NOTE: This article was originally published in EcommerceBytes on April 25, 2013 and was republished inadvertently on March 18, 2015.
ARLINGTON, Va. – As the cash-strapped U.S. Postal Service rolls out new shipping services, works to reduce its distribution network, and lobbies Congress for legislation to ease its labor expenses, the agency’s Office of the Inspector General is reviewing a series of proposals for a new revenue line: international ecommerce.
Prepared by MIT professor and entrepreneur Shiva Ayyadurai, the report describes the significant role that the Postal Service could play in facilitating global ecommerce, improving its own balance sheet while opening up new channels of economic activity for U.S. buyers and sellers.
In a presentation here at the PostalVision 2020 conference, Ayyadurai offered the hypothetical experience of an American couple that travels to a remote village in a foreign country, purchases a handmade purse and returns home, only to come to regret that they hadn’t bought more items. Then what? As broadband access spreads through the developing world – propelled by high rates of mobile device penetration – the idea of those artisans selling online doesn’t seem so far-fetched.
But global commerce brings a menu of logistical challenges, ranging from language barriers and currency conversion to cross-border issues like taxes, duties and clearing customs.
Anticipating the gold rush that international ecommerce could become, many players in the industry have been trying to work through these obstacles, whether it’s a platform heavyweight like eBay rolling out new marketplaces in China or Russia, or an expanding vendor like Borderfree (born FiftyOne) that is exclusively focused on helping online retailers navigate the process of selling overseas.
But Ayyadurai argues that state-backed institutions like the Postal Service are uniquely positioned to step into the ecosystem as a trusted logistics provider. Shortly before Ayyadurai took the stage at the PostalVision conference, he put out a call for comments on Twitter about the topic of international ecommerce. He said that he received a tweet from a resident in a rural village in India, who said that trust is one of the crucial impediments – that people in that part of the country have faith in their postal service, but little else.
“Social commerce is going to be a very important vehicle for trusted recommendations – or trusted vendors – trusted commerce,” Ayyadurai said.
So if the U.S. Postal Service could step in as a trusted brand, what role could it play in the global ecommerce space?
Ayyadurai’s report, which is under review at the Postal Service and has yet to be made public, outlines a number of areas where the agency could offer international ecommerce services, including language translation and currency conversion estimates, as well as a cost calculator that would inform buyers at the time of purchase the “fully-landed” cost of a transaction, including all relevant taxes, customs fees and duties.
“This is something that can really enable commerce,” Ayyadurai said. “If the Postal Service developed this, it’s something that could be used on many other sites.”
Uncertainty about the ultimate cost of an item is a major barrier to international ecommerce, explained Albert Hernandez, CEO of SkyShop Logistics, who noted that pricing fluctuations can erode trust among both buyers and sellers. In Brazil, for instance, taxes, duties and other fees commonly run around 100 percent of the purchase price, he said. When parcels arrive with those surprise fees due, buyers often abandon their packages, leaving sellers holding the bag.
“That’s the problem that all these merchants find,” Hernandez said.
Keeping with the theme of fostering trust, Ayyadurai suggested that the Postal Service could develop and implement a global reputation scoring system for online sellers, as well as an authentication database for trading partners.
“The seller in the developing nation also wants to know if he’s going to get paid, and you also want to know if this seller is legitimate,” he said.
The future of Ayyadurai’s report is far from certain. As with previous reports he has prepared, he has submitted his recommendations to the USPS’ Office of Inspector General, which is a distinct operation from the rest of the agency. The OIG will presumably review and relay the findings to the Postal Service itself, which will then decide how actively it would like to get involved with international ecommerce.