Gaurav Dhingra

India is not only a rising giant in the global arena, but also a booming market for B2B ecommerce. With its fast-growing economy, large population, and digital transformation, India offers immense opportunities for businesses looking to sell their products and services to other businesses online. This article explores why India should be on your radar if you want to succeed in the B2B ecommerce space.

João Manuel

India’s B2B ecommerce market is one of the fastest-growing in the world. By 2030, Redseer projects it will reach $90 billion to $100 billion in gross merchandise volume (GMV). Several factors are driving this growth, such as:

• The increasing demand from small and medium enterprises (SMEs) for a variety of products and services, especially in sectors like packaging, textiles, apparel, and contract manufacturing. SMEs account for about 40% of India’s GDP and employ over 100 million people.
• The availability of affordable and reliable internet connectivity and smartphones, which enable online transactions and communication. India has over 624 million internet users and over 500 million smartphone users, making it one of the largest and fastest-growing digital markets in the world.
• The government’s initiatives to promote digitalization and ease of doing business, such as the Digital India campaign, the Aadhaar biometric identification system, the Unified Payments Interface (UPI), and the Goods and Services Tax (GST). These initiatives have simplified online payments, reduced tax complexities, and improved transparency and efficiency.
• The emergence of innovative and disruptive B2B e-commerce platforms that connect buyers and sellers across the country and offer solutions for vendor management, supply chain automation, and supply chain financing.

India’s B2B ecommerce market is large, diverse and dynamic. It caters to different segments of buyers and sellers, such as wholesalers, retailers, manufacturers, distributors, service providers, and exporters. It also covers a wide range of product categories, such as industrial goods, consumer goods, agricultural products, healthcare products, and digital services.

India’s B2B ecommerce market is also open to international players who want to tap into this lucrative opportunity. According to a report by PayPal, cross-border B2B ecommerce in India is expected to grow at a compound annual growth rate (CAGR) of 28% from 2021 to 2026, reaching $54 billion. Some of the factors that are driving this growth are:

• The increasing demand from overseas buyers for high-quality and low-cost products from India, especially in sectors like textiles, handicrafts, pharmaceuticals, engineering goods, and software services.
• The increasing supply from Indian sellers who want to expand their market reach and access new customers across the globe.
• The availability of online platforms that facilitate cross-border trade by providing features like currency conversion, payment processing, logistics support, customs clearance, and dispute resolution. Some of these platforms include Amazon Business, Alibaba, eBay, TradeIndia, and IndiaMART.

India’s B2B e-commerce market is also poised to benefit from the recent developments in the global scenario, such as:

• The successful hosting of the G20 Summit in New Delhi onSeptember 9 and 10, 2023, which showcased India’s leadership role in addressing global challenges like climate change, sustainable development, digital transformation, multilateralism, and women empowerment.
• The signing of several trade deals and partnerships with key countries and regions like the United States, the European Union, the UK, Japan, Australia, ASEAN, Africa, and the Middle East, which enhanced India’s economic cooperation and integration with the world.
• The launch of several initiatives to boost India’s manufacturing sector and exports, such as the Production Linked Incentive (PLI) scheme, the Atmanirbhar Bharat (Self-reliant India) campaign, the Make in India program, and the National Export Policy (NEP).

To sum up, India is an emerging powerhouse in the B2B ecommerce space that offers tremendous potential for growth and innovation. If you want to be part of this exciting journey, here are some tips to help you succeed:

• Understand the market dynamics and customer preferences in different regions and sectors of India. Customize your products and services according to the local needs and expectations.
• Leverage the existing online platforms that connect you with potential buyers and sellers in India. Alternatively, create your own online presence and brand identity that showcases your value proposition and differentiates you from the competition.
• Build trust and credibility with your Indian counterparts by providing quality products and services, timely delivery, transparent communication, and responsive customer support. Use online tools like ratings, reviews, testimonials, and certifications to demonstrate your reputation and reliability.
• Comply with the legal and regulatory requirements of doing business in India, such as taxation, customs, licensing, and intellectual property rights. Seek professional advice and assistance if needed.
• Stay updated with the latest trends and developments in the Indian B2B e-commerce market. Adapt to the changing customer demands and market opportunities. Innovate and experiment with new products, services, and business models.

India is a land of opportunities for B2B ecommerce players who are willing to explore, learn, and grow. With its huge market size, diverse customer base, digital infrastructure, supportive government policies, and global outlook, India is the place to be for B2B ecommerce in the 21st century.

About the Authors:

Gaurav Dhingra is the co-founder and CEO of New Delhi, India-based ecommerce marketing agency Refresh Ideas. João Manuel is the founder and CEO of international marketing and public relations firm Vereda, which operates without a specific headquarters but maintains a company website at Vereda.global, with content displayed in the English and Portuguese languages.

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The global shipping and mailing company provides technology, logistics, and financial services for ecommerce shipping.

And among the new duties for interim CEO Jason Dies is evaluating if Pitney Bowes will choose to sell off its global ecommerce business unit. The unit provides retailers with a parcel delivery and returns network and other fulfillment services such as pick, pack and ship.

Dies, who most recently served as executive vice president, replaces CEO Marc Lautenbach, who has now left the company. Since joining Pitney Bowes in 2015, Dies was responsible for overseeing the company’s SendTech and presort services segments. He was also responsible for overseeing:

• Human resources
• Information technologies
• Marketing and communications

“After careful deliberation and consideration of various factors, the board determined it is the right time to initiate a search for our next permanent chief executive officer and install a qualified interim leader who can continue to advance key initiatives and pursue new opportunities for value creation,” says Pitney Bowes board chairman Mary J. Guilfoile.

While the search for a new permanent CEO is underway, Pitney Bowes will begin to “focus on accelerating corporate cost optimization and related restructuring efforts while also working with the leaders of SendTech, presort and global ecommerce to identify actionable opportunities to strengthen performance and market positioning.”

For the second quarter ended June 30, Pitney Bowes revenue declined 11% to $776.48 million. That’s down from $871.49 million in the second quarter of 2022. Net loss was $141.5 million versus net income of $4.3 million in the prior year.

Revenue for the Pitney Bowes global ecommerce unit was $313 million. That’s down 21% from $394 million in the second quarter of 2022.

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The social media app’s Shop option, prominently displayed between the For You and Following feeds where users watch videos, presents a never-ending scroll of “recommended” random products, according to an early version Bloomberg has reviewed. It includes products from a $2.99 Nike sweatshirt that appears counterfeit to a $6.99 statue of a “naughty dwarf” sitting on a toilet. Many of the listings, including a budget planner and a waist-trainer vest, say they’re shipped from China, where TikTok’s parent company ByteDance Ltd. is based. That could reignite U.S. regulatory concerns if it puts user data in the hands of Chinese sellers.

The TikTok Shop marketplace will be competing with Amazon.com Inc. to sell a target of $20 billion in merchandise this year, Bloomberg has reported. The effort has been discussed internally as a “community commerce” effort, according to people familiar with the matter. That means it’s meant to capitalize on the app’s potential to bring people together through their niche interests. But the early version of the experience shows no evidence of the ultra-personalized algorithm TikTok is known for in its video feed, which has been key to its success in capturing users’ attention.

Amazon is No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in the Global Online Marketplaces Database. The Digital Commerce 360 database ranks the 100 largest marketplaces by 2023 third-party GMV.

TikTok Shop marketplace listings

Instead, Shop is plagued by the same problems with a free-for-all marketplace that Amazon has faced. Categories and sub-categories of products are filled with overwhelming choice. The Home & Kitchen section shows a 37-cent-mini-car trash can next to a $16 four-foot computer desk and an $8.43 three-piece polyester satin sheet set. Misspelled brand names and implausible prices on many of the listings raise red flags for potential counterfeit sales.

TikTok said the article is “misleading” and that it doesn’t “represent the TikTok experience.”

The TikTok Shop marketplace highlights prices — which are remarkably low and listed in large font. It highlights coupons and free shipping offers in red and green, respectively. TikTok creates a sense of urgency by listing next to a product how many times it’s been sold. It also lists a countdown clock with the hours, minutes and seconds left of a sale.

The TikTok Shop marketplace does not list brands before users click on a product. The majority of product names seem more tailored to search engines and algorithms than human shoppers. One listing, for instance, touts “Women’s 3 Piece High Waist Workout Shorts Butt Lifting Tummy Control Ruched Butt Smile Yoga Short Pants.”

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Analysis of the 100 leading global online marketplaces. Includes over 30 charts, rankings of the world’s Top 100 online marketplaces by 2022 third-party GMV, tips for marketplace sellers, and findings from a new consumer survey. 

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Where are the products from? Are they real?

The most prominent section is for “Today’s Deals.” On the feed Bloomberg has seen, the top promoted product was a snail mucin-based face serum. The serum has recently gone viral on the app: a COSRX-brand Advanced Snail 96 Mucin Power Essence. The seller, listed as FIFTHLINYOUNG-4, advertised the serum for for $7.99, down from $39. But neither number aligns with the $25 price the brand COSRX offers on its website. The TikTok seller also says the product is manufactured in China, when COSRX products say on the packaging that they are made in Korea.

“Dear, yes, it is genuine,” the seller said in a message on TikTok. “The new store is offering discounts during events.”

The seller didn’t respond to questions about why the product says it is manufactured in China. CORSX didn’t immediately respond to a request for comment.

The snail mucin is also the only skincare item FIFTHLINYOUNG-4 has listed.

The other items by that shop include:

• A drone marked down from $999 to $88.
• Alisting featuring photos of the internet-favorite tumbler from Stanley without listing the brand name in the title or description.
• An LED tooth-whitening kit with photos that don’t match the brand name in the listing.

“Even in testing, there are over 200,000 verified U.S. merchants on TikTok Shop selling legitimate products — including over 150,000 beauty products that have been validated through our process and represent some of the biggest names in the beauty business,” a TikTok spokesperson said.

Sketchy sellers previously booted from Amazon marketplace

In June, a person familiar with the company’s U.S. Shop strategy said the company was focusing on American sellers. That strategy appears to have changed. A quick search reveals a number of Chinese brands on the TikTok Shop marketplace that Amazon has kicked off its platform for faking customer reviews. Amazon booted Guangdong SACA Precision Manufacturing from its marketplace in June 2021. Products from its brands Taotronics and VAVA are currently available on TikTok. So is the hot-selling headset brand Mpow. Amazon also removed its parent, Shenzhen Qianhai Patozon Network & Technology Co., from its marketplace.

In its terms that a user can click on before checkout, TikTok says “we make no representations, warranties, or guarantees, whether express or implied, that any content on TikTok Shop is accurate, complete, or up to date. We have no visibility or control over the contents on or available through those sites or resources and you acknowledge and agree that we have no liability for any such content.”

When a user checks out from the Shop tab, she can make purchases from multiple sellers at the same time in the same checkout. TikTok is processing payments through its app, Bloomberg has reported.

That means the company will also be collecting additional information about users, including:

• Card details.
• Billing address.
• Shipping address.

TikTok regulatory concerns

That may eventually lead to extra regulatory scrutiny for the company. TikTok has been under pressure from federal, state and local governments for its data privacy practices. The app’s Chinese ownership has sparked national security concerns over whether it can track or influence Americans on the app. The company has said it is working to isolate sensitive data from its American users so that only staff in the U.S. can access it through a separate unit called USDS.

“TikTok US protected user data is stored in the U.S. and managed by USDS,” a company spokesperson said. “And we work with third-party payment platforms to facilitate transactions on TikTok Shop, with all data managed by the payment partner.”

Lawmakers have been particularly sensitive to whether the app collects location data on users. Prior to the launch of Shop, the company said it updated its app so it no longer collects precise or approximate GPS data, only approximate location information.

But the TikTok Shop marketplace appears to open up some user data to its sellers. In TikTok’s Buyer Policy, the company says that “Sellers are independent controllers of the data that they collect about you via TikTok Shop, and TikTok is not responsible for their compliance with applicable law.”

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The Drewry World Container Index composite increased 11.8% to $1,761 for a 40-foot container. That’s the fourth straight advance and biggest week-on-week percentage gain since June 2021. The composite had fallen in 15 of the 16 months through June. It reflects short-term rates across eight trade routes connecting Asia, Europe and the U.S.

Shipping rates

The costs for shipping from Shanghai to Los Angeles reached $2,322 per 40-foot container unit. That’s an 11.3% increase from the previous week and fifth straight increase, according to Drewry. From Shanghai to Rotterdam, the rate jumped 25% to $1,620, the most since January 2021.

Shipping rates jumped tenfold to record highs during the height of the pandemic. Consumers had loaded up on household items and COVID-19 led to clogged logistics networks. The costs to move containers have since returned to levels reached before the health crisis, weighed down recently by bloated inventories and subdued consumer spending.

Matson Inc. earlier this week said retailers are continuing to manage inventories carefully amid weaker demand. Matson is a Honolulu-base container carrier that runs an express service from China to the U.S. and charges a premium for the faster route.

“Absent an economic ‘hard landing’ in the U.S., we continue to expect trade dynamics to gradually improve for the remainder of the year as the transpacific marketplace transitions to a more normalized level of consumer demand and retail inventory stocking levels,” Matson CEO Matt Cox said in a statement Aug. 1.

Last week, closely held French carrier CMA CGM SA laid out a gloomy outlook for the industry, especially on more established trade lanes. East-West shipping routes are “under more pressure and dropping faster than the North-South trade, which remains pretty dynamic,” CMA CGM Chief Finance Officer Ramon Fernandez told reporters.

Copenhagen-based A.P. Moller-Maersk A/S, the world’s No. 2 container carrier, is scheduled to release an interim report on Aug. 4 for its second quarter results.

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The ecommerce retailer is primarily known for selling apparel online. Since May 2023, Shein has launched its marketplace in Brazil, Mexico, and the U.S., with further plans to expand to Europe. The marketplace will eventually extend beyond Shein’s largest categories, the retailer says.

Shein Group Ltd. ranks No. 2 in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales.

Attracting in Amazon sellers

Shein has plans to expand its marketplace and reach more U.S. consumers, according to reports in The Wall Street Journal and Marketplace Pulse. The Chinese retailer is seeking “third-party sellers who will complement our product offering, whose offerings will resonate with our customer base,” says head of strategy Peter Pernot-Day.

Shein is offering incentives to Amazon sellers if they migrate to the new marketplace, according to The WSJ. Sellers are eligible for perks like three months without paying commission, and no advertising charges. Shein made these incentives available to sellers with at least $2 million in annual sales on Amazon.

The ecommerce retailer plans to eventually recruit 100,000 third-party sellers to its marketplace, with annual sales reaching $100,000 each, and 10,000 sellers with $1 million in annual sales each within three years.

Shein’s online marketplace is already selling to customers.

Shein will continue producing its own branded apparel and lifestyle products as more sellers join the marketplace, Pernot-Day says. Sellers will gain access to Shein’s production and demand forecasting technology, the retailer says.

The rise of Shein

Shein rocketed to massive popularity in the U.S. in recent years as fast fashion exploded. U.S. consumers spent $8 billion on the website in 2022, according to Euromonitor International estimates.

The retailer has a particular cache with younger consumers. Shein was the third most popular brand among teens in Piper Sandler’s semiannual Gen Z survey, behind only Amazon and Nike.

In the last year, Shein opened distribution centers around North America to fulfill U.S. orders more quickly. Merchandise that sells well in the U.S. is stocked in those warehouses, changing based on season. U.S. fulfillment centers are also responsible for returns, the retailer previously said.

Shein marketplace competitors

While Shein is recruiting Amazon sellers, it has a long way to go to compete with the ecommerce giant.

Amazon.com Inc. far exceeds Chinese brands in the U.S. Consumer spending on the platforms are only a fraction of the western giant, according to Bloomberg.

Like Shein, Amazon sells its own products and operates a marketplace with other sellers. Amazon is No. 1 in the Top 1000. The database ranks North American web merchants by sales. Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces.

Another competitor to both Shein and Amazon, Temu, entered the scene in the last year. Spending on Temu was 20% higher than on Shein in the U.S. in May, according to Bloomberg Second Measure, which analyzes billions of credit and debit card transactions.

Temu is backed by Chinese company PDD Holdings Inc. PDD, also called Pinduoduo, offers an app-only marketplace to Chinese consumers but does not operate an ecommerce website, so it is not included in Digital Commerce 360’s Asia Database rankings. Temu, which launched in September 2022, did not have a significant impact on Pinduoduo that year. Moreover, it didn’t have a high enough gross merchandise value (GMV) to make the global online marketplace rankings this year.

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Shein and Temu, owned by PDD Holdings Inc., are two of the rising powers in online retail. They are growing threats to the likes of H&M and Zara. The lawsuit offers a rare glimpse into the business models of the two secretive companies — and their fierce competitive practices.

Shein Group Ltd. ranks No. 2 in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales.

Pinduoduo offers an app-only marketplace to Chinese consumers but does not operate an ecommerce website, so it is not included in Digital Commerce 360’s Asia Database rankings. Temu, which launched in September 2022, did not have a significant impact on Pinduoduo that year. Moreover, it didn’t have a high enough gross merchandise value (GMV) to make the global online marketplace rankings this year.

Temu and Shein are growing rapidly in US market

Shein has grabbed more than 75% of the U.S. “ultra fast-fashion” market since entering the market in 2017, according to the suit. After Temu entered the U.S. in 2022, Shein responded by forcing clothing manufacturers into supply arrangements that excluded Temu, the suit alleged.

“Shein has engaged in a campaign of threats, intimidation, false assertions of infringement, and attempts to impose baseless punitive fines and has forced exclusive dealing arrangements on clothing manufacturers,” according to Temu’s complaint filed July 14 with the U.S. District Court for the District of Massachusetts.

The allegations come after Shein sued Temu in the U.S. Shein alleged trademark and copyright infringement as well as “false and deceptive business practices.”

Shein led the way in pioneering ultra fast-fashion. It offered consumers the latest fashion products at bargain prices, with shirts and swimsuits as low as $2. That helped the company become one of the most successful startups in the world, with a valuation of $66 billion, according to the market research firm CB Insights.

“We believe this lawsuit is without merit and we will vigorously defend ourselves,” a Shein spokesperson said in an email statement.

Allegations in Temu Shein lawsuit

Temu alleged that Shein engages in at least four strategies to stifle competition. Those include levying fines and penalties on suppliers that work with Temu and forcing suppliers to sign “loyalty oaths.” Shein also issues “public penalty notices and imposes extrajudicial fines on disobedient manufacturers for supplying product to Temu.”

Temu alleged in the suit that, as of May, “Shein has required all of the approximately 8,338 manufacturers supplying or selling on the Shein Platform to execute Exclusive-Dealing Agreements, which prevent those manufacturers from offering products on the Temu Platform or supplying products to sellers on the Temu Platform.”

The 8,000-plus manufacturers that supply Shein represent 70% to 80% of the total number of merchants capable of supplying ultra-fast fashion, Temu said.

Temu said merchants have pulled more than 10,000 listings as a result of Shein’s actions. In the lawsuit, the PDD unit cited examples of clothing manufacturers that had cut their presence or stopped business on the platform, “to appease” Shein.

“Shein knows that manufacturers need Shein’s volume and its access to the U.S. market and it is, therefore, able to coerce manufacturers into arrangements that force manufacturers not to do business with Temu,” the company alleged.

The case is Whaleco Inc. v. Shein US Services LLC, D. Mass., No. 23-cv-11596, 7/14/23

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Temu, owned by PDD Holdings Inc., which operates Chinese ecommerce site Pinduoduo, launched in the U.S. in September. It quickly became the most downloaded app on Apple Inc.’s U.S. App Store. Its marketplace carries clothes and home decor at rock-bottom prices. The company is aiming to take on global retail behemoths like Amazon.com Inc. and Ebay Inc.

But Tel Aviv-based Ultra Information Solutions says it found at least 10 items made or sold by businesses located in Xinjiang that are also available in the U.S. on Temu, where their company links and origins are obscured. Ultra used its digital vetting platform Publican to compare products sold on Temu, such as sandals, sunglasses and other items, with those sold by the parent company inside China.

“It’s a systematic violation of U.S. trade policies,” said Ultra co-founder Ram Ben Tzion.

Representatives for Temu and PDD didn’t reply to multiple requests for comment.

Import bans in the US

Citing what the U.S. State Department has called “horrific abuses” against the Uyghur people of Xinjiang, who are predominantly Muslim, federal officials banned the importation of cotton from the region in 2021. It expanded the law and its enforcement to all Xinjiang products last year under the Uyghur Forced Labor Prevention Act. Statements from former detainees and reports from an array of researchers and advocacy groups have alleged that the Chinese government put more than 1 million people in detention camps in the region and that laborers in fields and factories were forced or coerced. The Chinese government has said the camps are for re-education purposes.

In the U.S., Temu has grown in popularity with two advertisements aired during the Super Bowl in mid-February. Its 30-second spot — which cost millions to produce and air — features a trendy shopper twirling and dancing in an array of outfits with the tag line “Shop Like a Billionaire.” The ad has since been viewed on YouTube 341 million times. Temu is chasing Shein, the Chinese fast-fashion behemoth with estimated U.S. sales of $8 billion last year. If it succeeds, it would join only a handful of Chinese internet services to have become popular in the U.S. market, including Alibaba Group Holding Ltd.’s AliExpress and ByteDance Ltd.’s TikTok.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). Amazon ranks No. 3, and Ebay is No. 6.

Temu’s growth

PDD became successful in China as a dollar-store version of Chinese online retailers Alibaba and JD.com Inc., selling lower-priced goods. Its domestic app Pinduoduo is a marketplace that recruits suppliers to offer various products. Temu operates a similar model but goes a step further and handles delivery, promotion and after-sales services for merchants on its platform, as its Chinese parent seeks to expand in the U.S. and European markets quickly.

It opened an office in Boston to serve the U.S. and Canada, where it launched in February. Temu also operates in Australia and New Zealand. According to data analytics firm YipitData, U.S. Temu sales grew 6% on a weekly basis during the last week in May, the most recent data available, with an average of $34 an order.

Product origins

The vetting platform Publican couldn’t find conclusive evidence that any of the products sold on Temu and PDD were made with forced labor, only that the companies that produced them are located in Xinjiang.

“However, their proximity means there is a probable risk, not just a theoretical risk,” Ben Tzion said.

Publican’s supply-chain vetting has been contracted to more than 35 government agencies, including tax, customs and law enforcement in South America, Africa and elsewhere with a goal of interdicting fraudulent and illegal shipments, he said.

In addition to sunglasses and sandals, Publican also found children’s clay, a ring, wall paneling, rice storage containers, a car-window ice scraper, colanders and a bathmat sold on the PDD and Temu sites. The PDD-available items were identified as coming from companies in Xinjiang.

Ultra said it wasn’t paid for its research and it wasn’t commissioned by any third party.

“It was our initiative to illustrate how our technology can be a critical component in the enforcement of UFLPA as well as other trade-related compliance challenges,” Ben Tzion said.

Compliance

Shipments from China sold directly to consumers can bypass the U.S. ban on Xinjiang products because they fall below an $800 value threshold that triggers reporting requirements to U.S. Customs and Border Protection. Bloomberg testing on Shein garments shipped to the US on two occasions last year found that their cotton came from Xinjiang.

US lawmaker response

An April report from the Congressional U.S.-China Economic and Security Review Commission said Shein and Temu pose “risks and challenges to U.S. regulations, laws, and principles of market access” resulting from such direct-to-consumer sales. Republican Representative Mike Gallagher, chair of the House Select Committee on the Chinese Communist Party, and the panel’s top Democrat, Raja Krishnamoorthi, sent letters to Temu, Shein and two other companies in May seeking to determine whether they are importing products derived from forced labor in China.

The U.S. Department of Homeland Security named two new Chinese companies it will be restrict from sending goods to the U.S. under the UFLPA. The additions bring the total to 22 Chinese firms. Customs and Border Protection began enforcing the UFLPA in June 2022. In its first year, the CBP has reviewed more than 4,000 shipments valued at over $1.3 billion, according to the DHS.

Responding to the revised entity list, Republican Representative Chris Smith and Democratic Senator Jeff Merkley said the list is only one part of enforcement. They are co-chairs of the Congressional Executive Commission on China. Forced labor goods with ties to Xinjiang, “such as car parts, solar panels, rayon, and garments from fashion companies such as Temu and Shein continue to enter the US market.”

The representatives said they will work “toward the goal of stopping imports of forced labor-made goods. American consumers should not be unwittingly subsidizing the PRC’s genocide” in Xinjiang.

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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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