E-commerce without borders: An online retailer’s view
December 19, 2016 08:58 AM
As a global CEO of an e-commerce enterprise, I follow economic, political, and technology trends very closely. As a British citizen running a business from Germany with offices around the world, I lamented the Brexit vote, was riveted to Alibaba’s Jack Ma proposal for eWTP at the G20 in September and I am still pondering the recent U.S. election outcome. All of these items impact how I best proceed in running this business.
Many decisions about politics and commerce involve borders with much chatter about opening or tightening them. The tightening the borders mindset seems to be in favor politically this year. Let’s take a peek from the global business perspective for what might be ideal vs. reality.
In September, Jack Ma, CEO of Alibaba, proposed an Electronic World Trade Platform (eWTP) at the G20 summit in an effort to create an e-commerce world with no borders as explained in a CNBC Exclusive Interview. The intent is to truly globalize small and medium businesses. Ma acknowledges that the past 20 years of globalization has benefitted big companies and developing nations.
His proposal would be a simple treaty that removes government complexity to allow any consumer or seller to buy anywhere from any nation. The world would create a free trade zone specifically for SMEs using the Internet to conduct business. This eHubs are connected eRoads that combine to create a platform for free world trade. Ideally the eWTP platform would break down barriers and start conversations with shared values. He hopes this will become a reality in 15 years despite a reluctant Chinese government and anti-Chinese sentiment in the USA.
Can companies really pick up this responsibility from governments and steer the global economy in a better direction?
It’s a brilliant idea that is doomed to failure by the same thought negativity and issues that hamper most free trade or movement agreements. There will be forces more motivated to prevent it rather than make it happen. The benefits will be taken for granted and problems will be magnified until ultimately it will fail to happen due to bad public relations and populism.
By nature I am a free trade, Hayek economist and open border idealist. My vision for the world would have no borders for goods or skills and no barriers for people. That a product or person is defined and restricted to its point of creation is on the very face of it a ridiculous idea. I do understand that most people are attracted to the idea of open borders for more selfish reasons like “I want to be able to X”, “I want to be able to buy Y”, or “I want to be able to sell my things to Z”. Free markets and open borders provide choice and this is a good thing even if the original motivation may be selfish.
The Good, the Bad and the Ugly
But everything has a Newtonian tax, there is always an equal and opposite reaction. If you or your goods can get out, others and their goods can get in. Good, bad or ugly, is the result of an open border. Here is the crux of the problem: The products and people coming in compete with local products and people and this raises tension. Usher in more bad things coming in like poor quality or substandard products, counterfeits or goods made from exploited people and you can see the friction building. A look underneath will also reveal some evil things crossing those borders like drugs and crime.
eWTP is a vision that allows SMEs to trade across borders bypassing the barriers that normally exist. “E-Commerce without borders” is a great idea, what is not to like in theory? Help the little guy deal with border issues, open choice for consumers and bring countries closer together. Except the little guy can be just as good, bad or ugly as anyone else. And so the pressure to close the borders or not take them down will be as high as any other border.
In an age where populism sells in both media and politics, the eWTP concept will walk straight into the same political hype and negative news coverage as any other open border agreement. You only have to look at the UK news coverage on Europe to see that bad and ugly sells faster than good. There will be groups and businesses motivated to push the bad news because A) there will be genuine bad news and B) Some things genuinely negatively affect certain groups and are newsmakers.
The weather effect
Any good news won’t be visible. This is known as the weather effect; we sell T-shirts and when the weather is worse year one year—we blame the weather. But when the weather is better, we credit our hard work and strategies that are driving business and nobody mentions the weather. The same is true with trade agreements, they get the bad news, but economic and social uplifts are credited to local political or social changes not the trade agreement. So the EU, NAFTA, TTIP, and eventually eWTP become public relations black holes where only darkness exists and light goes somewhere else.
So in the end, eWTP will probably die before it comes into existence. Everyone will talk about its ideals but in their hearts they know the more localized deals are hard enough and that a global deal is still a generation or two away. The global political elections from this year clearly demonstrate that the world is not ready to take the stage and embrace truly open borders.
Web-only retailer Spreadshirt Inc. is No. 442 in the Internet Retailer Top 500 and No. 238 in the Europe 500, according to Top500Guide.com.