The Trump campaign in the United States and the UK’s Brexit movement put forth renewed calls for economic policies with potential to limit or reduce cross-border trade. A variety of measures have been suggested, such as renegotiation of some trade deals, suspension of others, higher taxes and tariffs on imports.
Yet if traditional cross-border trade is under global attack, cross-border commerce through the Internet is growing. Market research firm eMarketer expects retail ecommerce sales will reach $1.9 trillion in 2016 and $4.1trillion in 2020, making up 14.6% of total retail spending by then. At the same time, according to the WTO, 2016 saw the slowest global trade and output growth since the financial crisis.
The current political atmosphere, in fact, lends itself to ecommerce—which companies already prefer to the expense of brick-and-mortar. First, if companies in the Western world, especially in the US, go back to local manufacturing, that will put greater physical distance between producers and foreign target markets. Renegotiated or new trade agreements will provide countries the opportunity to include new rules that reflect the rise of digital commerce.
“Regardless of political sentiment, advances in shipping technology have removed the complexities of cross-border trade, making international expansion easier for small to medium-sized businesses,” notes Carl Hartmann, co-founder and CEO of Temando, a shipping software company.
Second, the concept of “America First,” the leading theme of the new US administration, and populist political and economic sentiments in Europe bring back brand nationality. Products’ cultural symbolism plays a growing role in global markets.
Ecommerce tends to “depoliticize” and “neutralize” the brand nationality, making it easier for consumers to shop to their heart’s content and for manufacturers to navigate global sales operations. Thus, for example, British online fashion and beauty retailer ASOS created a team to support its growth in Russia, with limited British presence, all while staying in line with the global brand guidelines.
In addition, many of the suggested protectionist measures have been removed in existing free trade agreements for digital products and services. Most recent trade agreements include provisions designed to liberalize ecommerce, such as the 2014 agreement between Japan and Australia for an economic partnership.
The shipping industry itself already sees significant growth as it plays a central role in cross-border ecommerce. “Global carrier networks and postal authorities have always been the key enablers in the rise of ecommerce. In recent years they have risen to the challenge by building new partnerships, products and services to meet the growing demand,” notes Hartmann. Also, emerging markets’ middle classes that grew with access to global products and services can take advantage of ecommerce strategies to build a commercial network globally.