MONTREAL — Since its founding in 2017, Shoplazza has grown to become the second-largest platform in the Asia-Pacific region for merchants to set up online stores—trailing only Shopify, it says. Now, with support from some of the world’s largest tech investors, it’s looking to compete with the Ottawa-based company in its own backyard.

On the heels of a US$150-million fundraising round led by SoftBank, Shoplazza plans to expand in Toronto, where it has maintained its brand headquarters.

The company expects to hire about 50 employees across all functions in the city, seeking to build ties as part of a broader expansion in North America; about a dozen of its roughly 350 employees are located in Canada, chief operating officer Alyson Zhang told The Logic. It also has an R&D centre in Shenzhen.

Roughly 70 per cent of Shoplazza’s 360,000 current merchants are based in the Asia-Pacific region, with the remainder in North America and the rest of the world, according to Zhang. The company, whose investors also include Sequoia China and Sky9 Capital, sees an opportunity to chip away at Shopify’s dominance in North America, a major market for its sellers.

“All of our merchants based in China are selling cross-border, but none of them are actually selling in China,” Zhang said.

Shoplazza cites two features as its selling points for merchants. First, the company maintains partnerships with manufacturers in China, giving merchants the option to purchase goods from suppliers directly through its service. Second, Shoplazza says it has tight advertising integrations with social media platforms like TikTok, as well as a trove of analytics that can guide sellers on how to make the best use of their advertising budgets.

Shoplazza’s integrations with social media platforms include the ability to top up ad budgets for Facebook and Google directly, without leaving its platform, Zhang said. And while those platforms have insights into ad traffic, their data is less robust for what goods customers are actually engaging with on merchants’ websites. Shoplazza uses that data from its sellers’ ad campaigns to give future recommendations such as the types of merchandise to advertise, in addition to the timing and placement of those ads. A Shoplazza spokesperson said customers can choose whether or not to use the analytics feature.

The company says it is in talks with TikTok and Google to increase collaboration with those firms to target the ads even more closely. “It needs to be planned very carefully because of the data privacy protections,” Zhang said. A Google spokesperson was unable to confirm whether the company had been in talks with Shoplazza. TikTok didn’t respond to a request for comment.

Shopify, Shoplazza’s chief competitor, started testing an analytics product last year called Shopify Audiences that helps merchants target ads in a similar fashion. But as the company’s stock crashes down from pandemic highs, it has been under pressure to do more in advertising, including possibly selling ads in its marketplace app or on merchants’ websites. Shopify didn’t respond to a request for comment.

“Shopify could do more with aggregating shopper behavior and serving that back to merchants,” said Joe Cicman, an analyst at the research and advisory firm Forrester. “However, it would have to do significant work to rebalance its terms of service and value proposition to all participants,” including shoppers, merchants, dropshipping suppliers and app-store partners.

Shoplazza’s efforts to gain a greater foothold in North America could potentially add to the challenges facing Shopify, which has seen growing competition from large firms like Amazon and Facebook.

In April, Amazon announced a new service, called “Buy with Prime,” that allows independent sellers outside its platform to use its logistics network to fulfill orders—a move widely seen as a threat to Shopify. The Canadian company’s stock fell 10 per cent that day, extending a decline that has seen its share price lose more than two-thirds of its value since the start of this year. On Thursday, Shopify’s stock fell even further as it missed quarterly estimates by a wide margin.

One of Shoplazza’s challenges as it grows will be reining in fraud, a problem for many e-commerce platforms. Reviews on the consumer rating site Trustpilot show hundreds of complaints about Shoplazza’s practices, with a score of 1.5 stars out of five, based on 505 reviews. (Shopify has a similar score, with 1.7 stars.)

Many comments come from sellers who have had their merchandise copied on sites hosted by Shoplazza, or consumers who never received their orders from Shoplazza sites. Zhang said that until recently, consumers in North America had no option to complain directly to the company since it didn’t have an English website, adding to the volume of negative posts on Trustpilot.

E-commerce scams have grown since the start of the pandemic as more people shop online. Losses from merchandise scams, which includes e-commerce fraud, nearly quadrupled in both 2020 and 2021 compared with 2019, according to data from the Canadian Anti-Fraud Centre. Dollar losses to Canadians totalled roughly $9 million last year.

In April, Shopify announced it would provide free fraud protection for its merchants on transactions with Shop Pay, its one-click checkout service. The feature, which is only being offered in the U.S., covers the cost of the fraudulent order and any chargeback fees.

Correction: This article has been updated to correct details about Shoplazza’s location, customer base and partnerships.