Israeli start-up BorderFree files for IPO

As retail moves online, and offshore, US retailers are embracing the sales and shipping platform this company offers

Some of BorderFree's customers (Photo credit: Courtesy)
Some of BorderFree's customers (Photo credit: Courtesy)

BorderFree, an Israeli start-up now headquartered in New York, has confidentially filed for an IPO, the Wall Street Journal reported over the weekend. BorderFree helps American retailers to expand their markets and gain customers overseas.

BorderFree was established in 1999, then called E4X, and changed its name to FiftyOne in 2008, taking on its current name last year. 2008 was a significant year for the company, CEO Mike DeSimone said in a recent interview, with the company’s fortunes rising at a time when most of the business world was down on its luck. “In the wake of the global recession, retailers began to use our services as a way to expand their global reach, and to make up for the sales they were losing in the US,” DeSimone said.

As Internet sales make up a larger chunk of overall retail sales each year, brick and mortar retailers, like Macy’s, Nordstrom’s, Sears, Neiman Marcus, and many of the other “big stores” in the US are trying to make up for lower in-store sales by shifting towards online — only to come up against the giants of Internet retailing, like Amazon and eBay, who got there first and have perfected their methods.

Business slowed in the US and Europe, but in other parts of the world, like Asia, business was better than ever. However, selling abroad for most US retailers has been notoriously difficult, with everything from shipping to customs to currency exchange posing formidable challenges. BorderFree offers retailers a solution – an all-in-one service that takes care of everything involved in international ordering, starting with taking orders in a customer’s native currency (at the correct exchange rate) to taking care of the shipping.

Mike DeSimone (Photo credit: Courtesy)
Mike DeSimone (Photo credit: Courtesy)

The vision of long-time entrepreneur Yuval Tal, who started the company that would eventually become BorderFree in 1999 (Tal now runs Payoneer, an Internet-based payment company) has panned out, said DeSimone. This past holiday shopping season was soft in the stores (on Cyber Weekend, the three days after Thanksgiving, for example, retail sales overall were down 2.9% from 2012), as US customers held back on spending due to the lingering effects of the recession — but international sales were an important bright spot for retailers.

“Among our US retail partners that launched targeted international marketing campaigns during the holiday season, several saw sales gains of 50–100 percent,” said DeSimone. According to BorderFree statistics, U.S. retailers saw the highest growth internationally in China, with 279 percent growth in same-store sales this holiday season compared to the previous year. Other top countries for year-over-year sales growth were South Korea (91%), Israel (78%), Sweden (74%), Mexico (67%), Spain (56%) and Russia (49%). Cyber-weekend sales in China were up a whopping 545% in 2013 over a year earlier.

Israel, which still houses the company’s R&D, was the first shipping site for BorderFree’s services, enabling the company to hone its system — and now the company has offices in Canada, China, and Ireland, as well as in New York and Tel Aviv.

BorderFree isn’t the only company offering these kinds of services — but it is the most popular among retailers, as its very long client list attests to. And the company gets new clients at the rate of several a month; the latest client, clothing retailer Men’s Wearhouse, just signed up last week. “More than 80% of all online consumers live outside the United States,” says DeSimone. “There is competition, but I’m very happy with our customer list,” says DeSimone. “Companies likes Sears, Macy’s and Bloomingdales, among many others, are smart enough to make the right choice. We’re helping out American retailers, and giving customers around the world the freedom of choice to get the products they want.”

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