E-commerce was booming even before COVID, and according to McKinsey, within the first three months of the pandemic online retail in the U.S. experienced a decade’s worth of growth. In 2022, cross-border e-commerce is forecast to account for more than 20 percent of all online shipments of physical products. And a December 2020 report from Worldpay notes that revenue from cross-border e-commerce is expected to surpass $6 Trillion by 2024.
Global e-commerce has surpassed domestic growth but pain points remain.
Indeed, cross-border online retail is now outpacing domestic growth, with consumers searching for cheaper prices abroad and looking for a particular product not available in their home country. Retailers are eager to go global to tap into new revenue streams, but there are a number of common pain points that hinder complex cross-border transactions. Seemingly small details such as local currency pricing, local payment options, shipping cost and delivery times, and accurately calculated taxes and duties are roadblocks that can ruin the customer experience if they’re not handled properly, not to mention cause innumerable headaches for retailers.
It’s not just consumers: Investors are fueling the global e-commerce boom.
As more retailers expand into new markets, they’re turning to tech providers to streamline the process. Venture capitalists have recognized that more advanced tech is needed: in 2008 VCs invested some $434 million in internet retail and by 2019 that number rose to $2.5 billion. A little over a year ago, Flow raised $37 million in Series B funding, and is thrilled to be partnering with prestigious investors including Bain Capital Ventures, NEA, Amex Ventures, and Latitude Ventures, among others. Their investments mean Flow is better equipped to help retailers build frictionless shopping experiences that maximize global revenue.
VCs are expanding their global reach.
VCs are investing in e-commerce ventures around the world, such as the Egypt-based logistics company Bosta, which received Series A investment from U.S. and Middle East VC firms. Investors are also funding tech infrastructure referred to as “headless commerce” or Commerce 3.0, which offers consumers a flawless integration of online, mobile and offline experiences. Cherry Ventures recently funded the Poland-based Saleor, open-source e-commerce platform delivering a high-speed and personalized shopping experience. Thunes - a Singapore-based fintech company that facilitates cross-border payments and saw a 100% increase in growth over the past year - recently added Insight Partners to their group of investors.
Investors are funding the seamless transition of both goods and people.
But what about the logistical issues facing the consumer who moves to the U.S. but lacks a credit history? VCs are also recognizing the need to invest in neo-banking platforms that serve the global citizen community and facilitate cross-border e-commerce. Accel, Lightspeed Venture Partners and several high-profile angel investors recently funded Zolve, a cross border fintech startup founded in Feb 2021 and headquartered in San Francisco and Bangalore. Zolve – which currently serves consumers moving between India and the U.S. and has plans to expand globally - aims to enable quick and streamlined access to global financial products. For example, when a consumer relocates from India, Zolve uses their credit history in India to qualify them for a U.S. bank account and credit card. Applications can be processed in the country of origin and require minimal documentation and no application fees.
VCS are funding startups that facilitate global remittances.
In 2018, a whopping $68bn in remittances was sent to India and 30bn to Mexico, with an average transaction of $200-$300 remitted to cover basic needs for families in the country of origin. Matt Oppenheimer, co-founder of Remitly – a mobile-first provider of remittances and other financial services - observed the cumbersome and expensive process for sending money internationally while working for Barclays in Kenya. Remitly is targeted at immigrants in the U.S., Canada, Australia and four European countries, and its streamlined processes encourage global e-commerce. Recipients in more than 100 countries can pick up their remittance in cash, have it transferred to a mobile money account, or even request the payment be delivered to their home. Visa recently invested in Remitly, whose customers can send funds to Visa debit cards globally.
E-commerce will thrive in the post pandemic world.
Almost a third of consumers in 40 countries said they bought more in 2020 from global online retailers because of the pandemic and over 50 percent of those surveyed said they intend to continue cross-border online shopping post-pandemic. COVID may have temporarily shut borders, but the seamless global flow of money and goods (as well as the ability of consumers to easily obtain financial services cross-border which further enables global e-commerce) will define the post-pandemic era. Fortunately, investors are eager to fund tech that will improve such processes.