As much as economic uncertainty abounds, many market watchers expect continued growth of the cross-border eCommerce sector.
It’s a forecast backed by the belief that this expansion will be enabled, at least in part, by the help of payment platforms that reduce the pain points that small online sellers typically face as they navigate the challenges of trading in new geographies.
In fact, Payoneer Senior Vice President, Americas Ya Wen, says it’s already happening, at a time when the COVID restrictions and global supply chain snags of 2021 and 2022 dissipate, the current fears of consumers about their finances are not only forcing online sellers to adopt new strategies, but to find new partners to contend with them.
“[Consumers] will be more conscious about their wallet,” Wen said. “They’re looking for bargains, they’re looking for deals. eCommerce marketplaces will face stronger competition from offline brick-and-mortar retailers, which means they will steer their marketplaces to be more low-cost and deal-driven to remain competitive.”
Yet he sees online marketplaces as beneficiaries of these market forces, noting that online merchants will likely revisit their growth plans and rebalance their capital more toward marketplaces, where it is cheaper and easier to acquire customers and also sell to an existing customer base.
This all allows FinTechs to shine in 2023, as he sees their creative disruption in specific areas well-timed for the ongoing uncertainty. He said this will come at banks’ expense: They’re being outmaneuvered by FinTechs in areas like real-time and cross-border payments.
“Fast payments and real-time payments will see a big demand for many of the SMBs or eCommerce businesses,” Wen said. “They want to get paid as fast as possible so they can have liquidity and cash flow to invest [to grow] their online business.”
Time to Unify
Part of this transformation will be a quest by merchants to simplify and consolidate the digital commerce tools needed to enter new markets, which he sees as a job for unified platforms.
Given the volume of online sales that held up even in inflation-flattened 2022, Wen said multiple platforms and tools mean “a lot of additional costs, a lot of additional overhead for eCommerce businesses to handle.”
That in turn is leading cross-border hopefuls to seek “consolidated solutions to provide a single-point platform to handle the accounts payable and accounts receivable side of the business. There will be a lot more innovation to make accounts payable and accounts receivable easier, faster and cheaper for the eCommerce business.”
Looking at U.S. eCommerce sellers particularly, Wen concedes that there’s still growth to be found domestically, but many see greener pastures elsewhere. To reach these new frontiers and succeed, he said partners that can facilitate cross-border selling with “innovations in cross-border payments, cross-border logistics, listing translation, [figuring] out how to handle very volatile foreign exchange,” and merchant of record arrangements are indispensable.
“Those are the innovations that will be driven by companies like Payoneer [and] many of the leading providers who have been developing solutions for cross-border trade in the past five to 10 years,” he said, predicting continued innovation driven ongoing demand growth.
Easier, Faster, Cheaper
Saying cross-border eCommerce is too complex to talk about in generic terms, Wen breaks it down to the constituent elements and pain points that payments FinTechs excel at solving.
First in line, he said, are eCommerce merchants and online small and medium-sized businesses (SMBs) selling direct to consumers or through major marketplaces. “That’s really also the population that Payoneer works a lot with and provides value for,” he said.
“The second pieces are the major marketplace in the world, the Amazons, the Walmarts, the eBays, Flipkart in India. Those are the marketplaces that will continue to provide more innovative tools and resources to help make selling online easier.”
Last but hardly least are solution providers like Payoneer “who are making eCommerce, again, easier, faster, cheaper and more nimble.”
Wen said, “Think about how payments help all three of these categories become more nimble and add real value in the time of inflation, in the time of cross-border trading. This is where I think payments, working capital, checks in, checks out, merchant of record — all of those will become a driving force of innovation” in the new year.
Pressed for those pesky predictions, he simply said, “Anybody who stops innovating, anybody who thinks they have the ideal solution will be left behind. That’s why I’m super excited about what’s going to happen in terms of real-time payments [and nimbler] working capital products.”
Also, by way of predictions, he added, “I also think about how the FinTech companies will continue to replace the banks and present a much more viable alternative to cross-border merchants as they think about their global strategy.”