New overseas e-commerce rules exert pressure on U.S. retailers

By Daphne Howland | May 6, 2016

Dive Brief:

• A new, higher minimum threshold for online purchases by U.S. shoppers instituted in March by the U.S. Customs and Border Protection Agency makes it easier for small and medium businesses overseas to sell to the U.S. and conduct cross-border transactions on marketplaces like eBay, the Wall Street Journal reports.
• Americans may now purchase as much as $800 in foreign goods without paying import duties or tax, up from the previous $200. The change was the result of rare Congressional compromise last year. President Obama signed the new law in February and it took effect March 10.
• Before the new law, e-commerce tariff duties averaged 33%, according to the Wall Street Journal, citing numbers from the United Parcel Service.

Dive Insight:

This new higher minimum for overseas online purchases, coupled with the strong dollar, could be a boon for American shoppers and their cross-border enablers—payments companies like PayPal, marketplaces like eBay, or shippers like FedEx, for example.

PayPal earlier this year said it had lobbied for the bill because it “has been a major trade priority for PayPal over the past couple of years. The legislation is an important step in reducing barriers to small businesses participating in cross-border trade, and allows PayPal merchants overseas to more easily access U.S. customers.”

But the change also puts pressure on already beleaguered American retailers, for sure, and makes the need for differentiated merchandise all the more dire. Melijoe, a luxury Paris-based shop cited by the Wall Street Journal, has seen orders of its that sells luxury children’s apparel and grow some 27% since the U.S. import law was implemented. American shoppers are already a larger percentage of its overall sales since the change, in part because Melijoe sells items that are difficult to find stateside, giving them that much more allure. 

“There are things that you carry in your store that make it who your store is, and [customers] expect them when you walk into that chain,” Michael Stefanakos, VP at lean retail analytics firm FieldStack, told Retail Dive earlier this year. “Then you have things that are regional, and hopefully you’re looking at analytics” to figure out what those will be.