This gate may make country extensions essential

June 2, 2018 (Sat). The virtual world, while still developing, gives consumers the freedom to shop anywhere. A store built on just one digital address (domain) can serve the entire population. However, national governments are making it difficult by setting up boundaries and toll gates. This is best illustrated in the introduction of a tax law in Australia.

Starting July 1, the new tax law requires big digital retailers such as Alibaba, eBay, and Amazon to collect 10% goods and services tax on all online goods shipped to Australia and pay the collected taxes to the Australian tax office. This will make consumers in Australia pay more and add huge amount of work to the retailers.

Amazon has responded by changing the design of its flagship store so that shoppers from Australia will be forwarded to instead. Orders will be processed and taxes collected locally. If other countries follow and introduce similar tax laws, this will set a trend for digital retailers to use county extensions to build local stores for each market.

In addition to tax, information control may be another incentive considered by some national governments. This is illustrated in a rule proposed in China in 2016 to require domain of a website hosted in China be located in China as well. Even though this attempt failed and the rule was removed from the finalized regulations, I won't be surprised to see similar rules to pop up again in China or other countries.

Therefore, we may see a future where the virtual world will not be a single market but individual markets contained within national boundaries. Digital retailers must acquire domains of specific country extensions in order to serve that markets. As a result, demand for country extensions will increase.

The implication for global players in terms of domain strategy is this: you still need the global extension .com in order to cover the whole virtual world. Next, you also need to acquire domains of specific country extensions for the markets you want to enter.

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