Recently, I had the honor of joining the top-spot iHeartRadio show “A MoMent of Xen.” This segment featured host Xen Sams and special contributor, Chairman & CEO Paul Caldwell of private equity firm Caldwell Soames. The content discussed on the show was so business-changing, I need to share it in any way I can, so please read on.
TOPIC: INNOVATION AND TECH BEHIND CROSS-BORDER SOCIAL COMMERCE
The topic of the show was everything about cross-border social commerce, specifically exploring what it means for the future and how it ties into Web 3.
If you haven’t heard of either of these yet, NOW IS THE TIME.
- CROSS-BORDER SOCIAL COMMERCE is online shopping with trade between:
- a business (retailer or brand) and a consumer (B2C)
- two businesses, often brands or wholesalers (B2B)
- two private people (C2C) via marketplace platforms, such as Amazon or eBay
- WEB 3 is the next generation of the internet, one that focuses on shifting power from big tech companies to individual users.
THE FUTURE IS SOCIAL
Experts predict that NFTs (digital assets) and Web 3 transactions will most likely be commonplace in e-commerce in less than five years. But we don’t even have to wait that long to see how widespread international transactions are!
Worldpay found that 55% of online shoppers worldwide have purchased from another country in the last 12 months.
“If you don’t want to fall behind, it’s time to start planning ahead.”
— Xen Sams
International e-commerce enables merchants to increase their revenues and customer base rather than focusing solely on their domestic market. And in order to successfully grow cross-border sales, it’s crucial to provide international shoppers with the same seamless online shopping experience they enjoy on domestic websites.
Currently, there are 3 main challenges in cross-border e-commerce, preventing international shoppers from placing an online order:
1. Fraud
Trust is the primary driver in e-commerce today. That will be less of importance in Web 3, where it’s the blockchain (shared database) that guarantees transactions.
Web 3 eliminates the need for trust and the need for intermediaries facilitating virtual transactions. Instead, safe transactions and reliable payments are guaranteed through the blockchain. Web 3 will also better protect user privacy, whereas now, big tech is mainly who collects sensitive information and user data.
2. Logistics
International transactions can mean expensive shipping rates and complicated, costly return processes.
For example: If a buyer uses cryptocurrency as payment, that’s only great until they want to return their item three days later, and by that time, the cryptocurrency has gone down 30%.
This is a real-world logistical problem when dealing with international transactions and different methods of payments. There are a lot of gaps when it comes to enabling consumers to have really solid trust-based payment solutions.
3. Regulations
When you shop online, checkout should be as simple as clicking “Pay Now,” and using your preset payment.
If it’s cryptocurrency, such as Bitcoin, people think they can simply pay right now, but what they don’t look at is there’s an actual tax because you’re still talking about middlemen — AKA merchant service provisioning — until that goes away with Web 3 and becomes a peer-to-peer transaction.
With international transactions, there are a lot of legal regulations, statutory requirements, reporting requirements, tax requirements, custom duties and more. It’s quite complicated.
Online shoppers who experience difficulties or hesitations when trying to purchase cross-border are likely to abandon their cart and search for a more user-friendly website to make their purchase. Especially, if a site doesn’t seem 100% secured, can’t guarantee a seamless logistical experience or is selling something that will cost more than a local website due to taxes and regulations.
The catalyst
Due to the pandemic, shopping habits shifted away from physical retail and toward e-commerce. Consumers are now aware of how simple and convenient online shopping is. Web 3, crypto and NFTs are already impacting e-commerce, which is a development that will only accelerate.
Start-ups are seizing the opportunity, and Caldwell Soames has a few companies in its portfolio that shed light on just how in-demand companies taking charge of worldwide transactions really are.
“What we see really emerging in this space of cross-border payments is tokenization of payments. Just like you could tokenize cash flow inside an NFT, you can also tokenize a payment inside that same context, using that same technology. For example, OGPay is facilitating cross-border payments right now through simple widget technologies that can activate a payment in another country and on a website in another country.”
— Paul Caldwell
E-commerce goes global
The cross-border B2C e-commerce market was valued at $794 million in 2021, and it’s projected to reach a value of $3 billion by 2028.
The globalization of e-commerce is going to be mainstream.
Companies need to invest in safe, secure wallets that are capable of international transactions. OGPay is already leading the way in doing that, and social media platforms are following suit to offer in-app purchases where you can use multiple forms of currency.
We’re moving beyond the times of when you needed a certain credit card without international transaction fees so when you traveled internationally, you could buy something in a local marketplace. Now, anyone can do it from the comfort of their home, which is where we’re seeing people doing the most shopping and where it’s trending all throughout e-commerce.
Beyond innovation, beyond disruption
Metaverse … it’s all over the news, but why is it a BIG DEAL when it comes to cross-border e-commerce?
The metaverse is a combination and extension of many existing and emerging technologies, such as AR, VR, blockchain, crypto and social commerce. It’s an ever-expanding world of real-time virtual spaces in 3D that are just additional selling channels. They ultimately become an economy of their own by building customers’ experiences in the metaverse.
This really is an exciting challenge and opportunity for e-commerce. The metaverse is going to be a place where you absolutely will have an immersive experience with brands, so brands need to really look at that closely, at how they can make an amazing experience for people to get to know, see, touch and experience their brand in virtual reality.
Companies need to take note and start now to gather mindshare. That has to come before market share. On the consumer level, there will be more and more solutions built that will accommodate and focus on vendor relationships, but it’s really about transforming how a person thinks about shopping. If you can get to that transformation, then you have something that’s really going to matter beyond that.
There’s a ton of opportunity in the e-commerce marketplace, and right now is the best time to get ahead on meeting the expectations of your future customers — worldwide.
Through my elite-level creative marketing agency, Agency N9ne, I, along with my team of experts, can help you define your digital strategy for transforming how people think about shopping and ultimately go shopping online in the coming years. Reach out to me, and let’s partner together to disrupt the future of cross-border e-commerce.
Leave a Reply
Leave a comment