In the last 25 years, the odds of an older person being a millionaire have improved slightly. For young people, however, the odds have become much worse.

These figures come from a new paper by economists at the Federal Reserve Bank of St. Louis’ Center for Household Financial Stability, which shows evidence of a growing wealth gap that few people are talking about – the gap between the young and the old.

The paper, by William Emmons, Bryan Noeth and Ray Boshara, draws on surveys of 40,000 families that the Center carried out between 1989 and 2013 to examine the all-important role that your age plays in how much income you make, and how much wealth you accumulate. It offers a few clues as to how young people can game the system and end up like their wealthy older counterparts, as well as a lot of evidence to show that things are different for young people today.

In my opinion, if the “wealth gap” is this pronounced in the U.S., one of the few economies that continues to create new jobs, one can imagine what it is like in places like Europe and the Middle East, where economies are stagnating and youth unemployment is particularly evident.

While this dire situation exists, the globe is chock full of opportunities for wealth creation. As explained in the 2014 McKinsey Global Trade Institute Report, many of these are directly from or connected to global trade, whether it’s with North America, Europe, Asia, South-South trade, etc.

How SMEs can be included in global growth through e-commerce

E-Commerce is one of the newer and most accessible avenues for business people from all walks of life to participate in global trade and grow their wealth and sales.

Walmart has 250 third party vendors on its e-commerce platform. Amazon and Alibaba are tremendous vehicles for the sale of third party products on their sites. Unilever has seen the value of selling in China through TMall, though they do not sell through Alibaba. Mondavi, Costco, and P&G are just a few of the American companies which sold their products through Alibaba on Singles Day. On this one day alone in 2016, Alibaba achieved sales of $14.3 billion.

I have not heard one U.S. politician whisper a peep about e-commerce as an avenue for small business engagement in global trade.

The ramifications in regard to inclusion, economic egalitarianism, wealth-building, economic growth and job-creation are all too obvious. Politicians prefer to dwell on the dark side of globalization. This is because, despite Bill Clinton’s iconic quote “It’s the economy stupid” holding true in the political arena, ignorance too often trumps the audacity of hope.

Go global to access new opportunities for wealth

In order to build new wealth, what the world’s youth clearly needs is a crash course in international trade and trade finance, pardon the pun. The traditional solution is that of “certified financial advisers,” CFAs who provide ideas about savings and investment.

The problem with that “solution” is that the majority of CFAs have no idea how to capitalize on global trade opportunities, much less how to teach youth about what will be the greatest future source of wealth-creation. In this incapacity, CFAs are joined by economists and consultants who are largely ignorant of international trade, and international business in general. They are in no position to be advising anyone about the acquisition of wealth, and certainly not advising countries on how to grow.

Joseph Stiglitz, the Nobel Prize winning economist, noted that “much of America’s inequality is the result of market distortions with incentives directed, not at creating new wealth, but at taking it from others.” When it comes to markets, “Wall Street” is great at shock and awe, but this hardly benefits “Main Street”. Can nations create wealth without men, as Lincoln wrote, “wringing their bread from the sweat of other men’s faces?” They can!

We all realize that there is a need for a new direction, but first the leaders and the next generation of business professionals have to be educated to take it.

Global trade, more than manipulating stocks and financial markets, will create new jobs, opportunities and wealth across the nation, yet too many professionals do not feel ready or trained for it. Whether through e-commerce or more traditional solutions, today’s youth need to be ready to buy, sell and expand worldwide if they want to achieve the same financial success as generations before them.

“If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” ~ Antoine de Saint-Exupéry

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E-commerce is an effective way to expand into global markets for several reasons. One of the most important is that e-commerce creates trust and confidence by being bilateral, instead of mercantilist or a one-way street.

For example, one of my customers sells cosmetic and skin products to large merchandisers in East Africa. He then imports carvings, handicrafts, art and commodities from East Africa, which he sells in New York, all through e-commerce.

E-commerce also, importantly, accommodates small and medium-sized businesses. Many institutions, from the U.S. SBA to the WTO, praise SMEs’ value in creating jobs and helping to grow economies, as well as their vital role in the future of cross-border trade.

However, the execution of strategies to achieve such lofty goals by the various international organizations interested in the issue has uniformly failed.

As Voltaire reminded the French from the safety of Switzerland, “the road to hell is paved with good intentions.”

The UN was not able to achieve all of the Millennium Development Goals and will not likely reach its Sustainable Development Goals. The millennium goals which were met were attained mainly because of the growth of China, which has now slowed. In order to achieve a similar rate of growth, India and Africa would have to rise from poverty and develop at a similar rate as China. There are no viable signs that this is occurring.

The bright light on the horizon for both economic growth and job creation therefore emanates from e-commerce and web services in support of global trade, particularly for SMEs.

What are currently your best options to enter the e-commerce world?

U.S.-based Amazon and Chinese giant Alibaba, despite some setbacks, have raced to the top of global and cross-border trade. Flipkart in India is mired in bureaucracy, and there has not yet been a European champion at the joust.

In China, Amazon stumbled and could not compete with Alibaba’s massive investment in logistics there. Alibaba acts as the FedEx, UPS and DHL to the 200 or so “smaller cities” in China, and Amazon has no comparable delivery capability.

Alibaba has established 100,000 delivery points in China with Cainiao, the company’s logistics affiliate. Ant Financial, which is not tied directly to Alibaba, provides financing in support of the sale of Alibaba’s goods, whether through Tao Bao or TMall.

The company uses one of the world’s most intrusive “trustworthiness”-based credit approval systems to support Alibaba’s sales, through an escrow system.

Throughout the rest of the world, Amazon has made great strides in logistics by acquiring or contracting for air and ocean freight capability. Amazon is now the largest e-commerce retailer in the U.S., and serves over 130 million customers per month on its U.S. website.

Amazon also has 14 other national retail websites in major markets like China, India, Canada, the UK, Germany, Brazil, Mexico, Japan and Saudi Arabia. According to their Q1 2016 review, Amazon sold $9.57B of goods through their international websites in Q1 2016, up from $7.75B in Q1 2015. Their international retail is also growing at a rate of 26%, on par with the company’s 27% growth rate in American sales.

Winning at the great global trade game

By 2025, forecasts predict the flow of goods, services and financing will rise to a total of $85 trillion, of which e-commerce is forming an increasingly large portion. For companies looking to take advantage of the surge, I think that Amazon will win for several reasons:

1. Avoiding the deluge of fake goods available online

Trust and confidence, the basis of all business, has been eroded by the counterfeiting of goods on Alibaba.

The company has received complaints of mass sales of counterfeit goods through its Taobao platform for years, and has been repeatedly warned by U.S. trade officials. Alibaba was also sued by Kering, the parent company of luxury fashion brands like Gucci and Yves St. Laurent, in 2015.

Most recently, Alibaba’s membership in the prestigious International Anti-Counterfeiting Coalition was suspended, just one month after being accepted into the organization.

The move was made after several companies, including Gucci, Michael Kors, and Tiffany left the organization in response to Alibaba’s admission.

With no end to the problem in sight, Amazon represents the safer option in avoiding competition against low-quality knockoffs.

2. Saying no thanks to Big Brother-esque financing

As mentioned, the granting of credit via the escrow system, on which Alibaba financing depends, is based on the most intrusive of systems for determining credit-worthiness.

Chinese trustworthiness determination is based on a system which “knows” whether you’ve paid for your recent taxi ride. This level of intrusion into private lives is not likely to be accepted in democratic countries.

3. SMEs want the best possible customer experience

Finally, a profound knowledge of every aspect of global trade will have to be incorporated from inception in the support structure for platforms and portals which underpin e-commerce.

The anti-counterfeiting (respect for intellectual property) and credit-approval systems of Alibaba Group Holdings do not represent the very high standards of excellence with which a positive customer experience is closely associated.

Amazon is familiar to customers in a larger number of countries, and has had fewer controversies surrounding it. Given its recent revenue growth, Amazon seems prepared to offer a stable and secure user experience in the long-term as well.

Keeping an eye on the long-term potential of your e-commerce plan

Unquestionably, both Amazon and Alibaba have their drawbacks. The effective and efficient inclusion of systems of payment and compliance with export controls, import regulations for sales, logistics and the “last mile” of delivery, have not yet been fully addressed.

It is nevertheless my assessment that, based on how Amazon and Alibaba have met their challenges, Amazon will be able to scale globally at a much faster rate than Alibaba.

Expanding to new countries globally will remain the key to achieving a truly global and comprehensive solution, and to offering a fair and equal service, not only from the point of view of scale but also from a marketing and selling standpoint.

Are you planning on using either Amazon or Alibaba to sell your goods in the near future, if you’re not already? Are there any other competitors you think could give both a run for their money?

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