How Online Shoppers Can Save in Cross-Border Purchases
Rate offers a solution to the high cost of cross-border e-commerce
PHOTO CREDIT: Getty Images
In the cosmopolitan city of Singapore, people love to shop, whether in the physical or the digital realm. But this passion is not only within the confines of this city-state.
Singaporeans are among the top cross-border online shoppers in the world, observes Jake Goh, the CEO and co-founder of Rate, developer of RateX, a browser extension that helps consumers pay less when they shop online.
Singaporeans, he says, buy consumer electronics from American or Chinese e-commerce stores, or purchase clothing brands and designs that are not available in Singapore.
Still, there are many pain points in cross-border online shopping, owing to the presence of additional intermediaries and financial institutions.
“This causes the foreign exchange rate and transaction fees to be higher than it should be,” says Goh, noting that he experienced this problem first-hand as an avid overseas shopper. The transaction fees can be as high as 2 to 5% due to what Goh calls the “frictions in existing payment networks.”
These small fees can quickly add up for consumers, especially given how much cross-border e-commerce is booming in Southeast Asia. Goh cites data from research firm Frost & Sullivan that identifies the region as the world’s fastest-growing Internet market, with gross merchandise value rising to US$65.5 billion by 2021 from 14.3 billion in 2016.
RateX is Goh’s solution to the cost of cross-border e-commerce.
Online shoppers can download the RateX extension via the Chrome Store. Upon check-out at one of the company’s supported merchants — which include Amazon, Forever 21, Sephora, Uniqlo, and a host of other household names — the RateX browser extension will appear. Since the transaction is done through RateX, the customer pays less, due to free discount codes and lower transaction fees.
In turn, Rate monetizes by charging merchants a commission for the sales the company brings them.
“As we scale across multiple countries, accepting money from both customers and paying merchants using existing infrastructures prove to be cumbersome and costly,” Goh says. “The overhead cost and fees involved when dealing with multiple currencies add up, and localization of our product may prove to be another huge threat to our current model.”
Using blockchain technologies
To address this problem, RateX is exploring the use of blockchain technologies. They are developing Rate3, a universal token made specifically for e-commerce participants, including shoppers, merchants, and even wholesalers, manufacturers, and logistics providers.
“This significantly reduces the risk and fees associated with different banks in various countries, and cross-border scaling becomes much easier and sustainable,” he says.
RateX has mostly acquired users through paid channels but have found word-of-mouth referrals or endorsements from existing users to be most effective.
One such endorsement is from Singapore’s Senior Minister of State, Grace Fu, who commented on Rate’s Facebook page that the company effectively solves a real-world problem.
The company recently rebranded from RateX to Rate, as it evolves into a portfolio of cross-border solutions beyond its flagship browser extension like Rate3 and RateS, their mobile app for deals and coupons.
As of this writing, the company data shows that consumers saved more than $250,000 by using its service. The company is focused on improving how e-commerce works in Southeast Asia under the rallying cry of “cross-border first” for 2018.