What Did You Buy on Cyber Monday?
I admit it. I clicked on many of the Cyber Monday ads in my inbox even though I promised myself I’d write without distraction to catch up after a few weeks of travel. How tempted were you?
On Cyber Monday last year, Amazon customers alone ordered 43 million items worldwide–that’s 500 items every second. This year, Cyber Monday brought in more than $3 billion in sales revenue, a 17% gain over last year.
E-commerce is thriving.
Globally, e-commerce sales are projected to surpass $3.5 trillion within the next five years. China and the U.S. account for over 55% of global e-commerce, but digital consumption is growing around the world even in markets that still heavily operate on a cash-on-demand basis, like India. Major American e-commerce platforms like Amazon and eBay are growing their share in overseas markets but they face stiff competition from companies vying for new online shoppers around the world.
Three of the top ten e-commerce companies are in China.
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Note: Taobao, Alipay, and Alibaba are all owned by the Alibaba Group
The benefits of digital trade are economy-wide.
According to a report by the U.S. International Trade Commission, productivity gains and lower international trade costs from digital trade boosted U.S. GDP anywhere from 3.4% to 4.8% (upwards of $710.7 billion in 2011), which they acknowledge is a conservative estimate. The report also suggests that U.S. real wages and total employment were higher due to digital trade. Opening foreign markets to digital trade would increase GDP gains another 0.1%-0.3%, or potentially $41.4 billion more U.S. GDP in 2011.
U.S. companies benefit from using the Internet in many ways. They can access cheaper IT infrastructure though cloud computing, they can target advertising and use social media engagement with consumers, and they can crowdsource ideas and funding. Use of the Internet helps small and medium-sized companies overcome their size disadvantages and lower their trade costs. E-commerce platforms like eBay offer instant access to global buyers.
Trade policy can nurture digital trade.
Professors at the Fletcher School at Tufts University created a Digital Evolution Index. What the Index shows is that it is not a foregone conclusion that countries with relatively mature digital markets will continue to grow. The Netherlands, northern and west European countries, Australia and Japan are among the mature markets losing steam and in jeopardy of stalling out growth. The BRICs are rapidly advancing despite currently low penetration. Singapore, New Zealand, Switzerland, Hong Kong, the UAE, and the United States are markets with high levels of digital development that are on an upward trajectory.
Whether overseas opportunities grow and flourish depends in large part on whether governments enable digital markets to thrive or create regulatory drag. In many countries, forced localization of data servers and differences in data privacy and security requirements hamper access for U.S. e-commerce firms. U.S. firms are wary of uncertain legal liability rules, IPR infringement, and censorship.
That’s why the digital trade provisions of the Transpacific Partnership are so important. The provisions address the ability of companies and consumers to access and move data freely with prudent safeguards and place disciplines on unreasonable restrictions on digital trade. The provisions preserve the ability of companies to make business decisions about where to locate infrastructure like data centers. Regional Trade Agreements like Transpacific Partnership are advancing approaches to consumer protections and compatibility among privacy laws. There’s a long way to go to create robust frameworks, but this is a significant step forward.
E-commerce is a lifestyle. Eventually we all get sucked in. It’s too darn convenient.
When my kids say, “I’m bored,” there’s a ready antidote. Want a new book to read? Pick it out and it will be here this time tomorrow. Need a blank game board and dice to create a new game? No problem, I can find it online. Hello UPS delivery guy, goodbye boredom.
According to research firm eMarketer, the Asia-Pacific region is growing fastest at 35.2% year over year. Eighty million new online shoppers in the Asia-Pacific will spend an estimated $875 billion in online sales this year. The provisions in the TPP say: Hello new online shoppers and customers, goodbye market access barriers.