During the pandemic, it was hard to order anything from AliExpress, my Go-To website for buying cheap products from China. You order, pick the cheapest delivery option and forget all about it. In 2 months, the box will arrive. It didn't, of course, for the last two years. That's when I turned to Ubuy. I turned my Audiotechnica wired headphones into a wireless one with a converter that I sourced from the US via Ubuy. In 4 weeks, it was there on my ears.
Ubuy is an interesting company. They claim to serve 10,000 cities and 100 million+ SKUs. The most fascinating thing about Ubuy is that it's a bootstrapped company from Kuwait – a tiny middle-eastern country, known for its oil reserves and the Gulf war. The country is ravaged by political and economic crises, even though its a high-GDP country. Ubuy operates local websites across several countries. We estimate their total traffic across all their local sites to be >10M per month. At a modest conversion rate, they should be doing $50M - $100M in GMV, which is brilliant.
Today's essay is not about Ubuy but the lure of cross-border eCommerce and the opportunity it presents.
1. The US is the largest exporter of consumer goods. On average, post-COVID, US has been exporting ~$20B of consumer goods every month. With currencies across the world weakening, it is becoming expensive to buy US consumer products. Adding local inflation, cross-border eCommerce exports from the US will face significant growth challenges
2. Breakdown of US consumer exports:
3. Cross-border eCommerce will grow moderately, from $1.9T 2021 to $2.1T in 2023, accounting for 38% of global eCommerce GMV. Marketplaces lead the way when it comes to cross-border eCommerce. South East Asia is an interesting market with many small nations with a robust GDP that import consumer goods. Marketplaces in these regions are cross-border by default. Key Players: Shopee, Lazada (owned by Alibaba), AliExpress (also, owned by Alibaba), Tmall
4. 11% of US eCommerce GMV comes from cross-border sales. The US imports more consumer goods than it exports, by the order of 3x. Cross-border shopping grew 42% since 2019
5. Top categories for cross-border eCommerce: Clothing, Luxury goods, Fragrances, Footwear, Skincare & Cosmetics. Each of these categories grew between 30% and 50% YoY between 2020 and 2021, fueled by the appetite from affluent shoppers who could not spend money on experiences
6. Cross-border eCommerce is still a very nascent and untapped opportunity in the US. China alone imports ~$100B worth of consumer goods through cross-border eCommerce channels but the majority of it is from Asian countries. China's eCommerce imports are equivalent to nearly 40% of the US' total consumer goods exports. China's eCommerce exports stand at $168B, which is 2x of US' eCommerce exports.
7. Key cross-border eCommerce stack players in the US:
8. The biggest export of the US is its pop culture, which is greatly influenced by domestic brands. Naturally, the US is the largest exporter of consumer products. Yet, when it comes to cross-border eCommerce exports, less than 5000 eCommerce merchants have made cross-border specific investments to make it easy for global shoppers to buy US brands. The top US marketplaces are usually content with focusing on the large, homogenous domestic market for growth. US exports half of what China exports through eCommerce channels.
To use the cliched quote, it's very much Day 1 for cross-border eCommerce in the US, or perhaps, Day 0.
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