Earnings before interest, tax, depreciation and amortization, or EBITDA, jumped 79% to about $25 billion in 2022, the report said. It cited two investors briefed on the numbers. Tencent reported EBITDA of 164 billion yuan ($23.9 billion) for 2022 in its preliminary earnings statement. Meanwhile, Alibaba’s figure for the same period is about $22.7 billion, according to Bloomberg-compiled data.

Bloomberg reported last week that ByteDance’s revenue surged more than 30% to surpass $80 billion in 2022. That matched the tally at archrival Tencent, after twin video platforms TikTok and Douyin drew eyeballs and advertisers from social media incumbents.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4.

ByteDance and the TikTok ban

That double-digit growth topped most of the global internet leaders including Meta Platforms Inc. and Amazon.com Inc., underscoring the resilience of ByteDance’s business at a time Washington is threatening to join India in banning TikTok, which a growing number of government agencies across the world are wiping from official phones.

The U.S. is mulling a ban of the short-form video app because of alleged national security risks. Concerned regulators worry TikTok’s parent company, ByteDance, shares private user data with the Chinese government. A TikTok ban has been proposed before. In 2020, the Trump administration publicly mulled banning the Chinese app and banned it on many government devices.

ByteDance’s profit last year came despite mounting losses at fast-growing TikTok, according to the Financial Times. TikTok has amassed more than 150 million monthly users in America, spurring concerns about China’s access to the data it gathers. Its chief executive sat through a hostile congressional hearing, during which he did little to sway some of the loudest critics.

Douyin, though, remains ByteDance’s biggest cash cow. The still-robust growth at the world’s most valuable private tech firm could boost confidence among investors shaken by recent global events. The Chinese social media behemoth was valued at around $220 billion in a recent private-market investment by Abu Dhabi AI firm G42, down from the $300 billion that TikTok’s owner set during a September share buyback program.

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The U.S. is mulling a ban of the short-form video app because of alleged national security risks. Concerned regulators worry TikTok’s parent company, ByteDance, shares private user data with the Chinese government. A TikTok ban has been proposed before. In 2020, the Trump administration publicly mulled banning the Chinese app and banned it on many government devices. 

TikTok transformed into an ecommerce powerhouse

Since 2020, TikTok has become more popular among U.S. users. The app reached 150 million monthly active users in March 2023, up from 100 million in 2020. In that period, TikTok became a shopping platform for many users, prompting retailers to spend big on advertisements. TikTok was charging up to $2 million per day for ads taking over its homepage in 2021, Bloomberg reported. In 2022, TikTok rolled out a shopping feature in the U.S. and debuted plans for U.S. fulfillment centers, signaling plans to further cement its role in ecommerce.

A TikTok presence is particularly important for retailers looking for young consumers. In 2022, 83% of U.S. teens used TikTok at least monthly. 16- to 25-year-olds spend three times as much time on TikTok as on the next most popular social media website, according to September 2022 data from Measure Protocol.

TikTok is ThredUp’s smallest social platform

Secondhand apparel marketplace ThredUp has an active TikTok account of nearly 31,000 followers. It regularly posts memes, videos describing the harms of fast fashion, and collaborations with influencers like Nava Rose, who has nearly 6 million followers. Over Valentine’s Day, ThredUp used Rose’s videos to direct viewers to the “Dump fast fashion” shop of items Rose curated. ThredUp uses AI to surface similar items to the ones Rose selected.

For Noelle Sandler, chief marketing officer at ThredUp, TikTok is just one avenue to reach customers.

“We have a nice collection of platforms and content that we’re sharing across,” including Instagram Reels and YouTube, she told Digital Commerce 360. Though ThredUp’s TikTok audience is engaged, she said, it’s the smallest of the retailer’s social networks. A TikTok ban would be a blow, but not a huge one.

“I’m hopeful that TikTok gets to stay,” she said.

But if it doesn’t, she said, she believes influencer content will continue to perform well on other platforms.

Shein benefitted from organic TikTok videos

Fast fashion retailer Shein is one of the brands most closely associated with TikTok, but global head of strategy and corporate affairs Peter Pernot-Day brushed off concerns about a possible ban.

Shein ranks No. 12 in Digital Commerce 360’s database of the top online retailers in Asia.

With the help of TikTok and the thousands of user-generated “Shein haul”  videos, the brand became the most-visited apparel retailer website in the world, according to SimilarWeb. Though TikTok deserves at least partial credit for making Shein a household name in the U.S., the company doesn’t view TikTok as more essential than any other advertising method.

“It wasn’t so much influencer strategy as it was organic,” he said, as users who weren’t paid influencers posted their Shein purchases online in hopes of gaining followings.

“We‘re a consumer of advertising platforms. We’re active on Snap, Meta, Google ads,” TikTok is just one more place to buy ads, Pernot-Day said. He compared it to Shein’s new billboards in the Paris subway, as another way to reach customers where they are. If TikTok is banned, though, Shein might lose some of that organic awareness cultivated online.

A TikTok ban would be disappointing for Pacsun

Clothing brand PacSun is active on TikTok, with 2 million followers. The retailer prides itself on being on the cutting edge of ecommerce technology, from working with virtual influencer Miquela to creating a shoppable Metaverse store in Roblox. PacSun was also one of a handful of retailers to test out in-app checkout in TikTok in the U.S., co-CEO Michael Relich said.

PacSun ranks No. 252 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Like Shein, PacSun initially saw TikTok as a venue for organic content made by users who just wanted to show off their purchases. By 2020, PacSun was promoting user-generated content with hashtag challenges.

“Wherever the customer is, we want to be there,” Relich said, stressing the importance of remaining relevant with Gen Z and Gen Alpha customers. For PacSun, that includes TikTok, and he would be “disappointed” in a ban. 

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Friend said on the retailer’s earnings call March 21 for the fiscal third quarter ended Feb. 28, 2023, that Nike Digital sales grew 24%. That, plus 19% growth at Nike physical stores, led to 22% Nike Direct growth.

Nike Digital refers to sales through the retailer’s websites and apps. Nike Direct refers to its direct-to-consumer sales.

Third-quarter total revenue grew to $12.39 billion. That’s up 14% compared with the prior year’s third quarter. Nike Direct sales in the quarter reached $5.3 billion. That’s up 17% year over year.

Digital sales for the retailer’s namesake brand increased 20% year over year. Nike-brand revenue totaled $11.766 billion, with Converse-brand sales accounting for the remaining $612 million.

Nike ranks No. 10 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Nike Digital sales growth started with Amazon exit

The retailer stopped its first-party sales on Amazon.com in December 2019.

Less than a year after exiting the marketplace, online sales increased 75% in the retailer’s fiscal Q4 ended May 2020. Online sales were approximately 30% of total revenue, Nike reported at the time. Nike Digital sales had reached $5.5 billion for the full year.

And that trend has been ongoing, said Jim Corridore, senior insights manager at Similarweb. Similarweb, a digital intelligence platform, measures web traffic for more than 100 million websites.

He told Digital Commerce 360 that although Similarweb can’t see exactly what shoppers bought directly from Nike or the price point of those items, it can track how many people have gotten to the checkout page. Checkout traffic, or the number of users who have gotten to the sign-out page and received a “thank you” confirmation, grew 8.5% year over year for Nike in its fiscal Q1 2023, which ended in August. It also grew 20% from the company’s fiscal Q4 2022, which ended in May.

A Similarweb analysis of traffic to Nike’s main landing page, Nike.com, also showed 5.1% year-over-year growth for the fiscal first quarter ended August 2022. However, compared with the fourth quarter ended May, traffic was only up 0.02%.

“People are still interested in going on Amazon and buying Nike shoes, and there has emerged a market to fulfill those needs,” Corridore told Digital Commerce 360. “Third-party sales on Amazon have spiked to the point where it’s almost as high as first-party sales were in December 2019, when Nike exited the market.”

Amazon.com Inc. is No. 1 in the Digital Commerce 360 Top 1000 database. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Nike Digital sales breakout by region

North America

Nike Digital sales in North America grew 25%, though the retailer did not provide a dollar amount. That fueled 23% Nike Direct growth as the retailer’s total revenue in the region grew 27% to $4.913 billion. Friend attributed the growth to holiday sales.

Footwear accounted for $3.322 billion in the quarter. That’s up 31% from $2.532 billion in the year-ago quarter. 

For the nine months ended Feb. 28, total sales in the region reached $16.253 billion. That’s up 23% from $13.238 billion in the year-ago period.

Europe, Middle East and Africa (EMEA)

Nike Digital sales in the EMEA region grew 42%. Friend attributed that growth to Western European markets, specifically citing the United Kingdom. Nike Direct sales grew 29% in EMEA as the retailer’s total revenue grew 26% in the region to $3.246 billion. That’s up 17% year over year from $2.779 billion.

For the nine months ended Feb. 28, total sales in the region were $10.068 billion. That’s up 9% from $9.228 billion in the same period the year before.

The retailer has lowered fulfillment costs in the region by reducing split shipments and adding pickup points, Friend said. 

When it comes to membership and marketing, Friend said, “if we’ve got more members coming in through the top of the funnel who are more engaged and buying more frequently, we should start to see an improvement in our ROAS or return on ad spend from a digital perspective and give us a lot of confidence that we’re building a moat to be able to continue to serve and grow our digital business.”

Greater China

Nike Digital sales declined 11% in the quarter, though Nike Direct grew 3%. Friend attributed this to consumers shifting back to physical stores as China lifted COVID-19 restrictions. Revenue from the region was $1.994 billion. That’s down 8% from $2.160 billion in the year-ago quarter.

For the nine months ended Feb. 28, total sales in the region were $5.438 billion. That’s down 9% from $5.986 billion in the same period the year before.

This was the market in which Nike sales declined across the board in the third quarter, as well as year to date.

Asia Pacific & Latin America (APLA)

Nike Digital sales grew 23% and Nike Direct 22% as the retailer’s revenue increased 15% in the quarter in APLA.

The retailer’s equipment sales declined to $53 million. That’s down 15% from 63 million in the year-ago quarter. It’s also the only revenue decline in the quarter outside the retailer’s Greater China market.

Revenue in the region totaled $1.601 billion in the retailer’s fiscal third quarter. That’s up 10% from $1.461 billion.

For the nine months ended Feb. 28, total sales in the region were $4.735 billion. That’s up 11% from $4.273 billion in the year-ago period.

Nike Q3 2023 earnings summary

For the fiscal third quarter ended Feb. 28, Nike Inc. reported:

• Third-quarter revenue increased to $12.39 billion. That’s up 14% from $10.87 billion in the previous fiscal third quarter.
• Revenue in North America was $4.91 billion. That’s up 27% from $3.88 billion in the year-ago quarter.
• Nike Direct sales increased 17% to $5.3 billion.
• Nike Digital sales increased 20% and represent 27% of total sales.

For the nine months ended Feb. 28, Nike Inc. reported:

• Total revenue was $38.392 billion. That’s up 11% from $34.476 billion in the year-ago period.
• Total revenue in North America was $16.253 billion. That’s up 23% from $13.238 billion in the year-ago period. It’s also more than 50% greater than the revenue from the retailer’s next-largest market: Europe, Middle East & Africa.
• In EMEA, total revenue grew 9% to $10.068 billion. It was $9.228 billion in the year-ago period.

Percentage changes may not align exactly with dollar figures due to rounding.

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This year, growth came from hybrid marketplaces — those that sell goods they own along with goods from third-party sellers. Overall, marketplaces grew GMV by 2.9%, but hybrids like Amazon, Walmart Inc. and JD.com Inc. grew 7.2%, all well outperforming pure marketplaces like eBay, Wish.com and Alibaba’s Chinese marketplaces Tmall and TaoBao. Pure players’ GMV declined 0.9%.

Marketplaces are popular online shopping platforms, as consumers are attracted to the large number of products available — typically at lower prices. The world’s largest, operated by Alibaba and Amazon, dominate the industry. But there are a number of marketplaces, many of which sell products in a particular merchandise category, that are growing sales at a robust pace.

International online marketplace growth

International online marketplaces led growth this year. While Chinese online malls suffered from lockdowns, other international marketplaces in countries like Brazil and Russia had large growth as domestic sellers turned to local options amid supply chain woes and international conflicts. Two Russian operators, Ozon and Wildberries, were among the fastest growers in 2022 thanks to domestic sellers shifting to Russian-owned sites amid sanctions. Brazilian players MercadoLibre Inc. and Etsy-owned Elo7 also in the top 10 growers.

Despite declines, Alibaba’s TaoBao and Tmall lead third-party GMV of competitors globally. Amazon’s third-party GMV keeps it in third. But eBay’s decline lets Indonesian Shoppee make the top five.

New players keep coming

In the last decade, 35 of the Top 100 online mall operators accepted their first third-party sales. This includes a mix of pure players like sneaker seller StockX or grocer Mercato Inc. as well as traditional retailers opening up their online storefronts to third parties, like Sweetwater and Zalando.

US companies had flat GMV

Growth among U.S. online marketplaces was flat this year, with third-party GMV down 1.0%. Trends matched those of the global list, with hybrids faring better than pure marketplaces. Half of the Top 100 marketplaces are based in the U.S.

Still, among top U.S. companies, GMV hit $869.80 billion, accounting for more than a quarter of Top 100 marketplace GMV. Sneaker marketplace Flight Club grew fastest among U.S. marketplaces, with total GMV up 50% over last year.

Online marketplace trends

The bottom line:

• Top 100 marketplaces grew to $3.25 trillion in total GMV this year
• That’s more than 55% of global ecommerce spending

Marketplaces are a global phenomenon. Top 100 marketplaces are located around the globe:

• North America: 51
• Europe: 22
• Asia: 16
• Latin America: 7
• Middle East/Africa: 3

Top global marketplaces:

1. Taobao
2. Tmall
3. Amazon.com Inc.
4. JD.com Inc.
5. Shopee

Top U.S. marketplaces:

1. Amazon.com Inc.
2. eBay.com Inc.
3. Walmart Inc.
4. OfferUp
5. Houzz

Quick facts on U.S. marketplaces:

• $869.8 billion sold on U.S. marketplaces in 2023
• The median marketplace in the U.S. had 61.2% of sales from mobile devices
• Flight Club was the fastest-growing U.S. marketplace in 2022, with a 50% increase in GMV

About the Datababase
The 2023 Online Marketplaces Database provides more than 50 key financial, performance and corporate metrics on the world’s largest 100 marketplaces, including:

• Gross merchandise value (GMV) and growth of all products sold by marketplace platform, including inventory the marketplace operator owned and goods third-party sellers sold
• GMV and growth of goods third-party sellers sold on a marketplace platform
• Key marketplace operating metrics, including average ticket, conversion rate, number of sellers, number of SKUs and the fees/commissions the marketplace charges its sellers
• Share of sales from mobile devices
• Share of sales from U.S. customers
• Company information, including country of operation, marketplace business model type and the primary merchandise category
• Primary website features and payment options

The 2023 edition of the Online Marketplaces Database is available in two membership tiers: Basic Plus — priced at $1,095 per year — and an expanded Pro version for clients who want more financial metrics, multiple user licenses and data download capabilities.

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Senior representatives of the British online retailer spoke at Source Fashion, a conference connecting suppliers with retail buyers. Boohoo previously faced accusations of low wages and poor conditions at its factories or in its supply chain.

At the start of a panel event, several women shouted criticism before being led out by security staff.

Cheryl Chung, Boohoo’s former global head of corporate affairs, chaired the panel.

Boohoo is No. 28 in the Europe Database, Digital Commerce 360’s rankings of the largest online retailers in the region.

Protesters criticized labor practices

“How dare Boohoo take this platform to speak about ethics and industry collaboration,” shouted one woman. “Why aren’t your garment makers on this panel?”

The protester said Boohoo’s workers in Leicester received less than the minimum wage. Samuel Cliff, Boohoo’s head of ethical trading, denied the claim.

A 2020 labor scandal centered on Boohoo when some of the company’s U.K. garment suppliers paid less than minimum wage while skimping on safety steps at factories in Leicester. Boohoo overhauled its rules following the news, cut off hundreds of suppliers and launched an independent review.

Last year, an investigation by The Times said staff at Boohoo’s Burnley facility worked in grueling conditions, walking sometimes the equivalent of a half-marathon per shift. Boohoo refuted the claims at the time.

Another protester complained about garment workers’ pay in comparison with Boohoo CEO John Lyttle, who could receive a bonus of 200% of his salary under a pay plan. Another complained that workers in Boohoo’s warehouse in Burnley cannot take frequent toilet breaks.

Chung asked for the speakers to be allowed to speak and respond to the protestors.

“Do we want to be challenged? Absolutely. Should every business be challenged? Absolutely. Do people have the right to free speech? Completely,” she said.

Fast fashion brands keep growing

Boohoo is a competitor to other fast fashion brands Temu and Shein, both based in China. Temu just launched in September and announced its presence with two Super Bowl ads showing off its trendy clothes and low prices. Meanwhile, Shein expanded its U.S. presence to offer faster shipping to American customers.

Shein Group Ltd. is No. 36 in the Asia Database, Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales.

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PDD Holdings Inc.’s service ran two 30-second spots featuring a trendy shopper twirling and dancing to phrases like “Cha-ching! I feel so rich, oh yeah.” Like Shein, it has gained a reputation for cut-rate pricing and fast delivery. PDD, formerly known as Pinduoduo, said it’s also giving away a total of $10 million to users via online sweepstakes.

Temu launched in September and rapidly scaled Apple’s U.S. app store. It’s now considered a serious competitor to Shein, the fast-fashion phenomenon that has also fired up American shoppers. But PDD, which plans to launch Temu in Canada as soon as this month, offers a broader range of goods from pet supplies to groceries.

Temu momentum and Asia ecommerce leaders

Many apps that enjoy initial success fade away over time as incumbent leaders ramp up competitive pressures. Owner PDD is known in China for making inroads into markets major players cover less, including Alibaba Group Holding Ltd., such as lower-income rural areas.

Alibaba owns and operates Taobao and Tmall, which hold the No. 1 and No. 2 spots in the ranking for Digital Commerce 360 Online Marketplaces. Alibaba also owns Lazada Group, which is No. 2 in the Asia Database, Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales.

Shein Group Ltd. is No. 36 in the Asia Database.

Getting its name from “Team up,” Temu wants to replicate PDD’s social commerce model in North America. If it sustains its initial momentum, the app could join just a handful of Chinese-owned internet services to have succeeded in the U.S., including Alibaba’s Aliexpress and ByteDance Ltd.’s TikTok.

Super Bowl spots like Temu’s “Shop Like a Billionaire” typically cost millions to produce and air. However, many brands have considered them essential exposure over the years. Analysts expected Sunday’s game between the Philadelphia Eagles and Kansas City Chiefs expected to draw tens of millions of viewers. The Temu ad ran twice on Sunday, during the first and third quarters.

“Through the largest stage possible, we want to share with our consumers that they can shop with a sense of freedom because of the price we offer,” PDD said in a statement.

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In a letter dated Feb. 9, Republican Bill Cassidy of Louisiana and Democrats Elizabeth Warren of Massachusetts and Sheldon Whitehouse of Rhode Island sought details about the company’s procurement process and its links to Xinjiang, a region of China whose products are banned for import into the U.S. by federal law. That law designates goods from the region to be products of forced labor — a designation the Chinese government has disputed. Xinjiang has become infamous for its mistreatment of Uyghur Muslims. The letter requested a response within 30 days.

Letter cites Bloomberg report about Shein forced labor

Shein told Bloomberg in an emailed statement Feb. 9 that it has “zero tolerance against forced labor.”

The congressional letter to CEO Xu Yangtian cites a November Bloomberg report that used laboratory testing to determine that garments ordered from Shein on two occasions last year were made of cotton from Xinjiang. At the time, Shein didn’t dispute Bloomberg’s test results or say whether it uses cotton from the region. But it said it takes steps in all its global markets “to ensure we comply with local laws and regulations.”

The senators’ letter asked Shein to provide details about that process, as well as how it ensures that none of the cotton it sends to the U.S. originates in Xinjiang.

Shein said it had engaged third-party agencies to conduct regular, unannounced audits of supplier facilities.

“Shein requires that our suppliers purchase cotton from Australia, Brazil, India, U.S. and other approved regions,” the statement said. “We have built and implemented a traceability management system that gives visibility to the origins of cotton throughout the entire production process.”

Shein Group Ltd. ranks No. 36 in the 2022 Asia Database, Digital Commerce 360’s rankings of the largest e-retailers in the region by web sales.

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Asked where they made their last purchase from a retail website outside their home country, 27% of consumers said Amazon while 17% cited Alibaba’s AliExpress marketplace, which mainly offers inexpensive goods from Chinese manufacturers. The results are based on an October 2022 survey of 33,009 consumers in 39 countries who had made at least one cross-border online purchase in the previous three months.

Amazon’s share ticked up from 25% in the similar survey IPC conducted in 2019, the last year before the COVID-19 pandemic struck. AliExpress was down slightly from 20% in the 2019 survey.

EBay declined to 9% in 2022 from 14% in 2019. Wish, a U.S.-based marketplace that features mostly inexpensive goods from China and elsewhere, fell to 5% from 11%. Two retailers not mentioned in the 2019 IPC report were among the leaders in the latest survey: Shein Group Ltd., the Chinese fast-fashion retailer, accounted for 6% of most-recent purchases. German online apparel merchant and marketplace operator Zalando accounted for 3%.

Amazon is No. 3 in the Digital Commerce 360 Global Online Marketplace Database, which ranks marketplaces by total value, or gross merchandise value of sales. EBay is No. 5, AliExpress No. 15, Wish No. 16 and Zalando No. 24. Shein is No. 36 in the Digital Commerce 360 2022 Asia Database, which ranks Asia-based retailers by their online sales.

Why the US attracted a smaller share of cross-border ecommerce

Despite Amazon’s strong showing, U.S. e-retailers overall are losing ground in cross-border ecommerce. The U.S. accounted for only 10% of survey respondents’ last cross-border online purchase in 2022. That’s down from 11% in 2019 and 15% in 2016, according to IPC.

“The strong U.S. dollar made U.S.-made goods more expensive in recent years, which accounts for part of the decline,” says Jim Okamura, digital practice lead at retail consulting firm McMillanDoolittle and co-founder of the Global Ecommerce Leaders Forum, which brings together retailers and brands that sell internationally online. “Plus, the rapid deployment of ecommerce for any brand or retailer who wanted to survive during COVID greatly expanded domestic choice to a level where consumers had less need to go out of country for certain products.”

China led the way, accounting for 30% of shoppers’ last foreign online buy. That was down from 36% in 2019, but an increase from 26% in 2016.

Germany gained ground during the pandemic, increasing to 14% of shoppers’ last cross-border purchase. That’s up from 12% on 2019. The U.K. went in the other direction, slipping to 10% in 2022 from 13% in 2019. Those shifts likely reflect European Union shoppers buying less from the U.K. post-Brexit, now that they have to pay customs duties that are not charged by retailers in EU member states, such as Germany.

Consumers will shop more online, but not necessarily from the U.S.

Looking ahead, 74% of shoppers said they expect to purchase more from domestic retail websites, including 24% who said they expect to purchase much more. Meanwhile, only 6% expect to buy less (2% much less). But U.S. retail websites won’t see as much growth, as only 39% expect to shop more with U.S. e-retailers (8% much more), while 35% will shop less (16% much less.)

The biggest increase is in shoppers saying they will buy more from neighboring countries: 58% say they will buy more from retail websites in countries next door, including 10% much more, and only 11% less (3% much less).

“In countries with less-developed ecommerce, where there isn’t sufficient selection or competition among sellers, consumers look to neighboring countries where the ‘grass is greener’ and therefore more attractive to shop there,” Okamura says.

Shoppers buy apparel and footwear from international websites

Clothing and apparel are most frequently purchased cross-border. 36% cited them as the products they bought during their most recent cross-border purchase. That was followed by consumer electronics and accessories (20%) and personal care and beauty (16%).

“The category to watch is personal care and beauty — the  combination of greater consumer demand and more cross-border sellers should see this grow,” says Kent Allen, principal at consulting firm The Research Trust and co-founder of the Global Ecommerce Leaders Forum. “It’s also a category where social content is exploding and new direct-to-consumers brands, for example, ‘clean beauty’ brands free of harmful chemicals and wellness brands, should drive above-average growth.”

Consumers in the Americas were most likely to buy clothing and footwear from retail websites in other countries. Meanwhile, South Americans frequently buy consumer electronics cross-border and Asian shoppers buy personal care products, IPC says.

Most cross-border ecommerce purchases are relatively inexpensive

Other findings from the IPC survey include:

• 50% of purchases were valued at 50 euros ($55) or less. Only 6% of purchases were above 100 euros in value.
• 37% of respondents said they received their last cross-border purchase within five days, but 38% said it took 10 days or longer.
• 79% of cross-border shoppers were made aware of any customs fees at the time of purchase. 50% paid those fees while making the online purchase, 30% while the package was en route and 16% upon delivery.
• 10% returned all or part of their most recent cross-border purchase. The return rate was highest in China (25%), New Zealand and Switzerland (both 22%) and the U.S. (21%). 75% said their return was free, with the highest rate of free returns provided by Zalando, Amazon and Shein.
• 73% of consumers said they would wait a few days longer for a package to arrive to reduce the environmental impact of the delivery, including 30% who strongly agree with that statement. But 72% agree (29% strongly) that it’s the responsibility of the online retailer, not the consumer, to cover the costs of sustainable delivery.

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Online merchant Sportitude needed to keep its fraud at bay, but its costs continued to increase. After its fraud prevention costs doubled in 2020 compared with 2016, the Australian-based sports footwear and apparel merchant decided to switch its technology vendors, says Roumen Staykov, CEO of Sportitude.

Sportitude chose ClearSale, as the vendor’s pricing model differed from its previous provider, and its costs decreased 55% in 2022 compared with its 2020 pricing, Staykov says.

“It was not a small amount. It was well worth the move,” Staykov says.

Roumen Staykov, CEO of Sportitude

Sportitude has ClearSale’s performance-based pricing model, in which the vendor charges a fee for every approved transaction that it processes. The percent per transaction is smaller than a credit card processing fee (which is typically 1%-3%), Staykov says, without adding more or disclosing its previous fraud vendor.

“We treat it as the cost of doing business,” Staykov says.

False positives decrease

In addition to the decrease in cost, the number of transactions that ClearSale flags as possible fraud has decreased as well. This saves the merchant time, Staykov says, as the retailer has fewer transactions to verify.

“It’s a win from many angles,” he says.

Both vendors appropriately flagged fraudulent orders, and Sportitude’s rate of fraud attempts and chargebacks has remained about the same, he says.

Of all of Sportitude.com’s credit card transactions, about 1%-2% are flagged for fraud. Of those, more than 90% are actually fraud, Staykov says. This is good, he says, as it means it’s not getting that many false positives.

This is beneficial for both shoppers — as it is not inconveniencing too many shoppers with authenticating their purchase — and the merchant. For example, once the software flags an item as potentially fraudulent, two senior members of Sportitude’s customer service team will manually review each transaction.

“It used to be a lot more time,” Staykov says. “It would be a larger percent of that person’s role. The more frequently it occurs, it takes a lot more time out of day, follow up and investigating.”

Verifying if flagged orders are fraud

One test the merchant conducts to confirm credit card ownership is processing a refund. Sportitude employees will process a return for a few cents on the credit card and have the purchaser confirm the refund amount. Half the time, the purchaser never responds, in which case, Sportitude knows the transaction was fraudulent and will decline the purchase.

Sportitude has played around with faster ways to confirm credit card ownership — as processing a refund takes a few days —  but it has found this is the best balance of catching fraud while maintaining good customer service. Luckily, it’s a narrow group of legitimate customers that have to go through this process, and most are understanding when the retailer frames it as a “security step,” he says.

With Sportitude’s previous fraud-prevention provider, a lot more transitions were flagged for fraud that turned out to be legitimate. This inconvenienced more of its legitimate customers to authenticate their purchases, plus took more of Sportitude’s time. Now, its customer service representatives can handle more of those typical issues rather than having to spend large chunks of their day reviewing fraudulent orders, he says.

When a chargeback occurs

If Sportitude does confirm a transaction that winds up to be fraud, this will show up as a chargeback from the bank. What this means is that the criminal used stolen credit card details and that card owner saw a purchase that wasn’t hers on the statement, and had the credit company reverse the charges.

If a chargeback does go through, Sportitude can go into ClearSale’s portal and note which transaction wound up being approved even though it was fraud. This achieves two things: first, ClearSale will refund the purchase to Sportitude if it provides the shipping notification and the chargeback notification.

Second, ClearSale will update its artificial intelligence model that its technology uses to flag potentially fraudulent orders. When a retailer notes a nefarious transaction, its model then learns from the markings of this transaction to hopefully catch it in the future, says Salvador Tello, global senior, enterprise presales, at ClearSale.

ClearSale uses a machine learning model to assess if transactions are risky or good. Like most retailers, it also has a manual review team that will look at orders that its technology flags to then approve or decline. These fraud analysts use eight external sources that are “very powerful” in helping dig into different elements of the transaction’s fraud score before making a decision, Tello says.

For example, analysts can use proxy piercing technology to determine if the purchase is coming from a consumer who is disguising her IP address and using a proxy server. Another example is using device fingerprint technology to identify computers placing transactions. In addition, analysts can also look at ClearSale’s own tracking technology about customer behavior across all of its clients.

One example of an error that the artificial intelligence tool may flag as possible fraud that a human could verify is a typo in the address or email name, says Tello. Even though the information is incorrect, a human could easily see the error. Humans can also gain additional insights from analyzing social network activity or doing a reverse phone and address lookup. All this information is later fed into ClearSale’s artificial intelligence model.

Overall spikes in fraud

It’s important to catch a fraudulent order not only for the cost implications, but also because it could lead to more fraud, Staykov says.

Sportitude typically notices a spike in fraudulent activity if one or two chargebacks slips through, he says. Criminals may be using a new pattern of transactions that got through that the AI model hasn’t caught up to yet, and then criminals will exploit it as much as possible until the retailer reports the issue and the technology catches up, Staykov says.

“If you catch the transition quickly and nip them in the bud, it definitely causes the decline,” Staykov says.

The retailer also notices a spike in fraud during high-volume sales periods. For Sportitude, that is during November and May, which is when many retailers in Australia host sales, he says.

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Prices plunged on the Patek Philippe and Audemars Piguet timepieces.

The company eliminated 65 jobs, co-CEO Tim Stracke said. It shifted its operations focus in the U.S. to Miami from New York, and to Japan from Hong Kong in Asia. It also offered severance packages to some workers at its headquarters in Karlsruhe, Germany.

The reductions underscore the losses faced by dealers who purchased expensive watches during an unprecedented price surge in 2021 and early 2022. Since then, values for the most desirable models have plunged on secondary markets and on resale platforms such as Chrono24.

“We have seen very volatile, you could call it a roller-coaster situation, in the industry,” Stracke said.

The decline in secondhand prices for the top brands has been linked to rising inflation, slowing economic growth in the U.S. and Europe and the crash in cryptocurrencies. The bursting of the crypto bubble erased paper profits for some investors who had turned to luxury watches as a new speculative asset class.

The supply of previously rare pre-owned watches on secondary markets has also increased significantly, driving down values.

Economic realities affecting online marketplace Chrono24

Chrono24 hired about 100 workers last year amid the boom. Stracke said the value of transactions conducted on the platform increased about 28% in 2022. However, growth slowed in the second half.

“We are adjusting to current economic realities,” Stracke said.

The Subdial50, an index compiling prices of the 50 most traded watches by value, consisting mostly of Rolex, Patek Philippe and Audemars Piguet models, has dropped 33% in the past 12 months. UK-based Subdial is a watch trading platform and seller of second-hand luxury timepieces.

Among sought-after pre-owned models, the price of the Rolex Cosmograph Daytona in platinum has fallen 28% to about £83,000 ($102,679) in a year, the Subdial data shows. The Patek Philippe Nautilus 5711 with a blue dial has dropped 35% to about £84,000, while an Audemars Piguet Royal Oak with a blue dial has tumbled almost 29% to about £57,000.

Chrono24, founded in 2003, has about half a million watches for sale on its platform at any given time. They come from some 3,000 dealers and 30,000 private sellers.

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