Despite trade wars, tariffs, and the erection of other barriers to cross-border commerce, the past decade has seen a substantial increase in the number of U.S. microbusinesses and freelancers who export goods and services.
As the chart below (click to enlarge) from the MBO Partners State of Independence study series shows, the share of independent workers (freelancers, independent contractors and other microbusinesses) providing goods and services to customers outside the U.S. more than doubled since 2011.
The increase in exports is being driven by several factors:
- Online marketplaces have made it much easier to find and service customers outside of the U.S. They also simplify and facilitate transactions and payments.
- Collaboration software has reached the level where communicating with remote customers is easy and efficient. This has greatly increased the ability of service providers to serve customers outside of the U.S.
- Improvements in outsourced logistics services have reduced the costs and greatly simplified the process of delivering physical products to pretty much any global destination.
- Global markets are enormous, with 95% of the world's population and 84% of the world's economic activity taking place outside of the U.S.
Most U.S. independent workers and microbusinesses who sell to customers outside of the U.S. start out as "accidental exporters". This happens when a customer outside of the U.S. finds and buys from a U.S. based independent worker or microbusiness.
Often these first exports are done via online marketplaces like Amazon, Etsy, eBay or Upwork.
Once exporting has occurred, it tends to lead to more exports. For example, according to eBay's 2020 United States Small Online Business Report:
"... 96 percent of small businesses on eBay in the United States export internationally, sending goods to an average of 17 foreign countries. Additionally, nearly 60 percent of eBay entrepreneurs ship goods to customers across four or more continents."
Not surprisingly, independent workers and microbusinesses who sell goods are much more likely to be exporters and those who sold services. Almost half (48%) of those producing goods reported being exporters in 2020 compared to 16% of services firms.
Despite attempts to rein in or reduce global trade, the rise of microbusiness exports will continue. The drivers and market opportunities behind this trend are simply too powerful for it not to continue to grow.