Gift Focus inc Attire Accessories - January/February 2023

122 Martin McTague, National Chair of the Federation of Small Businesses, looks at e-commerce in an ever-changing society The dot com boom changed the small business landscape as we knew it. Gone are the days of ordering from a catalogue or a newspaper advert because now, we have access to pretty much every item at just the click of a button. It has opened a never-ending number of possibilities for traders, too, allowing them to potentially go global in just a matter of days. The UK e-commerce market now stands at a whopping £2,089 billion (ONS, Feb 2022) – a figure we could only have dreamt of back in the 1990s. But there is a gap between how small firms and larger corporations are treated by the online platforms they rely on. When disputes arise, small firms often feel like they are treated unfairly but have nowhere to go because they rely on the platforms to make sales. This needs to change. We must support traders selling things online at all costs and ensure that Government regulations don’t unfairly penalise those who contribute so much to the economy. International trade Currently, around 20% of current small business exporters and importers use online platforms – including eBay, Amazon, Facebook, Instagram and WhatsApp – to trade internationally. Key export destinations for UK small firms include Germany, France, Ireland, the United States, and the Netherlands. Digital trade can help businesses promote their products in previously unreachable markets by reducing risks in some areas, such as, raising brand awareness, fostering consumer trust, and reducing the costs associated with internationalisation. Digital trade is regulated at two levels: national, and international. Free trade agreements, especially those that contain arrangements in support of small businesses and digital trade can be vital tools to help mitigate the effects of trade barriers, exchange best practice and foster compatibility between different countries’ rules. But this opens small businesses up to a range of challenges, because different Governments across the globe take different approaches to the rules of e-commerce, meaning some traders are forced to bear the brunt of unfair practices. That’s why 76 members of the World Trade Organisation (WTO) signed a commitment to enter negotiations for a plurilateral agreement to put in place global rules on e-commerce. These include customs duties on electronic transmissions, data, business trust and consumer protection issues. Online sales tax The promise of recession is looming over small businesses’ heads – which is why FSB was relieved to see the Government scrapped plans for an online sales tax. It must never return, because this type of tax could leave their ability to compete with big retailers in the balance. The proposal came after the Government’s 2021 Business Rates Review, which included plans potentially to extend its proposed 2% online sales tax to small businesses, both tangible and intangible. It would have meant that all transactions, including travel, accommodation, and software, would have been subject to an extra cost. The report was issued amid fears that business rates are harming the high street by penalising physical retailers, while online retailers pay nothing. FSB argued that the tax system was already cumbersome and creating an online sales tax would do nothing more than add yet another hoop for small firms to jump through. Small businesses are trying to recover from Covid-19 while wrestling with soaring energy costs, interest rates hikes and a cost-of-living crisis. They cannot afford another anchor weighing them down. At a time where the tax burden is currently at its highest since the Second World War, creating yet another tax would have been the nail in the coffin for so many. Axe the Card Tax FSB supports ‘Axe the Card Tax’, a campaign aiming to make the fees that retailers pay to process card payments more transparent. The Payment Systems Regulator is currently investigating card fees, and the campaign is calling on the Treasury to launch its own review of the market, to ensure that there is a good level of competition among card processing companies, so that retailers of all sizes get a fair deal – especially as card payments are predicted to continue to rise as a proportion of overall transactions. The online world has opened opportunities that before the 1990s, we never would have thought possible. We have come a long way since ordering clothes from a grainy picture in a newspaper and waiting two weeks for it to arrive – but there is still a lot more work to be done to ensure that online retailers don’t fall victim to inconsistent trading laws, don’t face a ‘rich house poor house’ situation against bigger corporations, and don’t face burdensome card taxes. E-COMMERCE CONCERNS ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at You can follow us on twitter @fsb_policy and on Instagram @fsb_uk. FSB