The Cloudy Truth About Commerce Transparency

Do you feel that American consumers should know the countries making products and the seller's location before buying? That thought produced the following exploration. Let's jump in what I discovered.

Desire For Honesty

The majority of people seem to support transparency in commerce, whether they support Made in the USA or cheapest wins. With growing consumer frustration, little progress has been made to clarify product details for shoppers, even considering two Senate bills proposed last year. To understand why honesty and visibility are restricted, let's follow the money.

Commerce

In March 2021, Walmart pledged to spend an additional $3.5B annually (less than 1% of annual revenue) for the next 10-years on products made, assembled, or grown in the U.S. Many business leaders celebrated this commitment as media channels broadcast the good news.

Did you also know in March, Walmart opened its Marketplace to China-based sellers? "Chinese sellers have very obvious advantages in the global cross-border e-commerce field," said Michelle Mi, Vice President of Global Sourcing at Walmart, on March 25.

The Problem

The problem; most consumers will not be aware of where they are buying from since the Walmart Marketplace doesn't make sellers' business details or their warehouse location public.

According to a survey done by Walmart's Global Customer Insights & Analytics (GCIA) team in FY18 and confirmed in an April 2019 survey, 85% of customers said it's important for Walmart to carry products made or assembled in the U.S.

Commerce Amplified

Let's turn our focus to the largest marketplace. Amazon has a subscriber base exceeding 150 million, and the number of third-party sellers has increased by over 100% in the past four years, to more than 6 million. In 2020, the Amazon marketplace sold $295 billion in products.

In a post on March 15, Amazon announced that its B2B e-commerce division Amazon Business reached $25 billion in revenue. Roughly half of the Amazon Business sales are from third-party sellers, and approximately three million of them sell in North America.

Congress Support

Last year, Congress members introduced Senate Bill 3431 and Senate Bill 3707 to address honesty and visibility restrictions. The legislation in both bills had bipartisan support, advanced our desires for transparency, gained no traction. Let's review the intent of each.

On March 10, 2020, Senate Bill 3431 was introduced to address disclosure issues during the Congress session. The Bill states, "To require online marketplaces to disclose certain verified information regarding high-volume third party sellers of consumer products to inform consumers." This Act may be cited as the "Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act" or the "INFORM Consumers Act."

On May 13, 2020, Senate Bill 3707 was introduced to address misrepresentation issues during the Congress session. The Bill states, "To require clear disclosure of seller location and country-of-origin labeling for products advertised for sale on the internet and to prohibit false and misleading representation of United States origin on products, and for other purposes." This Act may be cited as the "Country Of Origin Labeling Online Act" or the "COOL Online Act."

On July 23, 2020, H.R. 7756 introduced the "INFORM Consumers Act" legislation.

Cabinet Support

During the February 18 news conference, Treasury Secretary Janet Yellen confirmed that Trump-era tariffs would remain in place and that any changes would depend on China's adherence to trade deal commitments.

China

China would like the U.S. to remove tariffs and sanctions on companies, and "abandon irrational suppression of China's technological progress, so as to create necessary conditions for China-U.S. cooperation," China's Foreign Minister Wang Yi said February 22, according to an official English translation shared by the foreign ministry.

Shenzhen and Shanghai stock exchange-listed companies maneuvered to sidestep tariffs on the Chinese imports. By shifting production to Vietnam and Mexico, Chinese companies elude higher customs taxes on their exports to the United States.    

Biden Support

According to the Biden proposed tax changes, a 10% Offshoring Penalty surtax, on profits of any production by a United States company overseas for sales back to the United States. Biden also announced a new "Made in America" Tax Credit. The incentive will be a 10% advanceable tax credit for companies making investments that will create jobs for American workers and accelerate economic recovery to build back better.

It Is Time for Action

If Walmart's survey still holds across all demographics, why do the 85% majority not raise our concerns to Congress? If each of us contacted our elected Senators and Representatives, the legislation would pass.

Inaction is acceptance of the status quo.   

Contact your elected officials in support of S. 3431, H.R. 7756, and S. 3707. We, the United States people, are the only way this transparency initiative will gain enough traction and votes to become legislation.