Expanding into Global E-Commerce: Legal Considerations
The rise of global e-commerce is changing the face of business around the world. The US share of that global e-commerce is steadily dropping, while China and the developing world are rapidly developing staggering market shares of retail and wholesale e-commerce. In 2016, the global retail e-commerce market was worth $1.86 trillion; the estimates are the value of global online commerce to rise to $4.48 trillion by 2021.
This expansion is explained in part by the widespread use and ease of use of digital money in Africa, South America, and the developing world, and by the rising number of internet users. One estimate in 2013 was that 40% of internet users had purchased goods or services online, over a billion users. The number of people worldwide who are using the internet has nearly doubled in that time.
For American business thinking about expanding into e-commerce globally, or new businesses developing a B2B or B2C e-commerce business, there are several critical legal considerations. These include currency conversion, transportation and shipping, and significant trade and regulatory issues between regions and nations.
Most of the big players in mobile money, such as Paypal, provide currency conversion services for business accounts. But the cost is significant and should be calculated early in business planning. Working through an e-commerce website or platform, such as Etsy, provides currency conversion services as part of their business support. There is a similar cost for these transactions, however. Many of the websites that allow cross-country shopping, such as Shopify, also provide currency conversion services.
At least half of all manufacturing shipping globally is the result of e-commerce. With the nature of online business, shipping is a critical piece of business planning. While the types and numbers of shipping providers continue to grow, concerns about safety, liability, dependability, and the environmental costs of global shipping are also growing.
Jake Posey noted, perhaps the most challenging issue with a new e-commerce venture is navigating the regulatory environment and trade agreements between nations and regions. There are specific restrictions with both finished products and supply chain products moving from nations and regions, and very specific requirements for doing e-commerce with clients in the EU. Customs, import duties, VAT, and taxes will be challenging enough for a global business that specialty advice is critical. Technology moving between countries is also regulated and restricted for some types of tech. Political instability and the threat of changing trade agreements will also challenge the new business.
For many businesses, these areas of concern are new, and outside of the usual comfort area. However, the US market share of the huge global e-commerce market is dropping. New technology is being developed that may help us meet the challenges of global currency conversion, shipping and transportation, and the changing regulatory environment. Expert legal advice will help a new business develop fail-safe plans for a new global venture.
ABOUT THE AUTHOR: Jake Posey
The Posey Law Firm PC, led by Jake Posey, is a sharply focused government relations and business law firm based in Austin, Texas. The firm’s government relations practice advises clients and advocates for the successful development of public policy in the legislative, judicial, and executive branches of Texas government.
Representing Fortune 500 companies, respected market leaders, and some of Texas’ leading state associations, Mr. Posey’s mission is to diligently deliver strategic business, political and legal solutions for his clients.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.