Growth of ecommerce services hampered by protectionism

The growth of ecommerce is quite phenomenal with being a non-existent entity two decades back, the ecommerce sales stood at $263.3 billion accounting for about 5.6% of total retail sales in the U.S. economy in 2013. The internet technology as such is giving boost to ecommerce by offering limitless opportunities to the retail sector by enabling sellers to collect and process huge data to arrive at the prices and products that satisfy the needs of the consumers and the changing economic conditions. The international ecommerce is expected to be the biggest change in the ecommerce generally going forward within a global ecommerce industry that is set to grow from $1.4 trillion (USD) turnover to $2.3 trillion by 2017.

Nevertheless, this growth of ecommerce services could be blocked or hampered by an increasing tendency of the respective national governments to bring trade restrictions to protect their domestic businesses or trade. The study conducted/issued by the Global Express Association (GEA) – a trade body representing DHL, FedEx, UPS and TNT stated that G20 countries have introduced as many as 1500 new non-tariff trade restrictions since 2014. This study was carried out by the consultancy firm Frontier Economics on behalf of GEA. The rise in protectionism or delays in reforms could hinder the realization of e-commerce expansion that is expected to drive the economic growth of developed as well as developing nations.

That is why, the study recommended major custom reforms that included changes to the duty exemption, simplifying and digitizing the required documentation processes and streamlining the inspections. The report laid stress on well-functioning of delivery services particularly with Small and Medium Sized Enterprises or SMEs’ who may be unwilling to set up their own supply chains leading to an increase in international e-commerce activities. In spite, of the global financial crisis, the GEA report states that the international express delivery volumes have grown by 7% on an average over the past five years with the strongest growth outside of Europe and North America.

The expansion of  ecommerce  is such that one can see more and more ecommerce companies being launched each year that to in many new categories of products such as art, electronic cigarettes, mattresses etc. that were previously the domain of the brick and mortar retail  business. Even though, a handful of these ecommerce sites manage to be successful ventures over a long term but about 75% of these startups fail.