Where now for International eCommerce?

As SARS-CoV2 takes hold around the globe, and commercial and cargo flights are stopping, what does the future hold for international eCommerce?  While the fear of Covid19 will have an effect on the high street, with people less likely to return once we exit from the lockdown that we were put under last week, the future of ecommerce is brighter.  There will be a inevitable dip in the first few weeks as people struggle to work out what the future may hold, what will become clearer is that non-contact forms of shopping will quickly become the norm.

The eCommerce Gravy Train

Home delivery services from the supermarkets is increasing at a rate higher than they can deal with.  Online only supermarkkey Ocado are already quoting delivery slots 2 weeeks in the future, and this is increasing almost daily.  Delivery services such as Deliveroo and Just Eat are also seeing a surge in demand.  The overall ecommerce trend of the last 10 years has seen a year on year growth in sales, with the global value of retail ecommerce this year being over $4.2 trillion dollars, this is predicted to grow to $6.5 trillion in 2023. (source: Statista).

New Legislation

Governments are slowly picking up on this massive growth and the fact that international, or cross-border, ecommerce is actually a lost revenue stream for them.  The majority of goods bought globally, specifically from Asia, as mislabelled and undervalued for the purposes of customs.  This is a particular problem for the postal services, which, despite their protestations, are the worlds biggest smuggling route.

There is a concept called ‘De Minimis’, which the United Nations defines as:

“A valuation ceiling for goods, including documents and trade samples, below which no duty or tax is charged and clearance procedures, including data requirements, are minimal.”

In practical terms this means that low value goods attract no duty or tax on inport.  The value of the de minimis threshold varies by country, and some countries have no deminimis threshold.  Examples include:

USA: $800 for the purposes of duty and tax calculations

EU: €150 for duty and €22 for tax purposes

However with the number of international transactions increasing massively, there is now a movement to remove de minimis, allowing governments to claim a significantly greater amount of duty and tax for imports into their country.

To facilitate this there are a nube of global initiatives that will require all pacages and parcels to be accurately display their contents and values, with the end goal to also force a link to the product to be included, to the value can be checked and confirmed.

The Actual Impact on Trade

The full impact of of Covid19 on ecommerce has yet to be seen, we are in very early days at this point.  But it will, strangely, be positive for the world of eCommerce.  Probably one of the few positives to come out of this pandemic.  However only time will tell as to the final pucture we face globally.

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