The GELF team recently talked to Chad about global cross-border and “US-inbound” ecommerce opportunities and challenges. In the first of an ongoing series profiling leaders in global ecommerce, GELF Co-founder Kent Allen interviews Chad Epling, CEO of NYC-based Mamenta. Mamenta is a cross-border ecommerce company enabling brands and shoppers to shop seamlessly across the globe.
Chad, much of the cross-border ecommerce focus in past years has been on US-outbound. Recently, we’ve seen the rise of what we call the “global cross-border” era, where brands around the world are breaking out of their domestic markets and targeting international opportunities other than the U.S.
Is the US ecommerce market simply too competitive, even with the recent boost in the de minimis to $800?
It’s less about the US market being competitive (which it is), and more about growing awareness among shoppers about overseas brands.
We are positioning Mamenta as the global cross-border leader for brands looking to expand beyond their domestic market, regardless of where they’re based. We have built the Mamenta technology in a way that standardizes the process to onboard and launch brands in the same way, whether they’re based in Tokyo, New York City, Auckland, or Haryana (NOTE: North Indian state surrounding New Delhi on 3 sides)
US consumers are trained to shop online differently than the rest of the world. They prefer going to a traditional ‘.com’ first, rather than to a marketplace. For some brands, we do think US marketplaces are a complement to the traditional Westernized ‘.com’ experience. However, US consumers are conditioned to expect to receive an online order within a few days or less. Therefore, even with the de minimis increase to $800, we find that brands would need to hold local inventory to be competitive in the US market.
The rest of the world shops marketplaces first, and have a variety of different niche marketplaces that address specific needs or verticals for our brands. That’s where we try to focus exclusively, because that opportunity is massive. According to a recent report from Accenture, the global B2C cross-border e-commerce market will balloon in size to $1 trillion in 2020 from $304 billion in 2015.
What are some of the challenges you faced in this evolving “global” cross-border era?
Brands will build and grow to thrive in their specific area of the world. This will make the metadata and attributes, at the SKU level, region-specific for a brand. We have focused our efforts in the Mamenta platform to automate the ability to add attributes and metadata through our proprietary algorithm that are unique to the regions and marketplaces we publish to.
What is the opportunity for brands based outside of the US market?
There certainly is an opportunity for emerging market brands to sell in countries like the US or Japan that have a stronger currency. This will often allow these brands to make more money selling cross-border than in their local market. Mamenta has the ability to collect payments in the local currency and repatriate into local currency of the brand.
Our GELF framework shows how many brands broaden their focus to international marketplaces once they become comfortable with using international shipping operations to fulfill international demand.
Of course these days, the devil is increasingly in the definition of “marketplace”. What are some of the unique marketplace concepts you’re seeing “out there”?
The definition of a marketplace and retailer is blurred at times. A number of global multi-brand retailers are looking to expand their assortment without purchasing inventory, and are increasingly turning to companies like Mamenta to add more SKUs to sell on their site.
On the other hand, many of the marketplaces in the emerging markets still purchase product, making them glorified retailers.
That being said, there are basically 3 types of marketplaces found in most regions of the world, even in the US.
First are the major mass market players in regions such as Amazon (US), Flipkart (India), Lazada (Southeast Asia), SOUQ (Middle East) etc. On these marketplaces you can buy anything from car tires to cologne to fashion.
Second, you encounter the niche marketplaces that focus on specific verticals or types of products – or offer a curated lifestyle appeal. For example, a marketplace might focus on just men’s fashion (Menlook in Europe), or luxury products (5Lux in China), or baby products (Hopscotch in India). Although they have fewer registered users, those users are highly engaged and specifically looking for those types of products. Focusing on these marketplaces tends to lead to higher conversions for our brand partners.
Finally, you have flash sale and liquidation channels that discount the retail price of products significantly. Marketplaces such as Gilt Group (US), SnapDeal (India), and Vente-privee (France) follow this model.
Each marketplace has its own advantages and fits some brands better than others.
Do you see these marketplace concepts becoming an evolution of traditional distributors?
I’d say it’s not the emergence of the marketplaces that are an evolution of distributors, but rather the creation of a technology companies such as Mamenta and others enabling these cross-border commerce flows that are offering new distribution options.
One of our founding concepts was to create a platform that would mitigate the need to use distributors to take a brand or retailer around the world. We empower brands to go direct-to-consumer in markets normally dominated by local distributors.
These new marketplaces are giving brands an outlet to sell their products globally. However, due to a complete lack of standardization among marketplaces, it’s nearly impossible for brands to figure out all the nuances of doing marketplace business in multiple regions simultaneously. That’s where we come into play. That’s why we believe that Mamenta is so revolutionary.
AT GELF LA ’16 on September 8th, we’ll be previewing new research from PayPal that shows how fashion, clothing/apparel and accessories continue to be the top cross-border product category across most markets. The data also shows that the categories that sell best after fashion often differ.
What are some of the variations in product categories that are selling well in the markets you’re focused on?
Some markets are brand driven like China and the Middle East, while other markets are style and price driven, like Southeast Asia and Africa. It’s crucial to understand each market and the buying behaviors of its consumers.
With that said, no matter which market, the best sellers are going to be underwear, lingerie, and baby products, as these are essential purchases of consumers.
Cross-border food and grocery sales are rampant in countries where food safety is a concern. For example, China and other parts of Asia are huge cross-border food sales channels that are generated by poor food standards and health scares. We tend to see bulk sales of food products for cross-border – for example, 6 milk power cartons, 5 x 1kg of dried nuts or fruit.
Q7: Finally, your favorite restaurant from your last year of globetrotting
One of my favorite experiences was waiting in line at 4AM to get the first 5AM seating at Sushi Dai in the Tsukiji Fish Market in Tokyo. It was the best fish I’ve ever had.
Thanks Chad! If you’d like to connect with Chad, he is a man on the move. Catch him on the fly at firstname.lastname@example.org