Richard Hong, while expanding his men’s personal care brand in the e-commerce space, discovered that attracting international customers was relatively straightforward. However, the real challenges emerged in delivering the merchandise to them.
“We found that logistics pack compliance, product compliance, and marketing lacked localization technology,” Hong shared with TechCrunch. “We had to develop many of these capabilities internally to scale effectively.”
Through his e-commerce venture, Pangaea Holdings, Hong successfully scaled to a point where a significant portion of revenue, exceeding nine figures, originated from outside the United States. Recognizing the hurdles faced by e-commerce businesses in international expansion, Hong and his Pangaea co-founder Darwish Gani conceived a solution to assist others in overcoming similar obstacles.
In March 2023, they launched OpenBorder as a spin-off technology business, securing $10 million in seed funding. Initially starting with five merchants, OpenBorder has rapidly expanded its clientele to nearly 70 merchants within a year, while also witnessing a tenfold increase in processing volume.
OpenBorder’s core concept revolves around facilitating cross-border trade for e-commerce merchants by providing instant access to international customers through automated logistical solutions. These solutions encompass shipping, trade, tax and duty compliance, product localization, and international marketplace listings, all consolidated within a single software platform. Additionally, merchants can leverage OpenBorder to sell on Amazon and regional marketplaces, offering customers a two-day, Prime-like experience.
Given the immense potential of the cross-border market, estimated at $2 trillion, OpenBorder is not alone in addressing this demand. Competitors like Nocnoc and Keeta are also devising solutions to facilitate cross-border transactions in different regions.
Peak XV Partners, formerly known as Sequoia Capital Southeast Asia, spearheaded OpenBorder’s recent investment round, with participation from Capital 49 and Harlem Capital. The injected capital will primarily fuel software development initiatives, including partnerships and the integration of artificial intelligence to identify areas of cost reduction and enhance performance. Additionally, Pangaea investor Eurazeo has joined OpenBorder’s board, contributing its extensive experience in the consumer merchant segment.
Many merchants partnering with OpenBorder initially witness around 4% of their revenue originating from international sales, which subsequently grows to 15% or even 20%. Drawing from Pangaea’s success, where over 50% of revenue came from non-U.S. customers, OpenBorder aims to expedite this growth trajectory for other merchants within a few years.
“With our proven track record, we firmly believe that other merchants can achieve similar international success. The key question is, ‘What does it take to get there?’ We have the answer to that question and are committed to helping every merchant tap into global consumer markets,” Hong emphasized.
