Barriers to selling on the Web remain

By Staff -- Logistics Management, 2/1/1998

Eventually, consumers may stop worrying and learn to love shopping on the Internet. But for now, substantial barriers remain to shipping those orders seamlessly around the globe.

Ken Lyon, London-based information services director for UPS Worldwide Logistics-Europe, says that while the potential for electronic commerce is enormous, logistics problems could hamper its growth, especially for international trade. "Electronic commerce has the potential to change the commercial landscape," Lyon says. "As people become more comfortable with it, it could create a flood of cross-border transactions. To some extent, customs and other organizations are ill-equipped to cope." Customs agencies are organized to manage large shipments, not enormous numbers of small shipments, he explains. Further, electronic commerce adds complexity from a customs perspective. "When trading occurs in a virtual environment, governments have huge problems understanding where a transaction started and stopped and whom to tax," he reports.

In a speech last year in Turku, Finland, Lyon told the Organization for Economic Cooperation and Development that customs clearance, duties, and taxes could well slow the development of international electronic commerce. "Internet shoppers may be unpleasantly surprised to discover that they may be responsible for providing export/import documentation, paying duties and taxes, and clearing their shipments through customs," he said.

One of the biggest problems for governments will be the likelihood that electronic commerce will develop faster than most of them can cope with. "The rate of change is so rapid, that if there is any impediment or delay, the world will go around it," Lyon says.

He suggests that transportation companies could act as intermediaries between governments, vendors, and buyers. Many major transportation companies already provide import and export services and have information systems to manage the flow of goods and information, manage documentation, and pay duties. But persuading governments of the need to prepare for widespread use of electronic commerce is not easy. He points to Western Europe as an example. "The European Commission people are sympathetic," he says. "The issue is whether we can convince national customs authorities of the urgency of this. These problems have been outstanding for a number of years. Now the market is not prepared to wait."