As cliché as it may sound, the world is now a global village. Many factors, whether individual or combined, have rippling effects on the lives of people. In the past, the effects were somehow restricted to certain sectors or certain
countries. However, these days, many government policies and structures can be said to be responsible for changes in economic growth as well as productivity which cuts across several sectors and countries. The impact that increased tariffs and taxes on the economy cannot be overemphasized. One fast-growing facet of most economies in Africa is
e-commerce. Let’s dive into some of the impacts that increased tariffs have on
e-commerce.
Inadequate incomes – To be financially stable, there has to be a fine balance between income and expenditure. As tariffs increase, there is a direct effect on expenditure as almost all amenities are affected. Immediately fuel prices go up, transport fares are increased. Prices of commodities on the market go up. However, almost all incomes remain the same. This weighs heavily on families and individuals. Since the online market is relatively novel to the vast public, people would rather prefer to either walk in or transact physical deals, thus creating losses for e-commerce sectors.
Shoddy products and services – When tariffs are increased, many manufacturers are forced to adjust their procedures and techniques to be able to stay in business. The quality of goods and services are then compromised. Because many online shops and businesses list and sell products/services, any slight reduction in quality causes a decline in the level of trust of the consumers. This reduces income levels of many e-commerce platforms as fewer people utilize online services during that period.
Layoffs – Increased tariffs have so much impact on companies. One major problem is unemployment. When tariffs are increased and companies are forced to maximize resources, one area that gets affected greatly is staff strength. The next option for most employers is to lay some workers off in order to get enough funds to continue the running of the business. In commerce, once tariffs are increased, managers are then forced to merge roles. Hence, one person may be performing multiple tasks while the other, who originally performed that role gets laid off. This then causes the employees who are left behind to be on their toes. There is often employee dissatisfaction and this greatly affects productivity.
Poverty and high crime – The adverse effect of high tariffs is so devastating that it transcends on the lives of many people. High tariffs mean high prices which cause unemployment and leads to low income and poverty. The resulting effect of this is an increase in crime rate.
E-commerce businesses get affected when crime increases because more and more people refrain from doing business online with the fear of being defrauded or scammed. Decrease in online transactions causes revenue to reduce which has a direct impact on several other factors in the e-commerce sector.
Product Unavailability – For
online businesses who mainly deal in products, all the above-mentioned factors tend to affect the availability of products. The total workforce decreases as a result of layoffs. This leads to a vast decline in production. The more people go online without having adequate options to choose from or anything to buy, the more they lose confidence in the business. The end result is a collapse of business or the accumulation of losses.
Day in-day out,
e-commerce businesses are faced with these challenges which are mainly as a result of impacts caused by an increase in tariffs. Although the sector has survived thus far, many fear that a frequent increase might totally collapse the business. Government policies are mostly blamed for increased tariffs. However, most
e-commerce businesses are finding
strategies around this problem. It is believed that a stable
solution will be found to effectively tackle this.
