Cross Border Commerce

Cross border commerce remains interesting because there is no big winner yet. Not Amazon. Not Alibaba. The reason is because doing commerce across a border is by its nature political, and hence local. 

I’m reminded of a time eBay noticed a high density of orders between the U.S. and Germany. They setup a dedicated shuttle service between the two locations. They jumped through all the legal and logistical hoops to create a very specific, niche service, that was probably short-lived. 

There are an endless supply of very specific, niche shuttle services that could be built profitably by entrepreneurs. Granted many will be short-lived, for various reasons, but profitable and worthwhile nonetheless.

I also expect to see more and more labor arbitrages. For example, labor is significantly cheaper in China. But again these opportunities can be short-lived. Witness the tariffs and Cold War with China.

At Shipwire, we found that after the 2008 market crash, the U.S. market largely died for our ecommerce sellers. But then the European market picked up, so we opened a UK warehouse. Then it dissipated. But Australia and Canada became hotbeds, so we opened up warehouses there. And then as they faded, the U.S. market came back. If we had bet our business on a single specific, niche market, e.g. buying those warehouses, we would have ultimately gone out of business. Instead, we counted on markets constantly changing, and our asset-light approach left us with little to tie us to a winnowing market, and few competitors that could keep up with our flexibility as the market zigged and zagged. Adapting to market weakness was one of our greatest strengths.

My challenge to all in the politically fraught blue ocean of cross border commerce is to limit yourself to specific, niche shuttle services and labor arbitrages that are achievable. But do so in a way that your efforts can quickly be adapted to new markets. Please visit my office hours and continue this conversation.