce websites grew from 9.7 million to 19.8 million, and there are now 26.5 million e-commerce sites operating worldwide.
However, the economics of global e-commerce may soon be changing, potentially making goods more expensive and forcing small business owners to pay closer attention to international trade laws.
Until now, e-commerce growth has been facilitated by simplified laws and processes, allowing small online sellers to thrive and the economy to expand.
Now, lawmakers and regulators, driven by governments seeking increased revenues, are targeting online sellers and consumers by imposing duties and taxation.
These changes could increase costs and slow down the speed of e-commerce — both of which have been key to its exponential growth.
In the United States, for instance, lawmakers have proposed legislation to lower the de minimis dollar amount (currently $800) under which e-commerce retailers can import goods duty-free.
They also aim to restrict certain non-market-economy countries (mainly China, but also Russia, Vietnam, and Belarus) from benefiting from simplified trade processes under de minimis.
Additionally, in late February, members of the World Trade Organization (WTO) will consider whether to lift a long-standing moratorium on customs duties and tariffs for electronic transmissions — products and services that are purely digital in nature, such as cloud-based software, e-books, music, educational materials, and art.
Governments see financial opportunities in these measures, but according to trade experts, the additional costs these measures could impose are likely to disproportionately affect small businesses and consumers.
Small businesses would likely have to pay duties on goods they previously imported for free and adhere to formal international trade requirements, possibly needing to hire customs brokers to handle their import/export transactions, increasing their business costs.
These added expenses could also hinder the ability of US e-sellers to compete in the global marketplace, where foreign sellers often undercut US goods’ prices. Moreover, the extra costs could restrict or prevent certain micro-sellers in impoverished countries from doing business online — a crucial segment for their survival.
