The firm is in the early stages of consideration. The IPO’s size has also yet to be determined, according to people familiar with the matter. The business group is in talks with banks that could potentially help prepare for the IPO next year, said one of the people. The person asked not to be named as the matter is private.

The unit, which competes with rivals such as Amazon.com Inc. in markets outside China, is one of six parts that Alibaba is splitting into. Valuations for the international business units vary: Morgan Stanley in March priced “international retail” units including Lazada and Trendyol at roughly $29 billion. Meanwhile, a CICC analyst report from the same month valued the firm’s international division at about $39 billion. In recent quarters, however, growth has been volatile in the face of global recessionary fears.

If it goes ahead, the Alibaba unit would join a number of high-profile Chinese firms including fast-fashion leader Shein seeking to tap American capital even as tensions rise between the world’s two largest economies. A listing in the U.S. could help the business — formally Alibaba International Digital Commerce Group, or IDCG — attract global investors wary of putting money directly into China.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. The database ranks marketplaces by total value, or gross merchandise value of sales. Alibaba also owns Tmall (No. 2).

Amazon is No. 3 in the Global Online Marketplace Database. It’s also No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales.

Shein is No. 36 in the Digital Commerce 360 2022 Asia Database, which ranks Asia-based retailers by their online sales.

Alibaba empire considers IPOs

Alibaba in March unveiled plans to break up its empire into units such as ecommerce, logistics and the cloud, with each business potentially exploring fundraising and an IPO at an appropriate time. The company will consider gradually giving up control of some of the businesses, CEO Daniel Zhang said at the time, but declined to specify a timeline for any Alibaba IPOs.

IDCG includes:

• Southeast Asian online mall Lazada
• AliExpress, popular in Russia, Latin America and parts of Europe
• Trendyol in Turkey
• Daraz in South Asia
• Business-to-business marketplace Alibaba.com

In the final three months of 2022, the combined orders of Lazada, AliExpress, Trendyol and Daraz grew 3% from a year earlier, led by Trendyol. The international unit accounted for roughly $9.5 billion or 7% of Alibaba’s revenue in the last fiscal year and is headed by Jiang Fan, the former president of Alibaba’s domestic online retail businesses Taobao and Tmall.

Other parts of Alibaba’s empire have already begun moving ahead with spinoffs. Cainiao Network Technology Co., the logistics arm of Alibaba, as well as Freshippo, its grocery chain, have started preparations with banks for IPOs in Hong Kong.

Deliberations around an IPO are very preliminary and the situation may change, the people said. IDCG said in response to queries from Bloomberg that currently, there is no IPO plan.

Alibaba has in the past explored splitting off Lazada. The unit, bought in stages from Rocket Internet SE, is considered one of the Chinese firm’s most high-profile international brands. It competes with Amazon and Sea Ltd.’s Shopee in Southeast Asian markets such as Thailand, Malaysia and Singapore.

In 2022, Alibaba discussed raising at least $1 billion for Lazada before calling off negotiations with potential investors when talks bogged down over its valuation. It had aimed to secure the funding as a precursor to a spinoff. Alibaba has since mothballed the fundraising and injected additional funds into the company instead.

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So, too, is staying abreast of fraud trends. While B2B fraud does not receive as much media exposure as consumer-related fraud, it is a prevalent and growing problem nonetheless that sellers need to manage effectively.

A new report from The Merchant Risk Council, Cybersource and Verifi, 2023 Global Ecommerce Payments & Fraud Report, notes that North American merchants spend 10% of their ecommerce revenue on average to manage payment fraud. The report also says the percentage of ecommerce revenue lost to payment fraud is 2.4% in North America and 2.9% globally, down from 3.6% a year ago for both North America and worldwide.

The report is based on a survey of 1,072 merchants between November and December of 2022 across North America, Latin America, Europe and Asia Pacific (APAC), representing a broad range of annual ecommerce revenue.

66% of merchants accept digital wallets

On the payments side, bank transfers, digital wallets and cards continue to be the most widely accepted payment methods among ecommerce merchants, with 67% accepting bank transfers/direct debit, 66% accepting digital wallets, and 66% accepting payment cards, up 9% from a year earlier, the report says.

In addition, 50% of respondents accept mobile payments, such as Amazon one-click, down 7% from a year earlier, and 45% accept cash. Another payment option rapidly gaining traction is “buy now, pay later” (BNPL) loans. More than one-third (36%) of ecommerce merchants now offer BNPL, up from about one-quarter of respondents in 2021.

The primary reason ecommerce merchants add new payments is to improve the buyer experience. Other reasons include reaching new customer segments or markets. At the same time, about 90% of ecommerce merchants encourage customers to pay via preferred methods, primarily to minimize fraud risks, maximize how quickly funds become available, and lower processing costs.

Another key takeaway from the report is that ecommerce sellers continue to use multiple payment processors and banks to support omnichannel payments. On average, merchants rely on four payment processors or gateway connections, and three “merchant acquiring” banks to support omnichannel payments. Merchant acquiring banks, or merchant acquirers, manage merchants’ accounts for funds received through credit card payments. The top reasons why sellers utilize multiple merchant acquirers include operational flexibility, geographic coverage, and payment authorizations.

The deployment of new customer-facing and internal payment management approaches by ecommerce merchants is prompting them to track more of the key performance metrics (KPIs) around payments. The top four payment KPIs tracked by ecommerce merchants are payment success rate (50%), revenue (48%), cost of payment (45%), and authorization rate (34%). Respondents could cite the tracking of more than KPI.

Machine learning is more common in fraud management

Regarding payment authorization, ecommerce merchants tend to employ two to three different approaches or techniques. Over the past year, the use of machine learning to fine-tune fraud management, as well as intelligent payment routing, have seen increased adoption, with about 4 in 10 merchants using each of these approaches, up from 35% a year earlier, according to the report.

“While fraud management has historically been seen as a separate function to payment processing, sophisticated fraud management is also seen today as a means of optimizing payment authorization through its emphasis on lowering of false positives and even influencing issuer acceptance by achieving lower merchant fraud rates,” the report says.

On a global basis, merchants continue to spend about one-tenth of their annual ecommerce revenue on managing payment fraud, a figure that has stayed consistent for the three consecutive years the study has been conducted.

“We have also seen a notable decline in the share of merchants who tell us that they ‘don’t know’ or ‘don’t track’ this metric – from 30% in our 2021 study to 23% this year – suggesting that merchants are keeping a closer eye on fraud management spending as time goes on,” the report says.

On the plus side, respondents reported improvement across key fraud management metrics, such as the share of ecommerce revenue lost to fraud, domestic order rejection and fraud rates, and the share of ecommerce orders that led to fraud-related chargebacks. The improvement was most evident in North America, where spending on fraud management rose significantly in 2021.

At the same time, anti-fraud spending rose significantly in APAC and Latin America, as well as among small businesses, suggesting that these segments may hope to see improvement in their fraud metrics in the coming year.

Small and mid-sized merchants spend more to manage fraud

Small-and-medium-sized ecommerce merchants that generate between $50,000 and $5 million in ecommerce annually were among the most active spenders on fraud management solutions. Merchants in this category doubled their estimated fraud management spending over the past year, from 6% to 12% of ecommerce revenue, the report says.

Increasingly, ecommerce merchants are looking to reduce the manual review of suspect orders. About six in ten respondents said they are seeking to reduce or eliminate manual reviews as part of their fraud management strategy. Merchant size plays a significant role in a merchant’s decision to eliminate manual reviews. Small-and-medium-sized businesses are most likely to attempt to reduce manual reviews, while larger merchants are more inclined to continue the process, the report says.

Regarding the type of fraud that ecommerce merchants are experiencing, the top four   are phishing/pharming/whaling, friendly fraud/chargebacks, card testing,, and identity theft.

Phishing/pharming/whaling fraud showed the largest increase in attacks in 2022, with 43% of respondents saying they experienced such, up from 35% a year earlier.

Friendly fraud is also a significant problem, with 34% of respondents saying they experienced it in 2022. In addition, 62% of respondents reported an increase in friendly fraud disputes in 2022. It costs merchants $35 to manage friendly fraud for every $100 in disputes, the report says.

Overall, 18% of all fraudulent disputes should be attributed to first-party misuse, the report says.

When it comes to detecting fraud, the report says the leading tools ecommerce merchants rely on are:

• Credit card verification services. 55%;
• Identity validation / verification services. 50%;
• Two-factor phone authentication. 44%;
• 3-D Secure authentication. 39%.

Respondents could cite the use of more than one fraud detection tool.

Despite the ongoing challenges ecommerce merchants face in manageming payments and fighting fraud, ecommerce merchants are making meaningful progress on both fronts, the report says.

Peter Lucas is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy.

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H&M is No. 11 in the Europe Database, Digital Commerce 360’s ranking of the region’s largest online retailers by web sales.

H&M’s resale market will launch immediately

The retailer will start its first resale platform in the U.S. market, H&M Pre-Loved, on March 14. The launch includes 30,000 items of used women’s and kids’ clothing and accessories on hm.thredup.com. The Swedish apparel company is the largest retailer to sell used clothing and accessories via ThredUp’s resale platform. ThredUp already works with several dozen other brands and has launched resale programs with J. Crew and Kate Spade in 2023.

“We need to take responsibility for the impact fashion has on climate and the environment,” Abigail Kammerzell, head of sustainability for H&M North America, said in a statement. Business models such as this can help “reduce and limit this negative impact, while continuing to deliver fashion and style for our customers,” she said.

In February, H&M announced a program to sort used clothing in Europe for resale and recycling.

Customer demand is unclear

It’s too soon to say whether resale programs will ultimately lead firms to produce less clothing because of declining demand for new goods.

Digital Commerce 360 asked customers about these preferences in a September 2022 poll of 1,064 shoppers. 13% said that they had purchased a previously owned product from an online consignment seller. 14% said they had made purchases based on a retailer’s sustainability policies. About one-third of respondents said they never used these services and had no plans to in the next year.

For companies such as H&M, it can be easier and less costly to use the existing technology and logistics of resale platforms powered by ThredUp and its competitors, rather than creating a service on their own. “Resale-as-a-service” is a source of revenue for ThredUp in addition to what it earns selling used items on its own marketplace website. ThredUp doesn’t disclose how much revenue it generates selling through its business model.

H&M didn’t reveal its forecast for potential revenue from the sale of its used items. Many companies that have launched resale platforms recently have said that initial revenue is likely to be minimal but that it will grow over time as the market expands.

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Temu, a shopping platform owned by Chinese ecommerce heavyweight PDD Holdings Inc., set a lofty sales target for its North American business last month: report at least a single day of gross merchandise value that tops Shein’s between now and Sept. 1. That target would mark the anniversary of its entry into the U.S. market, according to people familiar with the matter, who asked not to be identified because they’re not authorized to speak publicly.

It’s the first step in Temu’s broader plans to dominate the online shopping landscape. PDD, which made successful inroads into the less-covered lower-tier segments of a Chinese market dominated by Alibaba Group Holding Ltd. and JD.com Inc., is now hoping the fledgling app will drive a longer-term overseas business.

JD.com is No. 1 is in the Asia Database, Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Alibaba also owns Lazada Group, which is No. 2.

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.

Shein, Temu battle for cross-border ecommerce dominance

Temu views Shein as its biggest rival in the near-term. It wants to surpass its dominance within the next few years, said the people. But the firm, which sells anything from clothes to kitchen supplies, is ultimately aiming to take on global behemoths Amazon.com Inc. and eBay Inc., they said.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

EBay ranks No. 5 in the Online Marketplaces database.

Positioned for growth

Temu’s growth is already surging. It’s been the most downloaded app on Apple’s U.S. app store for much of the past few months. The firm achieved about $500 million GMV in the U.S. during its first five months of operation, according to data analytics firm YipitData. Data shows sales were almost $200 million in January alone. Temu launched in Canada, its second market, in February.

Temu is betting that a huge marketing campaign will drive sales growth. The company made its Super Bowl advertising debut in mid-February, running two 30-second spots that featured a shopper twirling around and dancing in an array of outfits. Super Bowl ads typically cost millions of dollars to produce and air. It’s also rolling out social marketing practices that are similar to Pinduoduo’s strategies in China. That includes offering discounts, cash rewards and free gifts to customers who refer their friends.

The strategy is bearing fruit, with visits to the Temu website surpassing Shein in January. If Temu is able to sustain its momentum, it will also join just a handful of Chinese-owned internet services to have succeeded in the U.S. Those include Alibaba’s Aliexpress and ByteDance Ltd.’s TikTok.

Aggressive prices

The app’s formula of ultra-low prices and flash sales has proven attractive at a time consumers are tightening their belts, said Abe Yousef, a senior analyst at app-tracker Sensor Tower. Temu’s been downloaded 24 million times since inception. It has gathered about 11 million monthly active users as of January. That’s up 47% from the December shopping season, Yousef estimates.

“Given the current challenging macroeconomic environment and the backing of parent PDD Holdings, Temu is well-positioned to continue its aggressive growth strategy among U.S. consumers,” he said.

Comparative data on closely held Shein’s finances are difficult to obtain. However, the scant details that have emerged indicate Temu’s target requires its rapid expansion to accelerate.

Fast fashion and Shein’s role in the US

Shein already dominates the U.S. fast-fashion market. It far surpasses rivals Zara and H&M, according to YipitData. The Financial Times reported last month that Shein predicts global GMV will grow to $80.6 billion in 2025. That’s up 174% from last year. Revenue could increase to $58.5 billion in 2025, up from $22.7 billion last year, according to the report, which cited a management presentation shown to investors.

Temu staff haven’t been given a daily sales target — it’s a figure held tightly among senior managers. They’ve instead been told to shift from growing the base of users for their app and website to devising ways to boost how much customers spend, the people said.

The company did not respond to requests for comment.

Shein’s rapid success has paved the way for a raft of newcomers wanting to get into the booming ecommerce market, but Temu is widely viewed as the most serious competitor. Temu is already headhunting Shein employees and targeting suppliers, while also leveraging the deep pockets, extensive supply chains and expertise — particularly in consumer data that allows rapid changes in offerings — of parent PDD, which already controls roughly 13% of Chinese online retail through its Pinduoduo platform.

While both firms are synonymous with cheap products, Temu operates more like a marketplace than a self-run brand such as Shein. It doesn’t handle design and production. Instead, it recruits suppliers to offer a list of products. Temu then selects from them and allows a store to open on its platform. After sellers send products to Temu’s warehouses in China, the company takes care of delivery, marketing and promotion, and after-sales services.

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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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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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Maersk and the Berlin-based start-up Cozero are developing analytics tools to improve greenhouse gas (GHG) emissions visibility for international parcel deliveries in Europe. Since entering the European ecommerce logistics sector in 2021 with the acquisition of B2C Europe, Maersk has delivered millions of international parcels for European online sellers. Due to a higher supply chain complexity, international parcels usually have a larger GHG footprint than domestic parcels, Maersk says.

Maersk European ecommerce

B2C Europe is a 20-year-old European logistics company that focuses on business-to-consumer (B2C) parcel delivery services in Europe. It also focuses on cross-border deliveries. Maersk acquired it in October 2021.

Maersk has already successfully tested Cozero’s platform with customers. It will now roll out the platform to more ecommerce clients, the company says. The project is key to Maersk’s strategy of providing end-to-end visibility to its customers and will eventually be integrated into Maersk’s existing Emissions Dashboard, providing it with a new parcel delivery emissions module.

Christian Grosse, e-delivery chief product officer, Maersk

Since 2021, Maersk has developed the Emissions Dashboard to provide a one-stop shop to consolidate emissions data across all carriers and transport modes. Smart Freight Centre (SFC) accredits it with an industry-leading calculation methodology that is in conformance with the Global Logistics Emissions Council (GLEC) framework.

“Our customers in the international ecommerce industry by design have large gaps in their GHG footprint visibility due to the high number of parties involved in the first-, middle- and last-mile delivery process,” says Christian Grosse, Maersk e-delivery chief product officer in Europe.

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There are complexities to be sure, but the growth of cross-border ecommerce has led technology providers, fulfillment services, online marketplaces, accountants, and advisory firms to beef up their services for retailers selling globally.

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