According to eMarketer’s latest report, worldwide business-to-consumer e-commerce is projected to grow 20.1% in 2014 to $1.5 trillion. The report estimates that this year, e-commerce sales from the Asia Pacific region will outpace the American market sales and account for $525.2 billion of the total market. North America’s e-commerce is expected to grow from $431 billion in 2013 to $482 billion this year.
Borderfree’s (NASDAQ:BRDR) Offerings
Another research report by Forrester estimates that US online retailers are expected to earn $24 billion in 2014 from cross-border consumers in retail goods. Of the 500 retailers listed on Internet Retailer’s 2013 Top 500 Guide, less than 60% of the retailers had international presence. That leaves a big market opportunity for retail expansion. New York-based Borderfree was founded in 1999 as an e-commerce technology provider that helps US retailers set up platforms for such international transactions.
Borderfree was initially founded as E4X where it introduced a patented technology that allowed retailers to handle transactions on their website in the consumer’s preferred currency. Soon, the company evolved and began offering additional services that included payment services and logistics while keeping in mind local cultural considerations. In 2012, E4X, which was now known for its international e-commerce platform FiftyOne, acquired an international e-commerce player Borderfree and renamed themselves Borderfree.
Their solutions include end-to-end solutions to help retailers with international expansion plans. Their commerce segment delivers customized websites that welcome customers in their local languages and offer local pricing and shipping options. Borderfree ensures that customers are offered a PCI-compliant site for secure payment processing capabilities. For merchants, Borderfree’s fraud and risk management team also screens for fraudulent activity on the site and assumes chargeback risk. As part of their logistics offering, Borderfree takes care of all customs clearance along with parcel shipping and return management.
To help retailers expand their international presence, they also offer marketing solutions that provide marketing campaigns along with analytics and research-based insights into global consumer trends to help companies deliver targeted marketing campaigns. Borderfree operates more than 150 e-commerce sites across 100 countries and helps process transactions in more than 60 currencies. Their platform processed more than $445 million in Gross Merchandise Value of transactions in 2013.
Borderfree earns revenues by charging customers fees based on a percentage of sales generated on the Borderfree platform. Their customers enter into multi-year contracts with duration ranging from 1-4 years. Additional sources of revenues include charges for fulfillment services, foreign exchange, and other transactions.
Their revenues have grown from $37 million in 2011 to $110 million in 2013. Net income was $6.7 million in 2011 and in 2013, net loss was $0.7 million. They support international operations for more than 90 customers including names like Aéropostale, Barneys, Bloomingdale’s, Brookstone, Crate and Barrel, J.Crew, Macy’s, Overstock.com, and Sears.
Last month, Borderfree filed their S-1 to raise $80 million by selling 5 million shares at $16.00 each. They plan to use some of these funds toward business acquisition to help grow technologies and other related assets. The stock had fared well and soon after listing, it touched a high of $21.25. Since then, though, the stock has fallen and is now trading at $14.43 with a market capitalization of $439.77 million.