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Cross-border ecommerce logistics: a comprehensive guide
- Last update: 23.02.2024
- Published: 30.09.2022
- Read in: 6 min
International online sales are a sign of the times. Not only big brands and well-known sales platforms such as Shopee, Aliexpress, or Amazon but also owners of smaller companies are expanding their business into foreign markets – the whole world is moving in the same direction.
Cross-border e-commerce has great potential and the race for customers is on. An important part of it is the logistical aspect, which can determine not only whether shoppers decide to make a purchase, but also whether they do it again. If you are wondering how you can win the hearts and build the trust of your international customers, and find out which logistics services can help you to do this, then you are in the right place. This guide is just the thing to help answer your questions.
Why should you set up an international online business?
Let’s start with some facts. International e-commerce is currently seen as a huge opportunity for anyone wishing to scale their online business. Local markets are becoming saturated and buyers are increasingly looking for products abroad.
As indicated by Eurostat data collected in 2021, more than 30% of online shoppers decided to make a cross-border purchase from another European country, and more than 20% from non-European countries
And while these figures may not seem that large in e-commerce terms as a whole, their significance is increased by the fact that they are on an upward trend. There is also a good sense of change in the Asia-Pacific region, where leaders are boldly moving toward the West – such as Singapore’s Shopee. And as the biggest are developing their cross-border drive, it means there is much to win.
What was certainly not foreseen was the outbreak of the COVID-19 pandemic, the turbulence in global supply chains, and now the inflationary problems. However, this does not change the overall conclusion: international sales are the future.
Why is well-organised cross-border logistics a necessity?
We have already established that international markets are key to the further development of ecommerce businesses. Now let’s look into why logistics plays an equally important role.
Many of you will be familiar with the challenges of running a business like this in one country. Most of the elements will be similar for international sales too, but their influence will be much greater.
The logistical processes will affect:
- the new customers’ online shopping experience and level of satisfaction with the service
- the delivery prices offered to buyers
- order fulfillment times
- the flexibility of your business
- the environmental sustainability of your company
The sum of all these factors will be a major part of whether your business gains momentum in foreign markets, whether it remains competitive, and whether your customers keep coming back for more purchases. That’s why it’s so crucial to organise them well from the start.
What can you do to prepare for conquering different countries?
There is no perfect advice here – every business, every market, every situation is slightly different. I can only give you a few tips that could serve as a roadmap.
Make a plan
I believe you will agree with me that everything starts with a plan. And while I know that many people prefer to act, rather than gather information and make tedious plans, without this there is nothing to start with.
Thinking through all the issues and making a list of things to do can give you a broader perspective and help you make the right decision. Although planning is only the first step and top priority, you should base it on facts.
Understand the current state of the market you are interested in.
Try to find answers to a few questions:
- Can you compete with your products in this market (for example on price)?
- What are customer expectations in terms of delivery costs and time?
- Which payment methods are most preferred?
- Where do online consumers buy most often (marketplace or individual ecommerce site)?
- Are there additional tax regulations you should be aware of?
Use verified sources: reports, government websites, and reliable media. But don’t let go of less official channels such as Facebook groups. They can give you an insight into what is currently happening in the market, what the biggest local problems are, and what customers are looking for (or what they are avoiding). Look for well-run groups with a committed administration – the best ones are usually closed and you have to meet several conditions to join them. If you don’t consider yourself a good observer, ask someone for support.
Be aware that opening up sales in a new market will involve providing an offer in the customer’s language – you will have to deal with this too.
Choose a starter kit
International sellers don’t explore the new market with a whole arsenal of products – they limit to a well-proven set of items. If you want to try your luck abroad, you should also follow this rule.
High stock volumes in a fresh market could be a big problem if sales don’t go according to plan. And believe me, buyers can surprise you! Withdrawing a large batch of goods means multiplying costs. It is safer to send a new load when you see that customers are willing to buy your products.
Remember that you don’t have to rush. Observe the market, improve your campaigns and then gradually expand your range by adding products related to your core line.
Decide how you will handle the logistics
Did you know that according to the STRIX report, as many as 59% of Polish ecommerce businesses that have started selling cross-border points to logistics as the biggest problem that slows down fast growth? This proves that it is a real issue and companies need support in this area.
Although the logistical processes themselves are not that different from those of domestic ecommerce, they are complicated by distance, the language barrier, and the multitude of new tasks.
Let’s consider what you can do to simplify these matters in the next chapter.
Cross-border logistics - in-house or by shipping partners?
This is probably the most frequently asked question among online retailers looking to sell internationally. No wonder – it doesn’t have to be obvious.
As an expert, I would honestly advise against the option of handling cross-border orders on your own. Mainly because of the international shipping costs, which are high – especially now, when the economic situation turns out to be worse than expected. But also due to the numerous additional processes to be managed. If you decide to run everything by yourself, there’s no way out: not only the business part of the ecommerce website, such as marketing strategy and product portfolio development but also storage, order picking and packing, delivery, and possible return handling, will be on your side.
Cross-border shipping becomes more complicated the further you want to send your product. Once the destination country is on another continent or is not part of a union (e.g. the EU), you will have to deal with the customs clearance process and tax rates.
If you choose to work with an external logistics partner, you will be able to outsource many of the processes, thus saving company resources and passing on part of the responsibility to the experts.
Many online store owners often think about costs – wouldn’t it be cheaper to do it alone? Of course, I cannot answer for everyone, but in the vast majority of cases, this will not be true. Due to their size, logistics operators can count on far better freight rates than growing ecommerce. Add to this labour time, warehouse ownership, and employment of people – and it is difficult, to sum up in favour of in-house order processing.
3PL vs. fulfillment network
What can cause some difficulties when shipping cross-border is the reach of the logistics provider. Sometimes it is quite challenging to find one capable of covering the markets concerned. Also for business reasons – the development of a complete logistics infrastructure in many countries takes time and a lot of financial resources.
Therefore, a solution called a fulfillment network has emerged on the market, offering access to a variety of 3PL providers, ensuring wide geographical coverage. By joining the network, you can be sure that your business needs will be fulfilled in your domestic market and other countries. This enables you to be more flexible and take advantage of opportunities when you see them.
It’s a solution that gives you the ability to ensure fast shipping, proper delivery times, and lower prices – at a level equal to local retailers. At the same time, it doesn’t lose its flexibility to improve or tailor the fulfillment to the target audience.
In this way, the logistics will work for the benefit of your business – improving the shopping experience and customer satisfaction.
Global ecommerce is striving to further grow and cross more borders (including national ones). It may not be long before shipping internationally will be the standard rather than just a trend.
In all probability, those ecommerce sellers that decide to expand beyond their own country and start trading nationwide will gradually gain experience and strengthen their position. Which may prove a good strategy during a crisis.