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Mom and Pop Go Global

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If you are a commercial seller on eBay, chances are you are an exporter. That is because a whopping 97 percent of eBay's commercial sellers participate in global markets, according to a report released this week by eBay, "Towards Commerce 3.0."

Think about that for a moment. Nearly all of eBay's commercial sellers, including micro-enterprises of one or a handful of employees, tap into foreign markets. Eighty percent of those export to at least five different markets. Contrast that with data from the Commerce Department that indicates that, of all U.S. small business that export, 58 percent do so to only one foreign country.

eBay's report is evidence of a broader trend. Small companies are increasingly leveraging internet-enabled advertising, cloud, communications, e-commerce, financial, logistics and search services to export. This development creates new potential for trade to improve economic growth and job creation, and a compelling reason to rethink conventional wisdom about the costs and benefits of trade.

For years, there has been a sense that trade presents a big threat and limited opportunity for American entrepreneurs and small enterprises. Small businesses may have thought twice about looking abroad because of the traditionally time-consuming and often-frustrating nature of customs, logistics, and regulatory and language differences in other markets. On the flip side, U.S.-based manufacturers and mom and pop retailers have often felt squeezed by low-cost producers in countries like China and large, globally-connected corporations that can often price more competitively than smaller retailers.

eBay's report highlights that the opportunity to grow domestically by tapping into overseas demand is becoming much greater thanks to technology and the internet. It is simply much easier to reach the 95 percent of consumers who live outside of the United States because of search engines, online advertising, package delivery companies like DHL, FedEx and UPS, and e-logistics providers who can process and fulfill international orders, such as New York-based Fifty-One. Companies including eBay are now implementing new services to improve the traceability of international shipments, help small businesses navigate customs, and enable buyers to calculate the full cost including duties of purchasing products from overseas.

Chris Chapman, who owns Snow Sport Deals, a Maryland-based business which sells ski equipment via Amazon.com and eBay, says that up to 30 percent of his business relies on international customers. Chapman, whose business Tom Heath of the Washington Post called a "21st century success," said he wanted to be able to grow his business internationally but still faced significant pain points.

"Commerce 3.0" suggests that policymakers can help small business exporters alleviate some of those pain points. It outlines a series of recommendations, including improving cross-border delivery services, reducing customs complexity, harmonizing and expanding trusted trader programs and promoting secure mobile payments. (One concrete way to assist small businesses in the United States and around the world would be to conclude quickly a strong multilateral agreement on trade facilitation under the auspices of the World Trade Organization.)

There are other issues to consider as well. As former United States Trade Representative Susan Schwab noted in a discussion about the paper hosted by the National Foreign Trade Council, the internet presents new challenges for companies who now need to worry about cyber-attacks, handling data appropriately across different countries and combating counterfeiting and piracy in the digital age. Government and private sector efforts to help small businesses navigate and address these issues would give added comfort to those who may look to export.

Overall, eBay paints a remarkable new portrait of exporters in the digital age and should spark a discussion about how policymakers can remove more of the obstacles that would allow exporters like Chris Chapman to meet the needs of international customers.