E-Commerce’s $200 Billion Problem: One That AI Can’t Solve

  • September 4, 2018 at 2:08 PM EDT
  • By Sebastian Kanovich, dLocal
0aaSebastian Kanovich dLocal
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Anytime I read the trades, glance at news headlines, or talk to other executives, AI seems to be the solution to all of our problems. Everyone is talking about AI. Emerging tech companies now have AI solutions at their forefront, but for companies looking to expand their e-Commerce reach globally, especially within emerging markets, AI is not the solution.

When it comes to e-Commerce issues, specifically at the local level — frequent cart abandonment, low payment conversion rates due to network instability, consumers’ inability to pay with the right credit card — we can’t wrap them in an AI blanket. These problems can only be solved through offering locally-relevant solutions that minimize friction at the checkout.

E-Commerce continues to carve out a bigger and bigger piece of the retail pie every year, yet retailers are still losing $200 billion in potential revenue a year through cart abandonment and checkout friction. These issues loom even larger for retailers that sell into emerging markets. India and Latin America are the veritable “El Dorados” of e-Commerce, with Africa not far behind, yet most online retailers and service providers are not well-versed in how to cater to the populace within these regions. 


There are a number of different factors that cause friction for consumers when they are shopping online — a number of which come down to hubris and laziness on the side of the retailer. Here are a few best practices that will drive conversions at the checkout and maximize your reach:

Don’t display your prices exclusively in U.S. dollars. That will cause confusion for the users resulting in only a fraction of projected sales to you. Instead, list your prices in the local currency and see your conversion rates skyrocket.

Don’t restrict payment methods to international cards (Visa, MasterCard, etc.) and ignore local cards and popular payment methods like bank transfers, e-wallets and cash schemes. Some of these local payment methods may seem foreign and cumbersome to you, but they are e-Commerce ready and are very relevant to shoppers in other countries. By adding local payment methods, you could see your revenues double in just a couple of months.

Don’t present everything in English only. Your web content, customer support and chat should all be localized. Make sure your customer support hours are in the local time zone, too.

The effort, I assure you, will be worth it, and the fruits of your labor will be evident. Namely, reduced friction at checkout. A boost to customer loyalty. And the cherry on top, a significant increase to your revenue. 

Online companies leave a massive amount of revenue in customer carts every year. In emerging markets, as much as 80% of the revenue doesn’t even reach the shopping cart because of non-localized checkout — instead it’s pocketed by retailers that are bridging the gap by adapting to the needs and constraints of the local market. Localization of checkout delivers immediate results — it expands reach, reduces friction, boosts your customer loyalty and increases your revenue. All without AI — imagine that! AI might be the word on every business’ tongue, but friction at checkout, especially in emerging markets, is a problem on a basic level. No amount of AI can fix that.  


Sebastián Kanovich is a pioneer in emerging markets payments and the CEO at dLocal. He spun off dLocal from AstroPay in January 2016, creating the only 360 payments technology company which handles pay ins and payouts in emerging markets for some of the largest global e-Commerce and marketplace companies. Kanovich holds a Bachelor’s in Economics from Universidad ORT Uruguay. He also studied Entrepreneurship, Innovation and Management of Technology at Tel Aviv University, and completed a prestigious Endeavor Innovation and Growth Program at Stanford Graduate School of Business. He continues to be fascinated with how payments work around the world.

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