E-commerce

E-commerce isn’t just about the giants anymore

More than 80% of Americans shop online, and more than 50% prefer e-commerce to in-store retail. And it’s not just how they shop, it’s what and where they shop that’s changed.

Photo: Adobe Stock

January 10, 2024 by Jessica Chiu — VP of Strategic Partnerships, Americas, Airwallex

The retail headline during the pandemic was the explosion of e-commerce, which hit over $4 trillion in sales globally in 2020. But it wasn't just more traffic to the long-standing e-commerce behemoths; we also saw a proliferation of new niche e-commerce brands. In 2021 alone, there was a 204% year-on-year growth in e-commerce sites, and there are now an estimated 26.5 million operating worldwide.

What's driving this surge of new entrants to the e-commerce landscape? It's (unsurprisingly) consumer demand.

More than 80% of Americans shop online, and more than 50% prefer e-commerce to in-store retail. And it's not just how they shop, it's what and where they shop that's changed. Consumers are increasingly eager to support small and medium size businesses as opposed to relying exclusively on bigger brands, indicating a growing demand for a diversified e-commerce ecosystem.

However, there is another less obvious factor helping this e-commerce ecosystem thrive: the rise of financial platforms that lower the barrier to entry — making it possible for businesses of any size to launch and maintain an online store that scales across borders.

Fintech is helping e-commerce challengers scale and better serve customers

It's complicated to run an e-commerce business — accepting payments with a secure and seamless checkout experience, selling to customers overseas, accepting payments from vendors and suppliers in other currencies and time zones. While an e-commerce giant may have the resources to set up physical entity bank accounts and payment acceptance capabilities in every region in which it operates, that requires time, capital and development resources that an upstart may not have.

There's a growing category of fintechs tackling exactly this challenge, so that a ceramics studio in Melbourne can sell to customers in Miami, and pay a vendor in Germany, using something as simple as a single API integration. They no longer need to worry about the lead time, cost or complexities of opening local business entities in multiple markets, local regulations and licenses or partnering with regional financial institutions. Many fintechs have adapted to enable e-commerce brands to optimize their financial infrastructure, expand globally into new markets and accrue cost savings.

Beyond helping companies expand, advances in fintech are helping younger e-commerce brands provide better customer experiences. For example, checkout may seem like a simple process but it's been historically challenging — and the stakes are high as 55% of online shoppers say they'd quit a purchase mid-process due to checkout friction. At times, customers trying to make a purchase on an e-commerce site are redirected to a third-party site to make the actual payment, then are sent back to the original merchant, introducing friction and opportunities for the transaction to fail.

Leveling the playing field

Bigger e-commerce players typically have a large staff of in-house developers who build payment capabilities directly into their platform to mitigate this issue. But once again, advances in fintech have leveled the playing field. Fintech platforms allow any merchant to deliver seamless, secure checkout for any payment method. With embedded finance technology, e-commerce brands can easily create their own payment products and pages with customizable UI and streamlined compliance, and customers will never need to leave the platform.

The e-commerce industry has long been dominated by a handful of giants, but the tides are turning. Technology is leveling the playing field and creating opportunities for a more diverse and robust ecosystem.

Fintech's global and digital-first nature enables e-commerce businesses to operate and expand without borders, giving up-and-coming brands a chance to play ball with the big hitters, all while helping what matters the most — seamless customer experiences.

About Jessica Chiu

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Jessica is VP of Strategic Partnerships for the Americas at Airwallex, a global payments and financial platform enabling businesses of all sizes to scale and operate efficiently across borders. Prior to Airwallex, Jessica led strategic growth and product partnerships at Pinterest and Spotify. She also held business and finance-focused roles at Netflix and LinkedIn, and has additional experience in technology investment banking.

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