Alibaba Aims to Increase International Revenue Through Buy Now, Pay Later Option

Alibaba Group Holding Ltd., a Chinese internet giant, saw its shares rise 3.41% on Wednesday. The company, which is based in Hangzhou, China, is one of the world's largest e-commerce businesses. Alibaba has been expanding its reach in recent years, and is now a major player in the global market.

In an attempt to boost global sales as growth at home slows, Amazon started allowing shoppers in Europe to pay for purchases on its international e-commerce platform only after receiving their merchandise.

On Monday, Splitit Payments Ltd., a fintech company, announced that it had raised $100 million in new funding. The company plans to use the new funds to expand its operations and continue its mission of providing affordable financing options to consumers. Splitit has been growing rapidly in recent years, and this new infusion of capital will help it continue to scale its business.

Alibaba said it would join with Ant Group Co.'s Alipay to provide a delayed-payment option to customers of AliExpress, an online marketplace operated by Alibaba outside of China.

Splitit, which is based in Atlanta, Ga., and is listed in Australia, has announced that its new "Pay After Delivery" service will first be rolled out in Germany, Spain and France. The service enables individuals to pay for their merchandise in installments via their credit cards, and could eventually expand into other international markets.

AliExpress is an online marketplace that was founded in 2010. It offers a wide range of products, including toys, clothes, electronic gadgets, and other consumer goods. According to its website, AliExpress ships to over 200 countries worldwide. However, many of the sellers on the platform are based in China, which can often lead to long shipping times – something that may deter potential buyers.

An AliExpress spokesman said that for major European cities such as Paris and Madrid, goods can be delivered in 10 working days. He added that for more remote areas in Europe, delivery times are 15 to 20 days on average. The company also provides a delivery guarantee, which provides some compensation to shoppers if their merchandise isn’t delivered on time.

Alibaba has reported a decline in orders placed through AliExpress in its last three fiscal quarters. The company has attributed this to weakened demand caused by the euro's depreciation against the US dollar, changes in European Union tax rules, and supply chain and logistics disruptions resulting from the Russia-Ukraine conflict.

The payments tie-up comes at a time when Chinese e-commerce companies are looking more abroad to bolster sluggish sales growth at home. Once one of China’s fastest-growing tech businesses, Alibaba’s revenue for its last two fiscal quarters was little changed from the year-earlier periods as a result of a slowdown in consumer spending during China’s strict zero-Covid policy. The company also swung to a net loss in the July-to-September quarter. However, Alibaba is still the dominant player in the Chinese e-commerce market, with a market share of around 58%.

Last year, Alibaba Chief Executive Daniel Zhang said that globalization was one of the company’s three key strategies, along with consumption and cloud computing. Alibaba’s international retail business, which includes AliExpress, contributes only 5% of the company’s total revenue. However, AliExpress is facing growing competition from other Chinese-owned online retailers, including fast-fashion giant Shein and Pinduoduo Inc.’s four-month-old American subsidiary Temu.

Buy now, pay later services are becoming increasingly popular worldwide, with retailers or merchants absorbing the financing cost for what are often interest-free loans. Within mainland China, Ant – which is one-third owned by Alibaba – has long provided short-term financing options to shoppers on Alibaba's e-commerce platforms.

Under the Splitit-Alipay tie-up, shoppers will have a hold placed on their credit cards when they make purchases on AliExpress. After customers confirm receipt of their goods, the money will be transferred to the sellers. Splitit's shares closed 22% higher on Monday, while Alibaba's Hong Kong-listed shares were little changed.