Online Sales, Colon Free Zone’s New Committment

Image from our friends at ColonTours.

Image from our friends at ColonTours.

E-commerce has a grand potential to revive re-exports in the Colon Free Zone whic, in 2014 fell an astounding 11.5%. This proposal is being made by the management of the Free Zone, which not only foresees all the commercial movement that e-commerce can generate for existing businesses, but all the business potential that companies like Amazon can attract.

Marco Tellez, vice president of The Association of Users of the Colon Free Zone, has indicated that to make online sales a competitive reality, they are placing their hopes on the reform Act of the Law of 1948, which originally created the Colon Free Zone and its regulations, and that by this reform it will give a much needed boost to electronic commerce. One glaring factor that restricts the competitiveness of online shopping right now is a required payment of USD$ 15 per receipt towards a DMCE, Declaración de Movimiento Comercial Electrónico, a tax for each invoice.

In this sense, Tellez says that if a user, for example, in Peru, purchases a pair of eye glasses online from a business within the Colon Free Zone, then he must pay that additional $ 15 for the item. But, if he compares prices on platforms from other countries, he will understandibly overlook purchasing in Panama. Why should he pay much more?

Another indicator that decreases the chances are the additional freight costs from Panama, as they are more expensive, according to Tellez, than those offered from Miami to Latin America. The difference lies in the extra freight charges payable by courier companies operating in our country. I have had a personal experience with these freight costs, which can be sizeable and can mean the difference in going ahead and shopping for items online.

What we are looking at is a paralell license fee which renders the mail service more expensive. It is equivalent to USD$ 300 per month for up to 250 packages, and USD.60 cents for each additional item shipped. “It’s a cost to be considered. The less volume you have, the more it affects you as the merchant,” admits Ralph Michaud Haro, senior manager of CopaAirlines Courier. For companies specializing in courier service like COPA, e-commerce has great potential in the Colon Free Zone.

Michaud Haro, of COPA, stressed that without the surcharge of $ 15 per invoice it is quite feasible that online marketing would increase in the Colon Free Zone. “We can offer competitive rates and offer routes throughout the region, giving fast service, but if the additional $15 DMCE remains, the cost will be higher,” he says.

Jose Chavarria, CEO of DHL Express, says, however, that all countries have regulations that affect one way or another the cost of shipments but, in comparison, he considers that Panama has a favorable regulation. “Trade Business to Consumer, or B2C, as known by its acronym, is still a relatively new phenomenon in our region that has particular challenges which are not limited to the regulatory field,” he says.

Emarketer’s figures, detailing global trade including purchases in stores and online, closed at $ 22.492 billion in 2014. Of this amount, electronic commerce encompassed 5.9%, and the expectation is that in 2018 it will reach more than 8% of the market. China and the United States concentrate 55% of online sales. In Latin America and the Caribbean, according to a study commissioned by FedEx to Forrester Consulting, 81% of consumers who shop online do so at US stores. It is this market that the Colon Free Zone should now take aim.