Cross-border ecommerce has opened a worldwide market place to consumers. The idea of a truly global perspective in shopping however does not always translate to reality, with consumer traditions often being an underlying determining factor influencing ecommerce habits.
International commerce developed throughout history on a gradual basis. Individual nations first traded with their neighbours and then, with the development of overland trade routes and more sophisticated seagoing vessels, looked further afield for products that could not be found locally. Control of trade became of geo-political importance, with a nation’s wealth and prowess often linked to its ability to sell and buy goods. Trade centres shifted over time. Shoppers began to associate products with particular origin points, influencing commercial needs and further enforced by either lingual or cultural bonds between manufacturing and consuming countries.
Despite its technical sophistication, international ecommerce follows a similar path. Consumers are still heavily influenced by cultural factors, either historical or modern, in their global outlooks. K-Pop, a music genre originating in Korea, for example is highly influential in clothing trends in both China and Japan, in turn affecting cross-border ecommerce trends to the benefit of Korean companies. The prestige that British and French fashion culture receives in China makes these countries highly attractive for Chinese consumers, while western Europe still looks to the North America as a key ecommerce market, due to cultural, linguistics and historical ties. Though large companies like Alibaba and Amazon have a truly global reach and are capable of supplying language specific sites for major ecommerce markets e.g. Amazon.de, smaller and medium sized online retailers from less established brands have perhaps a more difficult time tapping into the same sized markets.
Consumer demand and ‘brand building’ based on cultural influences is one element guiding international ecommerce, taxation and law are another. Well-established patterns in historical trade has ensured that countries try to favour preferred partners with favourable taxation and customs regimes, ideally in return for similar privileged treatment. In the modern world these take the form of trade blocs such as the Arab League, ASEAN trade area and the Union of South American Nations. Each member benefits through their association with traditional trade partners or via collective bargain with other trading blocs. The rapid development of ecommerce, particularly for lower value goods, has alerted many governments around the world that their existing import taxation systems allow vast quantities of items to enter their borders without contributing to the national financial resources. As such, many leading industrial nations are reviewing their deminis tax levels for ecommerce goods or seeking methods of taxing cross-border retailers who have a presence in their country.
Such moves by leading regional economies invariably have a knock on effect on neighbouring countries linked to them through a shared cultural and trade history. For example, recent proposed ecommerce taxation changes in Australia encouraged a similar review in New Zealand. For some trading blocs such as the European Union, any centralised legislative alterations to the entry of ecommerce goods across their communal border is automatically applied to each member state however some trading blocs have more leeway. A recent review of ecommerce taxation in Singapore is being closely watched by other members of the ASEAN trade area, who may have to follow with their own similar plans. Such reviews tend to originate with regional market leaders with large interest in ecommerce, with secondary neighbouring economies following suite.
The impact that ecommerce taxation changes will have on the global market is yet unknown. One possibility may be the development of taxation/customs system per bloc, with for example member states adopting an identical system requiring standardised information to ease cross border ecommerce trade. Another potential point of interest will be the influence such changes have on current tertiary markers. The expansion of infrastructural systems such as broadband and the growth of digital banking have been listed as matters of national importance in several developing countries. Laos and Ethiopia are two examples of countries which could be on the verge of rapid ecommerce growth, both being on the periphery of major ecommerce trade areas, being the ASEAN and GCC respectively. Time will tell if new regional ecommerce taxation will stifle the advance of these upcoming markets or help them duplicate the historical growth levels seen in more mature ecommerce economies.