3 Young Brands that have Cracked the Cross Border Game Successfully
Globalization isn’t exactly new. We have been trading across the globe since the days of Marco Polo and Ibn Batuta (a lot earlier if you really go back in history). Thanks to the advances in technology, processes, data, and infrastructure, what has changed massively in the last 20 years is the ability to connect, communicate and drive sales real-time across the world. Today, customers look for their favorite products without even knowing (or franking caring much) where it gets delivered from. My daily routine in Los Angeles is something like this. I drink Columbian coffee with mangoes and lychees from India, milk and bread sourced locally for breakfast, wear clothes manufactured in Europe and China, use a mobile phone assembled in the US but manufactured in Asia, and sleep on a mattress that was manufactured in Mexico.
There has never been a time in human history when the world was smaller. Customers are ready to pay for value and what they like. Result? 1 in every five orders is sourced globally! In developed countries, this is already up to 1 in every three orders being sourced globally. Add e-commerce to the equation, and you have started an unstoppable chain reaction. Why? Well, because in ecommerce, you don’t need to stock up inventory ahead of time, resulting in the aggressive growth of cross-border commerce. Brands now have the flexibility to manufacture when they get an order, ship it, and get it delivered to the end customer in less than four days from across the globe – about the same time it would take in domestic commerce.
You don’t need to guess where this juggernaut is headed. It is a one-way street to borderless commerce (or as close to it as you can get within the regulatory framework). Mckinsey predicts that 1 in every 2 orders will be crossborder in less than five years. That is a whopping $5T in value. Can you, as a brand or an investor, ignore a segment that was minuscule in 2015 (about the time I started in crossborder ecommerce) and is about to become half of global trade in just about 10 years or so? Back in 2015, not even Amazon had any idea what crossborder ecommerce was. Only eBay and Alibaba had figured it out successfully. Fast track to today, almost every small ecommerce marketplace claims that they sell globally! While many brands of repute are still struggling to crack their cross-border game, some have been exceptionally successful. Their cross-border play has enabled them to become global household names and did not take 50 years to do that as it took their predecessors. Our story today features three such brands that have successfully gone crossborder and are likely to rule ecommerce tomorrow simply because they are the pioneers. These companies have not only made it big, but also left a footprint in the global market by asking the right questions, taking advantage of technology, timing and opportunity and moving forward with calculated risk-driven solutions.
Sugar Cosmetics (India)
Vineeta Singh, the founder of Sugar Cosmetics, observed how most reputed cosmetic brands failed to cater to the needs of the Indian market. In hot and humid India, traditional makeup often dripped off with sweat leading to customer distress and dissatisfaction. Moreover, those brands’ shades, formulas, and colors were primarily created with lighter skin tones in mind. Which was another fail for the Indian market.
Vineeta and her partner Kaushik Mukherjee dreamt of a solution to this problem and came up with Sugar Cosmetics! I met Kaushik when he was sitting next to me on a flight from Mumbai to Hyderabad in 2019. I have been keenly following their story ever since. Sugar Cosmetics was created with the promise of providing long-lasting, cruelty-free makeup that not only stands firm in the face of the tropical climate of India but also provides perfect shades for the discerning Indian customer. Their product-market fit is bang on and it didn’t take much time for them to become one of the hottest selling brands in the market-places. They have gone on to build an Indian brand that stands out globally. Sugar Cosmetics is currently at a monthly revenue of $20 million and is doubling year on year.
Sugar’s dometic success is not really the focus of our story though. The other day, I was speaking to a beauty expert from New York and she mentioned Sugar in hushed tones. I was pleasantly surprised to say the least. Upon research, I figured out that Sugar Cosmetics has successfully entered the global market with its retail presence in Russia and online presence in the US. In both these geos, the brand is famous primarily amongst expats from the tropical world. They are also active in the entire tropical market, which includes South Asia, Africa, and Latin America. Per the company’s plan, about 30-40% of revenue would be from outside India by 2026.
American Giant (USA)
American Giant, a fast-growing startup in the highly competitive apparel market, got its start with high-quality, American-made clothing that was unlike anything else on the market. Their commitment to style and durability helped them stand out from “fast fashion” imported clothing from China, South Korea that did not exactly suit the American customer. American Giant knew it needed a marketing team that could grow the business and retain customers in ways that reflected the company’s values and didn’t require much hands-on maintenance. But how do you go about doing that?
American Giant identified the military as an affinity segment for its brand. The company’s made-in-America ethos, rugged clothing, and straightforward style resonated with this audience and presented an opportunity. The military community has over 37 million consumers with $1 trillion in spending power. This opportunity offered great potential for acquiring a large and loyal group of customers.
The company took it up a notch with discounts and offers. American Giant knew that generic discounts would get lost in the crowd. Instead, they decided to tribute the military with innovative and exclusive offers—discounts only available to verified members of the US armed forces, their families, and veterans. Exclusive offers hold strong appeal for military members, who are more likely to shop with a company that offers a military discount. And by tapping into powerful human emotions of belonging and feeling special, exclusive offers help build loyalty. A pure online brand, they connect to their consumers through email marketing. American Giant also sells its products online through its website.
Since the American Military enjoys a global fan-following – American Giant was able to tap into some serious cross-border interest in their products. American Giant has used its unique yet effective strategies to be among the most significant brands that made it big in the crossborder game. Today crossborder sales lead to 20% of their revenues and is the fastest growing segment of their business. Guess where they are headed next? BTW, this reminds me of a very interesting Indian brand with a very similar strategy that I met last month. More on that later! 🙂
We have all heard of GoPro – the stuff that crazy adventurers and sports people use to film their stunts. Nowadays, it is a mandatory part of every world traveler’s kit. When Nick Woodman was first developing the idea behind this company, his aim wasn’t to take upon the world of action photography. Au contraire, his vision was much more straightforward: to create wrist straps that photographers could use to tether existing cameras to their arms for unusual shots.
Woodman traveled to Australia and Indonesia, where he realized that his straps alone would not be enough for the company to be successful. He needed waterproof housing for his camera and would need to find the perfect model. In 2004, GoPro launched its first camera: a reusable 35mm device for about $3 each. By selling them for $30 a piece, GoPro made a neat profit on these cameras. The company gained a strong reputation by building relationships with surf shops and appearing on QVC, raising $350,000 in sales. In the meantime, it developed a niche product—but wasn’t quite iconic yet. When his friends pushed him to jump to digital, Woodman released the Digital Hero, GoPro’s first all-digital, video-ready product. It had VGA audio in ten-second increments but no audio capability. By 2007, however, the Digital Hero 3 offered unlimited audio and video.
GoPro introduced several significant technological advancements, such as the wide-angle lens and waterproof housing, over the next several years. However, in 2009, they were met with a new competition: Apple introduced the iPhone 3GS, which included onboard video capabilities. The first iPhone’s introduction changed how we view and record videos. On top of it, copycat models from China were selling at a tenth of their price and proved to be fairly durable.
The traditional video camera and camcorder market declined, as did GoPro’s core business. This provided the company with an opportunity to take on more mainstream markets. It also presented new challenges for the company as it sought to compete with established players in the market. GoPro survived this onslaught because it had built a cult following worldwide. This proved to be a unique case where crossborder following turned out to be the reason for the brand’s survival. In 2022, GoPro remains a top brand with a global footprint and an enduring following.
At Eunimart, we have been asking questions and framing problems on behalf of brands, retailers and supply chain companies. Our vision is to help companies not just grow revenue today but also plan for the future. We have built a full stack of AI tools to power revenue, supply chain, and distribution combined with an incredibly flexible and advanced open source platform to power the next generation of entrepreneurs who dare to dream like the companies we just discussed!