Cross-Border Ecommerce | Digital Commerce 360

Small businesses see headwinds and ecommerce growth ahead

Mark Brohan — Tue, 23 Jul 2024 21:16:18 +0000

Economic and political risks aside, U.S. small businesses are bullish on their opportunity to gain ecommerce sales experience, according to a survey of 1,000 small merchants from shipping company DHL.

For example, the outlook for ecommerce sales in 2024 remains optimistic among small and medium-sized businesses (SMEs).

65% of respondents anticipate that their ecommerce sales will increase year over year (2024 compared to 2023), with 24% expecting a significant increase and 41% predicting a slight increase, according to the survey.

“The agility of ecommerce platforms allows SMEs to quickly adapt to market changes, manage costs more effectively and reach a broader, global customer base, all without the overhead costs associated with traditional brick-and-mortar operations,” the survey says. “As inflation continues to drive up the cost of goods and services, ecommerce provides SMEs with tools to optimize pricing strategies and streamline supply chains.”

DHL findings on ecommerce sales

Inflation and shipping costs are prominent concerns for ecommerce businesses today. The survey reveals that 40% of respondents view shipping costs as the biggest threat to their business, while 38% identify inflation as their primary challenge. Likewise, 60% of respondents note that inflation is the top issue they will be following for the rest of the year.

International expansion is a key focus for SMEs in 2024. Over half of the survey respondents (53%) see international growth as the biggest opportunity for their ecommerce business. This is further supported by their priority markets for expansion, with 43% targeting the European Union and United Kingdom, and 29% looking toward Mexico and Canada.

“Overall, SMEs remain optimistic about the potential for ecommerce growth despite the economic hurdles,” according to DHL.

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Increased US Customs enforcement presents de minimis implications for ecommerce

Brian Warmoth — Thu, 06 Jun 2024 19:48:14 +0000

U.S. Customs and Border Protection (CBP) announced new action as part of an effort to curb exploitation of de minimis rules for small-value ecommerce orders. At issue for these imports are activities within the scope of the agency’s Entry Type 86 Test and the treatment of Section 321 of the U.S. Tariff Act of 1930.

How CBP proceeds could have implications for international retailers, including China-originated shipments ordered through Shein and Temu. The companies fell under scrutiny by the U.S. House Select Committee on the Chinese Communist Party in 2023, along with other companies.

During the investigation, the committee looked at the current de minimis environment for imports. An update in 2016 allowed that a single person on one day could import articles with a total value of up to $800 without formal customs declarations. That de minimis threshold allows shipments to avoid certain import duty and tax obligations. It was raised from a previous level of $200.

“Temu and Shein alone are likely responsible for more than 30 percent of all packages shipped to the United States daily under the de minimis provision, and likely nearly half of all de minimis shipments to the U.S. from China,” the bipartisan committee’s report claimed.

Shein is No. 2 in Digital Commerce 360’s Asia Database ranking ecommerce retailers in the region by online sales. The online apparel retailer was valued at $66 billion in May 2023 when it closed its latest funding round.

PDD Holdings owns Temu, which launched in 2022 and isn’t yet reflected in the database. PDD also owns Pinduoduo, which operates an app-only marketplace for Chinese consumers. Because it doesn’t operate an ecommerce website, Pinduoduo is not included in Digital Commerce 360’s Asia Database.

How will US Customs enforce de minimis rules for ecommerce?

U.S. de minimis imports | Image source: U.S. International Trade Commission

“While balancing our economic security and trade facilitation mission with our law enforcement responsibilities, CBP is taking action to ensure compliance and minimize the exploitation of the small package, or de minimis, environment,” said Troy Miller, acting commissioner at CBP, in a statement released May 31. “While the majority of brokers, carriers, and supply chain businesses that participate in CBP’s Entry Type 86 Test are compliant with applicable laws, we are enhancing our enforcement efforts to ensure that all participants are held accountable when they are not.”

The U.S. International Trade Commission published a briefing in November 2023. Its author concluded that most imports using the de minimis standards came from China.

“The majority of these imports, shipped by postal and express delivery services, are retail products purchased online,” the report stated. “Section 321 imports have been the key channel for Chinese business-to-consumer (B2C) online retailers that ship direct from factories or distribution centers in China to U.S. consumers.”

It also cited those imports as a source of interest in Congress.

“The large volume and fast growth of these imports from China since 2018 has led to increased Congressional scrutiny and proposed legislation to modify what some have called an outdated program not suited to the current trade environment of surging cross-border e-commerce,” the report found.

Implications for Shein and Temu

In addition, the International Trade Commission briefing stated that Chinese ecommerce firms had “exploited” the increased U.S. de minimis level and minimized inspections. It also characterized the outcome for “Chinese e-commerce providers” being increased U.S. market share.

“In particular, Shein and Temu, online Chinese fast fashion retailers, reportedly accounted for over 30 percent of U.S. de minimis imports in 2022,” the briefing stated. “Shein has maximized the direct-to-consumer business model and it eclipsed leading U.S. firms in the category in 2022, with U.S. revenues growing from under $500 million in 2018 to over $3 billion in 2022. Temu’s business model also relies heavily on U.S. de minimis treatment.”

Already, CBP has taken action against an unknown number of brokers that it found to be posing compliance risks.

“To date, CBP has suspended multiple customs brokers from participating in the Entry Type 86 Test after determining that their entries posed an unacceptable compliance risk,” Miller said.

Those brokers will be eligible for reinstatement. However, they must demonstrate to CBP that they have “developed and implemented a remedial action plan,” he explained.

Shein’s potential IPO in London

Shein reportedly filed confidentially for a public offering in the U.S. last November. However, those plans face obstacles, including regulatory scrutiny in the U.S. and in China, where it was founded. Instead, the company has since shifted talk to the U.K. for a possible London-based public offering. That filing could come any day, Sky News reported on June 3.

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Alibaba grows revenue in Q4 as net income nearly halves

Abbas Haleem — Thu, 16 May 2024 17:00:37 +0000

Alibaba Group Holding Limited announced that it grew revenue 7% year over year in its fiscal fourth quarter ended March 31, 2024, but income from operations decreased 3%. Meanwhile, net income decreased 96% compared to the prior Q4.

For the full year, Alibaba revenue grew 8% over 2022 and operational income increased 13%. Net income increased 9%.

In a statement announcing quarterly earnings, Alibaba attributed the net income drop in the quarter to “a net loss from our investments in publicly-traded companies during the quarter, compared to a net gain in the same quarter last year.”

“Our China and international commerce businesses realized double-digit year-over-year GMV growth through our focus on the customer experience,” CEO Eddie Wu said in the statement. “We are also excited by the accelerated growth of customers and cloud computing revenues related to our AI products.”

Alibaba’s Cloud Intelligence Group grew revenue 3% year over year to about $3.55 billion. Its cloud offerings include elastic compute, database and AI products.

In a May 14 earnings call with investors, Wu said Alibaba’s “core business has gradually returned to healthy growth” after several quarters of “adjustments and continued user experience enhancement.”

Alibaba owns the world’s two largest online marketplaces by gross merchandise value (GMV), Taobao and Tmall. Taobao ranks No. 1 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the largest such marketplaces by GMV. Tmall ranks No. 2. Both operate in China.

How much did Alibaba make in 2023?

For the full 2023 fiscal year, Alibaba grew revenue to $130.35 billion. At the same time, it grew operational income to nearly $15.7 billion and net income to $11.04 billion.

In Q4, Alibaba revenue grew to about $30.73 billion. It attributed that growth to increased investments in its ecommerce business.

Alibaba International Digital Commerce Group (AIDC), the company’s ecommerce division, grew revenue 45% year over year in Q4, to $3.80 billion. The combined orders on its marketplaces grew 20% in the same period. It attributed the performance to growth in its cross-border business broadly and the AliExpress marketplace specifically.

“We are committing more resources to cross-border e-commerce because of the clear customer value proposition of price competitiveness and timely delivery to consumers around the world,” it said. “To further expand our geographic footprint and deliver differentiated services to a broader customer base, we increased investments in our cross-border initiatives this quarter.”

Wu told investors the company has “completed adjustments to Alibaba Cloud’s product strategy for the AI era.” He added that AI-related revenue more than doubled, increasing in the triple digits year over year in Q4. Wu said he believes this “wave of generative AI-driven technological innovation is in the early stages of the industry cycle.”

Starting in 2024, he said, Alibaba has seen a “rapid increase in customer demand for AI.” As a result, Alibaba is investing in its cloud-computing product matrix and — in Wu’s words — “especially in AI infrastructure.”

Withdrawn Cainiao IPO

Alibaba withdrew Cainiao’s application for an initial public offering (IPO) in March, Wu stated. Cainiao is a logistics company that Alibaba and other companies launched in May 2013.

“Cainiao provides essential infrastructure to Alibaba’s core ecommerce business,” Wu said. “And we hope Cainiao will strengthen its synergies with our Chinese domestic and international e-commerce operations. Alibaba Group will continue to support the expansion of Cainiao’s global logistics network.”

Jiang Fan, AIDC’s CEO, said Cainiao’s cross-border logistics capabilities have helped AliExpress. He said “synergies” between the two have made AliExpress more competitive, with five-day and 10-day completion rates both doubling year over year.

Here’s last quarter’s update about Alibaba revenue and earnings.

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Top 2000 Database

Matt Love — Wed, 27 Mar 2024 20:08:54 +0000

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Sample view from the 2024 Top 2000 PRO Level Database, with these data points shown: 2024 Ranking, 2024 Web Sales, 2023 Web Sales, 2022 Web Sales, 2023 Web Sales Growth, Average Ticket, Conversion Rate, Merchandise Category, Merchant Type. Subscribers can select from 100+ datapoints to show, and PRO users have download to Excel capabilities.

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Take a look and see which plan is right for your business needs:

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DHgate Shines Spotlight on MSMEs and Women’s Empowerment at ASD Las Vegas Trade Show

Digital Commerce 360 Staff — Wed, 27 Mar 2024 18:50:01 +0000

Sponsor content is created on behalf of and in collaboration with DHgate by DigitalCommerce360. Our editorial staff is not involved in the creation of the sponsored content.

Leading B2B cross-border e-commerce marketplace DHgate teamed up with female empowerment organization The Inner Mountain Foundation to highlight the experiences of real business owners at ASD Market Week 2024.

The spring edition of ASD Market Week just wrapped up in Las Vegas, with over 1,800 vendors displaying an all-in-one shopping experience with a wide selection of high-margin products available for view at the trade show.

One of the more notable participating exhibitors was DHgate, a leading B2B cross-border e-commerce platform that helps international retailers connect with suppliers from China and around the world. This year saw DHgate team up with The Inner Mountain Foundation, a groundbreaking initiative started by DHGATE Group Founder, Chairperson and CEO Diane Wang that seeks to empower female entrepreneurs. Diane herself is a pioneering e-commerce entrepreneur who first founded Chinese online book and video retailer Joyo.com (later acquired and rebranded as Amazon China) and then later the DHgate e-commerce platform.

“ASD Market Week is a fantastic opportunity to not only showcase DHgate’s e-commerce services, but also for the company and The Inner Mountain Foundation to reach out to and better understand micro-, small-, and medium-sized enterprises (MSMEs) and female entrepreneurs’ experiences,” said DHGATE Group Co-CEO Chun Li.

“We are keen to advance DHgate’s services for small American businesses and collaborate with platform merchants for mutual growth. Among these, female entrepreneurs make up a significant portion of DHgate’s clientele.”

Inspiring Stories Aboard the DHgate X Inner Mountain Party Bus at ASD
Launched in the fall of 2023, The Inner Mountain Foundation is devoted to building communities of like-minded women around the world, with a goal to inspire them to conquer their ‘Inner Mountains’, find the inner strength to lead, and make a difference in the world. The Foundation provides access to numerous educational resources, information, training and funding for female-owned businesses.

At this edition of ASD, The Inner Mountain Foundation organized a party bus, hosted by Natasha Walstra, a member of The Inner Mountain Foundation’s California chapter and host of the Foundation’s podcast ‘The Climb’. During the one-hour bus tour, Natasha and participants from diverse backgrounds shared stories of personal growth and self-discovery, as they worked to empower themselves and other women.

The party bus represents the first in a series of offline events aimed at engaging women in local US communities. Everyone aboard the party bus was excited to hear about the upcoming activities from The Inner Mountain Foundation across North America this year, as well as opportunities to communicate with female entrepreneurs from China.

As party bus-goers shared their experiences, obstacles and challenges they faced during their entrepreneurial journeys, a few participants stood out: Erica, a local Las Vegas beauty blogger who recently started her own business; Amanda, a stand-up comedian who is also starting a social content service business; and Sherita, a single mother of three who is seeking more stable financial income by venturing into e-commerce.

They revealed that they appreciated the safe cooperative space curated by The Inner Mountain Foundation, where they could gain strength and encouragement from sharing with others, hearing their stories, and inspiring each other.

Meet the Real People in Retail: DHgate Customers Share their Experiences
Back at DHgate’s ASD Market Week booth, the business team met many old friends and new clients from around the world, including female influencers and other women-owned small businesses, who shared their experiences in the American retail space.

One anecdote came from Ashan and his mother, immigrants who operate a family-owned grocery and wholesale business in Texas. Their offline grocery store has been operating for decades, transitioning from the first to second generation of the family. They said that their secret to surviving over the years has been to stay on the constant lookout for new and more cost-effective products. They expressed appreciation that DHgate could connect them with a wider choice of high-quality suppliers from China. Ashan and his mother were very excited to learn about DHmogo, a new B2B cross-border e-commerce platform for home and living products that offers value-added sourcing services such as customized procurement for MSMEs in the American and European markets.

Mark and Tiffany, a married couple from New York, also shared their story about running a beauty business. They openly admitted that, based on their experience, in the past, cosmetics have not been a strong suit of Chinese suppliers. The situation is changing thanks to a dramatic expansion of beauty categories on the Chinese supply chain, offering various beauty tools, accessories, and smart beauty devices. The emergence of high-quality beauty merchants and competitive prices has given Chinese suppliers an advantage for Mark and Tiffany, who are excited to use DHgate to expand their business further.

Two Days of Shopping and Stories, with a Multilingual Focus
DHgate had one of the most eye-catching booths at ASD Market Week this spring. With a selection of popular products and excellent booth design, the booth drew a lot of attention and created a buzz among event-goers and other vendors alike.

The unique design of DHgate’s gift bags received unanimous praise, with many attendees specifically requesting them; one customer even placed an on-site order for 5,000 pieces. Many on-site orders were also placed for electric skateboard luggage cases, one of this year’s hottest items.

This year, DHgate also received an unprecedented amount of interest from multilingual customers, primarily from Turkey and Spanish-speaking countries, and many negotiations and inquiries took place. Some Turkish dealers said they hoped businesses in the United States could cooperate with DHmogo in the future to expand American customer services to other overseas regions.

“The growing trend of multilingualism will be an important focus for our team this year,” said DHGATE Group Co-CEO Chun Li. “We anticipate that AI-generated content will be a game-changing technology for multilingual business interaction, and to this effect, we’ve developed our own Voyage AI model specialized for cross-border e-commerce.”

About DHgate
Founded in 2004, DHgate has become the leading B2B cross-border e-commerce marketplace in China, boasting over 34 million live listings annually. Through their global operations and offices, including in the USA and UK, DHgate reaches millions of people with trusted products and services. As of December 31, 2022, DHgate served more than 59.6 million registered buyers from 225 countries and regions, connecting them to over 2.54 million sellers in China and other countries.

For more information, please visit DHgate.com and follow @DHgate.com.

About The Inner Mountain Foundation
The Inner Mountain Foundation promotes the empowerment of women through education, community, and outreach. They are led by Founder and Chairperson Diane Wang, who first articulated the principles of Inner Mountain Thinking in her 2024 book, The Inner Mountain. As a global foundation and women’s empowerment community, The Inner Mountain Foundation invests in impact-making educational resources that they seek to make as broadly accessible as possible. Their goal is to focus the work of the Inner Mountain on soft skills training, which they believe helps equip women to be their greatest, most empowered selves across their most wholly integrated life (connecting the self with work, family, community, and legacy).

For more information, please visit innermountain.org

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Wish to be acquired by Qoo10 for 1% of marketplace’s previous value

Brian Warmoth — Wed, 14 Feb 2024 19:53:54 +0000

San Francisco-based ContextLogic announced it reached a deal to sell its online marketplace Wish for $173 million. The transaction will see Wish acquired by the Singapore-headquartered ecommerce platform Qoo10 at a 99% markdown from the publicly traded company’s market cap in 2021.

ContextLogic will drop its current ticker symbol WISH within 30 days of the deal closing, according to its announcement. The acquisition price of $6.50 per share, however, will give investors a 44% premium on where the stock traded before the Monday announcement.

Wish.com is No. 25 in Digital Commerce 360′ Global Online Marketplaces Database. The database ranks the 100 largest such marketplaces by 2023 third-party gross merchandise value (GMV).

What Wish being acquired by Qoo10 means for its future

“Integrating the Wish platform into Qoo10 will create a true global cross-border ecommerce platform to support the massive market demand,” said Joe Yan, the CEO at ContextLogic. “Upon close, we expect the new Wish platform will have an improved customer experience through increased product assortment and merchant selection. And for our merchants, we will be able to offer fully integrated logistical capabilities to deliver unmatched cost-efficient services with high quality control and transparency.”

The acquisition also provides an end to Wish’s ongoing losses under ContextLogic. The company announced in November that it was exploring “a range of strategic alternatives to maximize shareholder value” at the end of third quarter when negative cashflow reached $86 million.

Who are Qoo10’s competitors?

By adding Wish to its portfolio, Qoo10 will push into a competitive discount space in online retail. There, Temu and Shein are aggressively pursuing expansion. Temu, for instance, likely spent tens of millions of dollars on Super Bowl ads, in 2024. In addition, it may have as much as $3 billion being readied for its total annual marketing budget.

“Wish has innovative technology that provides highly entertaining, personalized shopping experiences for its users while serving as one of the largest global ecommerce platforms,” said Young Bae Ku, the CEO and founder of Qoo10. “By combining our operating expertise and Wish’s technology and data science capabilities, we expect to drive greater success for merchants while providing an even greater marketplace for consumers globally.”

As Qoo10 eyes its own international expansion, it will look to leverage Wish’s existing reach and business.

“With the acquisition of Wish, Qoo10 and Wish will offer a comprehensive platform for merchants, sellers, buyers, and customers globally to realize the potential of a truly global marketplace,” Ku said. “With the strong commitment from Wish’s employees and staff combined with the Qoo10 family group of companies, we are well positioned to realize our long-stated goal of being a leading cross-border, ecommerce marketplace.”

Closing date for Qoo10’s Wish acquisition

ContextLogic anticipates a second-quarter closing for the deal in 2024 to finalize Wish being acquired. It will face a shareholder vote and other conditions before that can happen.

“The Board conducted a thorough review of strategic alternatives with the assistance of outside financial and legal advisors,” said Tanzeen Syed, chairman of the board at ContextLogic. “We evaluated a variety of potential outcomes and determined that the proposed sale of our operating assets and liabilities, while preserving significant NOLs, represents the best path forward to maximize value for shareholders. We also believe there is a significant upside potential to obtaining a long-term aligned capital partner that would support future value creation.”

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Why Temu spends millions on Super Bowl commercials

Mary Meisenzahl — Mon, 12 Feb 2024 21:52:56 +0000

Growing ecommerce app Temu spent big on Super Bowl commercials this year.

The Chinese app bought air time for three commercials during the game and two after. Super Bowl advertising is some of the most expensive of the year. For Super Bowl LVIII, advertisers paid between $6.5 million and $7 million for a 30-second commercial, CNN reported. Individual rates vary, however, depending on when an ad airs during the game and if an individual advertiser purchases multiple commercial spots. A Temu spokesperson declined to comment on how much the retailer spent.

Temu’s Super Bowl commercial featured the tagline “Shop like a billionaire.” In it, the animated protagonist buys a variety of household and apparel products priced under $10. The purchases are a sampling of the low-cost products Temu has become known for. The retailer also partnered with San Francisco 49ers running back Christian McCaffrey to promote $5 million in coupons and credits on Instagram ahead of the game, and an additional $10 million during the game, the spokesperson said.

PDD Holdings owns Temu, which launched in 2022 and isn’t yet reflected in Digital Commerce 360 rankings of the largest online retailers. PDD also owns Pinduoduo, which operates an app-only marketplace for Chinese consumers. Because it doesn’t operate an ecommerce website, Pinduoduo is not included in Digital Commerce 360’s Asia Database.

Rise of Temu and its Super Bowl ad buys

Temu first gained the spotlight one year ago during the Super Bowl in 2023.

Last year, the retailer bought two Super Bowl commercials, its first introduction to many U.S. consumers. PDD had launched Temu just a few months earlier, in September 2022.

“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 at the time.

That strategy seems to be working. Temu was the most downloaded app in the U.S. in 2023, and the eighth-most downloaded app in the world, according to analytics firm Sensor Tower. The retailer reached 51 million monthly active users in January, a nearly 300% year-over-year increase.

In May, Temu surpassed rival Shein’s monthly U.S. sales for the first time. In September, a report from Earnest Analytics found that Temu is taking market share from Dollar General and Dollar Tree. Temu is now the No. 4 most-visited retail website in the U.S., behind only Amazon, Walmart, and eBay, The Wall Street Journal reported based on Insider Intelligence research.

Shein Group Ltd. is No. 36 in the Asia Database. Dollar General ranks No. 725 in the 2023 Digital Commerce 360 Top 1000. The Top 1000 is a ranking of North America’s leading retailers by online sales. Amazon ranks No. 1, and Walmart ranks No. 2.

Temu’s ad strategy

Temu is spending heavily on advertising, prioritizing customer acquisition. The retailer outspent all advertisers except Amazon on Facebook in Q4 of 2023, Sensor Tower said. Temu grew its ad spending on Facebook 318%, and spending on Instagram grew 101% year over year in the quarter, the firm said.

J.P. Morgan estimates Temu will spend $3 billion on marketing in 2024.

Editor’s note: This article has been updated to reflect Temu’s ownership. PDD Holdings owns Temu, as well as its sister company Pinduoduo.

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3 ways AI transforms the ecommerce customs declaration process

Emily Newton — Mon, 12 Feb 2024 14:00:18 +0000

Emily Newton

A smooth customs process is essential for getting ecommerce goods to their destinations in the expected time frames. However, standard customs forms are extremely detailed, with dozens of fields to fill. People are increasingly interested in how artificial intelligence (AI) could streamline things.

1. Completing Customs Forms More Efficiently

Even conscientious people make errors when providing information on customs documents. That might mean they put details into the wrong fields, use the wrong tariff codes to classify ecommerce documents, or make other mistakes, ultimately extending the time frames for parcels reaching their destinations or resulting in the packages getting returned to the senders.

Many optical character recognition tools have AI features to improve their functionality. People can use these options to pull data from electronic paperwork automatically and use it for customs forms.

Phlo Systems is a digital forwarder based in the United Kingdom working on a chatbot to fill out customs forms. Training is underway and responses have about an 80% accuracy rate, showing the solution’s potential. As of November 2023, the company’s CEO and founder expected to complete customs forms with the tool in three to six months.

Although AI can shorten the time necessary to complete customs forms, humans should always supervise the process and double-check the results. Well-trained algorithms are not perfect, so computing power and human oversight are an excellent combination to assist those dealing with exported products.

2. Linking Customer Purchases to Customs Form Data

Businesses may also expand the functionality of existing ChatGPT tools that bring AI to ecommerce, making them improve customs documents, too. Technology ecommerce brand Newegg released a customer-facing ChatGPT tool in July 2023 that suggests products for people wanting to build computers based on details they input about budget, performance requirements and other specifics.

The tool compiles all the options into a list people can review before checking out at the site. It is easy to imagine an accompanying AI product Newegg team members could use to populate customs forms based on what a customer ultimately purchases from the suggested list. Then, the items are more likely to be classified and described correctly on the customs forms. Tariff classifications determine duty rates and taxes on imports, making their accuracy critical.

Ecommerce leaders could also use AI to track trends that enable more accurate customs data. Perhaps a large percentage of overseas shoppers purchase a specific in-demand item and nothing else. AI might accelerate the process by automatically populating the product-specific customs form fields in such cases. Then, there is less to do because people only need to check the information that varies with each customer.

3. Stopping False Declarations and Counterfeit Goods

Possibilities also exist for customs agents to use AI tools to highlight abnormalities associated with illegal goods or items declared incorrectly. Artificial intelligence excels at processing large quantities of information and catching things humans would miss. Many banks use it to monitor for fraudulent transactions because it can detect those instances more accurately than people

If people make false declarations on customs documents, they typically do that to reduce their import tax and duty-related obligations. Many border patrol agents use artificial intelligence to assess which shipping containers to open for further inspection.

Some ships reach ports bearing 24,000 containers, making it impossible to inspect them all. However, the customs officials working at a Belgian port rely on predictive AI models to flag which ones to check. The algorithms make decisions based on customs declarations and data from goods previously requiring inspections.

Even so, illegal goods can slip past border agents, which may result in counterfeit products reaching ecommerce sites. More companies are responding by using or offering AI tools to combat these emerging circumstances.

One enterprise specializing in the luxury goods and sneaker markets built an artificial intelligence-driven product to compare photographs of legitimate items with those sold online. The software compares approximately 2,000 to 4,000 characteristics so consumers or retailers can feel more confident about authenticity.

Some ecommerce marketplaces could use counterfeit protection as a selling point to attract new customers. Suppose first-time visitors to a shopping website sees a banner informing them that all products above a specific monetary value receive anti-counterfeit screenings before getting shipped to recipients. Such a claim gives consumers peace of mind, particularly before buying high-value, unique or collector’s items.

Will Artificial Intelligence Improve Customs Processes?

AI for customs declarations and processing is still in the early stages, with decision-makers from many businesses still in the planning process. However, as more of them try real-world applications, artificial intelligence should make a bigger and lasting impact on paperwork and goods movement. The results could assist ecommerce companies with administrative tasks associated with import and export paperwork, plus support border patrol officials with spotting suspicious cargo or incorrectly declared products.

About the author:

Emily Newton reports on how technology disrupts industrial sectors. She’s also the editor-in-chief of Revolutionized, covering innovations in industry, construction, and more.

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UPS will cut 12,000 jobs after revenue and package volumes decline

Mary Meisenzahl — Wed, 31 Jan 2024 19:00:03 +0000

United Parcel Service Inc. (UPS) will cut 12,000 jobs this year, the carrier announced Jan. 30. That’s part of a plan to generate $1 billion in savings as revenue and package volume decline, CEO Carol Tome said.

UPS consolidated revenue declined 7.8% to $24.9 billion in its fiscal fourth quarter ended Dec. 31. Consolidated operating profit declined 22.5% during the same time period to $2.5 billion. For the full fiscal 2023 year, consolidated revenue declined 9.3% to $91 billion and consolidated operating profit declined 28.7% to $9.1 billion.

“2023 was a unique and quite candidly a difficult and disappointing year. We experienced declines in volume, revenue, and operating profit in all three of our business segments. Some of this performance was due to the macroenvironment and some of it was due to the disruption associated with our labor contract negotiations as well as higher costs associated with the new contract,” Tome told investors.

532 online retailers in the Digital Commerce 360 Top 1000 use UPS for their fulfillment — either exclusively or in combination with other carriers. 65.6% of Top 1000 sales come from retailers using UPS. The Top 1000 is a ranking of North America’s leading retailers by online sales.

UPS domestic revenue results

U.S. domestic segment revenue declined 7.3% to $16.9 billion in the quarter, UPS said. Average daily volume (ADV) ended the quarter 7.4% below 2022 levels. However, that still represented a step up from an “exceptionally low third quarter” that preceded the period, Tome said. Revenue per piece of mail was slightly positive, the carrier said without revealing more.

B2B made up 35.5% of domestic volume in the quarter, about flat from 2022. B2B ADV declined 6.8% year over year, due to declines in the retail, tech, and manufacturing sectors, UPS said.

Total air ADV declined 15% year over year, while ground declined 5.8%. Macroeconomic pressures pushed UPS customers toward ground products to cut costs, it said.

UPS international revenue results

Revenue and package volume also declined internationally, largely due to softening demand in Asia and Europe, Tome said. Revenue declined 6.9% year over year to $4.6 billion, driven by an 8.3% decrease in ADV. Revenue per piece grew 3.1%.

The carrier highlighted a few bright spots in the international segment. Volume from China to the U.S. grew 2.7%. That remains the most profitable shipping lane, UPS said. The growth was largely driven by small and medium-sized businesses. Volume in the Americas also grew, up 11.9%. That was the result of Canadian and Mexican customers using cross-border ground shipping services, UPS said.

2024 projections

UPS remains “cautious” looking ahead to 2024, it said. European export volumes are projected to increase, and the carrier expects volume from China to continue growing, too.

In the fourth quarter, UPS recovered much of the volume lost to a potential strike earlier in 2023, Tome said. The business will be burdened by rising costs this year, including from the higher labor costs won in union negotiations with the Teamsters. Eliminating the 12,000 positions is intended to mitigate those rising costs, she said. Layoffs will impact managerial positions, not union jobs, it said. UPS has about 495,000 employees as of January, Tome said. That’s down from a high of 540,000 during peak COVID-era demand.

UPS said the first half of 2024 will likely be difficult, while projecting profit to grow 20 to 30% in the second half of the year.

UPS quarterly earnings

For the fiscal fourth quarter ended Dec. 31, 2023, UPS reported:

Consolidated revenue declined 7.8% to $24.9 billion.
Consolidated operating profit declined 22.5% to $2.5 billion.
UPS average daily package volume declined 7.5%.

For the 12 months ended Dec. 31, 2023, UPS reported:

Revenue declined 9.3% to $91.0 billion.
Operating profit declined 28.7% to $9.1 billion.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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Shein’s IPO plan faces more challenges

Mary Meisenzahl — Thu, 18 Jan 2024 20:10:19 +0000

Shein might face a roadblock in its path to an initial public offering in the U.S.

China’s internet regulating body, The Cyberspace Administration of China (CAC), is investigating the apparel retailer’s data and supply chain practices, The Wall Street Journal reported. That could have implications for Shein’s plans for an IPO in the U.S. The fast-fashion retailer reportedly filed for the move confidentially in November. A CAC investigation, however, could delay an IPO for months or remove the option altogether. Shein must wait on permission from Beijing before pursuing a U.S. IPO.

Shein is No. 2 in Digital Commerce 360’s ranking of ecommerce retailers in Asia by online sales. The online apparel retailer was valued at $66 billion in May when it closed its latest funding round. Shein reportedly reached $2.5 billion in income in 2023, according to Bloomberg.

Why is China investigating Shein?

Shein was founded in China in 2012 but moved its headquarters to Singapore in 2022. It does not sell its low-priced apparel and accessories in China, but it does rely on contract manufacturers in the country. The U.S. is Shein’s biggest market of the 150 countries it sells in.

However, the retailer is still subject to certain Chinese regulations before it can get a green light to go public in the United States. Chinese companies planning an IPO outside the country must abide by recent listing rules, Reuters reported. Companies are bound by the listing rules if more than half of revenue, profit, or assets are generated in China, and either its main business is conducted in China, or senior management is mostly made up of Chinese citizens.

The Chinese regulations are in part to ensure that data on Shein’s suppliers, partners, and staff in China are protected from leaks outside the country. China will also review what information Shein will share with regulators if it does go through an IPO.

By approaching China’s regulators ahead of an IPO, Shein could head off potential problems like those of ride-hailing business Didi. In 2021, Didi was subject to a regulatory review after raising more than $4 billion in an IPO with the New York Stock Exchange. Chinese regulators then ordered it to stop registering new users and to shut down some apps. Within a year, it was delisted in the U.S.

Other Shein IPO obstacles

Shein faces other obstacles that could stall potential IPO plans, too. Those include U.S. lawmakers, who have raised concerns over the retailer’s labor practices.

Shortly after the retailer filed confidentially for an IPO in November, U.S. Representative Jennifer Wexton released a statement questioning the presence of forced labor at Shein’s contract manufacturers.

“If the fast-fashion giant Shein wants to go public in the U.S., they should have to prove to American consumers that their products are not sourced from forced labor,” the Virginia senator said.

It faced criticisms for labor practices since a 2022 Bloomberg report linked cotton in some Shein products to China’s Xinjiang region. Human rights groups have accused China of using forced labor from the Uyghur ethnic minority in the region, which the government in Beijing denies.

Shein has said it has a “zero-tolerance policy for forced labor.”

“We take visibility across our entire supply chain seriously, and we are committed to respecting human rights. To comply with U.S. law, we require our contract manufacturers to only source cotton from approved regions,” the apparel retailer told Digital Commerce 360.

As of November, Shein said 1.7% of its cotton tested positive for cotton from the region.

“According to global supply chain tracing firm Oritain, these amounts are much lower than the industry average of 14%,” a spokesperson wrote at the time.

When will Shein’s IPO happen?

The CAC has not set a date for providing Shein with an answer to its investigation. The U.S. Securities and Exchanges Commission also has not responded in writing to Shein, according to The Wall Street Journal.

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