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Panel 2 - E-Commerce - North America Consumer Product Safety Summit


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Stakeholders and regulators discuss the benefits and challenges posed by the rapid expansion of e-commerce. Discussion of industry processes and best practices. How can regulators help platforms help their sellers and consumers?
Presenters: Doug Hyland, Compliance Program Manager, zulily; Stuart Schmidt, Manager, Trade Compliance, UPS; Carlos Ponce Beltran, Deputy Attorney for Telecommunications, PROFECO.

Published in: Government & Nonprofit

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Panel 2 - E-Commerce - North America Consumer Product Safety Summit

  1. 1. North American Consumer Product Safety Summit May 2018
  2. 2. 2017 ZULILY zulily is retailer obsessed with bringing our customers special finds every day We feature a fresh, curated collection including apparel, shoes, home décor, toys, health & beauty, gifts and more.
  3. 3. we dared to be different… “This can’t be near a billion-dollar business. How many people really want to shop this way? How many small brands really want to sell this way?” - Forrester Research Analyst, Oct 2011
  4. 4. 2017 ZULILY risk based direct import small package category by jurisdiction United States Canada Australia EU Mexico
  5. 5. how can regulators help? clarity small parcel rules incident reporting parity 3rd party testing documentation labeling & marking
  6. 6. final thoughts
  7. 7. Trade Facilitation in the World of eCommerce May 4, 2018 Stuart Schmidt Manager, Trade Compliance
  8. 8. About UPS World’s largest package delivery company and a global leader in supply chain services. 19+ million packages and documents per day. 3% of global GDP and 6% of the U.S.’s GDP moves around world in UPS trucks and planes. Serves more than 220 countries and territories around the world. 8
  9. 9. 9 E-Commerce Macro Overview
  10. 10. E-Commerce An Undeniable Growth Opportunity  It is expected that Internet sales in Latin America will grow to $ 75 billion in 2017.*  Internet users in the region are expected to grow to 37% this year, from 28% in 2011.*  Governments depend on electronic commerce for export growth, consumption growth and innovation.  Trade facilitation plays an even bigger role in success in the region. 10 (*Source: IDB INTAL Interactivo)
  11. 11. From Seller to Buyer, powered by e-retailers, e- Payments, and delivery services. Buyers want: Ease and seamlessness Track and trace Reliability Affordable Shipping and competitive lead times Sellers need: Localized Checkout: Duty & Tax displayed in cart International order fulfilment: delivery options balancing speed with cost, international shipment processing, customs clearance documentation, door to door tracking and proof of delivery. Customer Service: International returns and refunds solutions Border clearance, delivery, returns and refunds a critical part of the customer experience. Supply Chain: Market Demands E-Platform Shopping Cart Seller Buyer Transportation Information Payments Goods & Services E-Payment Logistics/Consolidator Express or Post Delivery 11
  12. 12. 12 E-Commerce: The Eco-System Within
  13. 13. The Trade Facilitation Policy Infrastructure Pre-arrival Processing Single Window and Border Agency Coordination Disciplines on Fees & Charges Separation of Release from Accounting Process Authorized Economic Operators (AEO) Post-Clearance Audit  Transparency, Consultation, and Opportunity to Comment  Risk Management: WCO Immediate Release Guidelines  Cat 1: Correspondence and Documents  Cat 2: Consignments below a duty/tax de minimis threshold  Cat 3: Consignments below a formal declaration threshold.  Cat 4: Consignments requiring formal entry. • Submission of documents • Processing by destination governments Pre-Arrival Processing • Risk Management based on value and other criteria, distinguishing informal from formal declarations • Immediate Release for Low Value Goods (Green Channel) • High Value Clearance and Inspections (Red Channel) Risk Management and Release Post Entry Payment & Audit • Post clearance payment of duties and taxes or payment through security bonds • Post-entry audit “Express Clearance - What Good Looks Like” 13
  14. 14. What’s the Problem Then? Surge in import volume / Impacting Service Levels Surge of New Competition For Domestic Retailers / Potential Advantages in Taxation Democratization of International Trade Low Understanding of Rules of Trade Inexperienced traders with no compliance programs New Risk Profiles Tax evasion Illegitimate trade / illicit goods Other security threats New Challenges for Governments 14
  15. 15. 15 Recommendations Going Forward
  16. 16. Recommended Action: Simplify Trade for Low-Value Shipments As it is not feasible to discriminate among like goods based on how they are distributed, simplification could be developed based on key characteristics of e- Commerce trade such as the generally low-value of such shipments. Governments to consider: A coordinated simplified approach for entries and clearance based on WCO Immediate Release Guidelines.  Establish common simplified entry threshold under which shipments are still dutiable or taxable but informal clearance is permitted.  Common data elements e.g. no need for HS Code for Cat 2 as non-dutiable anyway. Establish returns procedure or extending temporary import procedures to include e- Commerce returns. Returns should not require formal declaration if they can be matched with outbound invoice details. 16
  17. 17. Recommended Action: Closing Loopholes to Address Risks  Governments still need to address increased risk of illegal and illicit shipments, dangerous goods, and other threats that are now entering the supply chain, on vessels, and crossing borders.  Global integrators and cargo airlines have invested in technology, screening, advanced data, security and compliance programs but loopholes still exist.  A large proportion of e-Commerce trade occurs via other channels, and take on innovative distribution modes such as drop-shipping, consolidators, virtual addresses, complicating the traditional import/exporter structure. Many do not provide the same levels of scrutiny for themselves or for their customers.  For example, postal services are often exempt from advanced data submissions which air carriers, freight forwarders, and their customers need to provide to target and screen high risk shipments.  Identifying all players involved in cross-border delivery/distribution and ensuring they abide by the same rules of trade. 17 Consolidators Postal service / EMS Traveler Express Delivery
  18. 18. Recommended Action: Educating the New Participants of Trade  e-Commerce has resulted in the democratization of international trade where anyone, sitting anywhere can transact in trade. Today there are many more small businesses exporting, new importers-of-record, many of whom are unfamiliar with the rules of trade, and don’t have compliance programs.  Supporting private-public capacity building efforts to educate new participants of international trade and support trade compliance programs for APEC MSMEs. 1812
  19. 19. ¨NACPSSUMMIT” Panel2:E-commerce “Consumer Protection in New Business Models” The Challenges of Shipping PackagesAcross Borders intheAge of E-commerce Carlos Ponce Beltrán DeputyOmbudsmanforTelecommunications Washington,D.C.May3,2018
  20. 20. OVERVIEW: I.- E-commerce in Mexico II.- Challenges and ideas for protecting digital consumers in new business models
  22. 22. 1. Mexico ranks 17th among the most attractive countries in the world for e- commerce. Source: The 2015 Global Retail E-Commerce Index 2. We currently have 97.2 million Internet subscribers, 17.18% are fixed connections (home and office), and 82.81% are mobile connections (mobile equipment). 3. 3 out of every 4 Internet users (a total of 65.5. million users) made an online purchase in 2017. 4. The total value of e-commerce transactions in Mexico in 2016 was 17.63 billion dollars, with 28.3% annual growth. 5. Online buyers in Mexico had an 86% satisfaction rate. They also stated wanting to make another purchase in the following three months. 22
  23. 23. 6. PROFECO receives an average of 1,500 complaints each year about online sellers and reviews 2,000 online sellers per month. It has not detected any product safety issues, but it does advise on miracle products. 7. 67% of Mexican Internet users made online purchases through foreign platforms. 8. 52% of these purchases were made through U.S. platforms; 29% were through sites located in China; and 6% were Japanese online sellers. 9. What new business models are becoming popular in Mexico? CONSUMER CENTRIC MODELS: C2B (Consumer to Business), C2C, Social Commerce (Ex. F-commerce) or We Commerce. B2C continues to grow at a rate of more than 25% per year. 23
  24. 24. 24 10. The parcel industry in Mexico handles more than 180 million shipments per month (ranging from letters to large packages);12 million packages. 11. 30% growth per year translates into a total value of 200,000 million pesos (nearly 11 million dollars). 12. E-commerce accounts for 20% of these shipments. 13. Correos de México (government postal service) is the leader (28.7%). Followed by Fedex (12.2%); DHL (8.5%); Estafeta (7.1%). The remaining 43.4% is distributed between UPS and 2 thousand other companies. 14. DHL states that by 2020, 50% of its operations will be e-commerce based. In 2016, this figure was only 10%. 15. In the second quarter of 2017, UPS increased its consolidated revenue in México, by expanding its e-commerce-based deliveries. 16. According to the WTO, Mexico ranks 15th among exporting countries, and 14th among importing countries.
  26. 26. ONE. Determine whether regulatory efforts are lagging or up to date. In terms of third-party platforms and market places, we offer the example of Mercado Libre, the leader in these types of sales in Mexico, which has a larger presence than Amazon in our country, moving 1.6 million packages per month.. Proposals: • Work in conjunction with platforms to make sellers aware of the safety regulations, that apply to them, such as not selling dangerous products. • Given increased C2C and third-party platforms, we need to consider how consumer-sellers respond as providers. How? By measuring their sales volume and educating them on the safety requirements for selling products. • Promote a cross-border product-safety code of ethics. 26
  27. 27. TWO. Innovate how e-commerce risks are communicated Proposals: • Create a system of guarantees to ensure the safety, quality, and security of new and second-hand products, to be jointly embraced by sellers and platforms (consumer protection policy and coverage). • Promote specific self-regulation. • Expand the scope of safety stamps for existing trademarks and brands (separate from or in conjunction with security and privacy stamps) THREE. Establish the geographic boundaries for new digital markets and modernize international cooperation in these markets by signing conventions or agreements between associations or groups with various e-commerce companies as members Proposals: • Harmonize and share good cross-border e-commerce practices (C2C, B2C y Market Places). For example: Return guarantees (money, products, or services). • Canadian, Mexican, and U.S. regulatory bodies can draft a proposed Terms and Conditions to be used as reference for these models of e-commerce sellers and platforms. • Recognize virtual communities (VCs) that assist regulatory agencies in providing information about risks and consumption/sales good practices. 27
  28. 28. 28 Thank you very much! @cponcebeltran @profeco