Richard Hong found it easy to reach international customers while expanding his men's personal care brand's e-commerce brand. The challenge arose when trying to get the goods to them.
“We found that there was no localization technology in logistics pack compliance, product compliance, and marketing,” Hong told TechCrunch. “We had to build a lot of these capabilities in-house to be able to scale.”
Through his e-commerce company, Pangea Holdings, Mr. Hong has been able to scale it to the point where the majority of its revenue (well over nine figures) comes from outside the United States.
Hong and Pangea co-founder Darwish Ghani started thinking about how they could help other e-commerce businesses expand internationally. You just don't have to overcome the same obstacles.
In March 2023, Hong and Ghani spun off their technology business as OpenBorder and raised $10 million in seed funding. At the time, he had five franchisees in the company, but a year later he had grown to nearly 70. The throughput has also increased tenfold.
OpenBorder's cross-border transaction concept is simple. Give e-commerce merchants instant access to international customers through automation of specific logistics needs.
These include shipping, trade, tax and customs compliance, product localization, listing on international marketplaces, and more, all from one software platform. Merchants can also take advantage of a two-day Prime-like experience to sell on Amazon and local marketplaces, Hong said.
There is a $2 trillion opportunity in the cross-border market, and OpenBorder is not alone in addressing this need. For example, Nocnoc is doing something similar for merchants in Latin America, and Keeta offers a way to facilitate cross-border payments.
Meanwhile, Peak XV Partners (formerly Sequoia Capital Southeast Asia) led the investment, with participation from Capital49 and Harlem Capital. OpenBorder leverages its software development capital, including partnerships and artificial intelligence, to find areas of cost reduction to improve performance. The board also includes Eurazeo, a Pangea investor with extensive experience in the consumer sales segment.
Many OpenBorder merchants start with 4% of their revenue from overseas, but increase to 15% and even 20%. Hong said Pangea gets more than 50% of its revenue from customers outside the United States, and OpenBorder hopes to help other merchants get there in just a few years.
“The fact that we're doing it shows that there's a real possibility for other distributors to get there, but the question is, 'What does it take to get there? ?”about it. Mr. Hong said. “We have a clear answer to that question and want to help all sellers reach all consumers around the world.”