Lower shipping costs needed to access global markets

High shipping costs to customers overseas are a major barrier to small business exports. In the meantime, Chinese exporters are getting subsidized to ship to the U.S.

Photo by monkeybusinessimages/iStock / Getty Images
Photo by monkeybusinessimages/iStock / Getty Images

Google Chairman Eric Schmidt predicts that the entire global population (7 billion) will be online by 2020, just five years away. This is a huge opportunity for small- and medium-sized businesses to export their products directly to consumers and wholesalers overseas.   But there is a major barrier stopping them: international shipping costs.

Right now, it costs about $70 for Hello!Lucky to ship a typical $100 wholesale order of greeting cards internationally. An $30 retail online order costs $50 to ship overseas. Imagine if you saw those shipping rates at checkout. Small businesses care about their customers' perceptions, so we subsidize the cost or do not offer international shipping at all. 

In contrast, according to the Washington Post, Chinese shippers receive subsidies from the U.S. government via something called "ePacket."  Though epacket, USPS subsidizes shipments from China to the U.S. -- so much so that it is meaningfully cheaper for a Chinese seller to ship a 3-pound box to the U.S. than it is for, say, a U.S. seller to ship the same box from San Francisco to Boston. See detailed examples here.

This is a big deal if we want manufacturing to return to the U.S., and if we want to take advantage of the exponential increase in global trade.

There is reason to think the U.S. could be one of the countries to lead the way in an entrepreneurial boom in the next decade. Technology, ranging from 3-D printing to crowd-funding, is rapidly removing barriers to anyone starting a business (see Peter Diamandes' new bestseller, Bold).  This means the number of entrepreneurs, makers, and manufacturers is poised to skyrocket by 2020.  To take advantage of this growth engine -- and to promote universal human ideals represented by the products these entrepreneurs create -- the U.S. needs give small business owners access to the global marketplace.

It all starts with lowering outbound shipping costs.