When it comes to online marketplaces, are the opportunities for buyers and sellers given equal consideration?
In a conversation prefacing an upcoming live webinar around global marketplaces and the challenges of truly borderless commerce, PYMNTS’ Karen Webster and Michael Ting, SVP of Digital Markets at Hyperwallet, delved into the myths and realities of far-flung online two-sided platforms.
Said Webster, when people think of global marketplaces, they tend to think of the buyers’ side, that credentials can be used to buy things from anywhere and ship them to anywhere.
But it is the seller that may get lost in the mix, and as Webster noted, where the rubber meets the road and where marketplaces need to be sensitive to what a global and local presence really means.
The mental model of buyers, said Ting, is that they are simply looking for variety and access when it comes to purchasing merchandise; they are largely agnostic as to where the sellers are located. When it actually comes time to transact, the vast majority of buyers have access to global and ubiquitous payment methods, like credit cards or PayPal accounts. A such, there isn’t much friction associated with the buying experience, and consumers can cast a wide net (even one that’s global in scope) when searching for goods.
The issue with marketplaces, said Ting, arises with localized versions of larger eCommerce platforms, such as Amazon and eBay. The platforms have, as their hallmarks, local languages, local payment methods and the like. In other words, a great deal of effort goes into ensuring a familiar experience for local sellers. Unfortunately, challenges still arise, specifically when it comes to localizing cross-border and cross-currency transactions.
Ting noted that, in these situations, marketplaces must navigate difficult issues, like how to price goods in the local buyer’s currency, for example. This must be done is such a way that the buyer feels that she is getting the local experience and at the same time remitting full value to the seller. Thus, complicated treasury issues appear for the marketplaces as they need to figure out how to pay a foreign seller in a different currency, a process that requires sophisticated treasury operations and careful communication with the seller community.
When marketplaces are indeed global, and sellers are dispersed around the world, treasury management systems must also take into account taxes and regulatory issues tied to cross-border commerce. “There’s a snowball effect,” said Ting, “when you open the floodgates to that [global] opportunity.” Thus many online marketplaces require sellers to have a local bank account in place so that they can pay them. That is a system that Ting said is no longer pragmatic as it limits which sellers are eligible to sell on the marketplace, a restriction that in turn may limit the variety of goods on the platform and thus the number of buyers.
Writ large, the global commerce experience also has to take into account regulatory issues, a foundational risk that Ting said occurs in every marketplace. Cross-border marketplaces have the burden of knowing who each buyer and seller is, with the additional obligation of monitoring their behavior in order to detect collusion or potential collusion, which in turn means sophisticated workflows for the marketplace itself.
As a result, the notion of a truly borderless economy, said Ting, where any buyer and any seller should conceivably be able to connect with one another, is a challenge to accomplish.
Online marketplaces, Ting said, must scale and pack their virtual shelves with enough wares to capture the interest and imagination of a diverse buyer community. “You are limiting yourself,” he said, “if you are excluding sellers from your marketplace by requiring a local bank account.”
To Sign Up For: The Myth of Global Marketplaces: How Borders Impact A Two-Sided Platform on Thursday, September 14, 2017 at 1:00 PM (EST), fill out the form below: