Prepare for impact! Ecommerce could strain supply chains over the holidays

Prepare for impact! Ecommerce could strain supply chains over the holidays

The pandemic has given ecommerce sellers a lesson in how high demand can stress supply chains and impact sales. Consumers who accepted back orders and shipping delays this past spring will become less forgiving as the holidays approach. To meet heightened demand, online sellers will need to partner with logistics professionals capable of helping them quickly by efficiently putting packages into the hands of customers worldwide.

Global ecommerce has seen enormous growth during the pandemic, up 71% year over year in the second quarter alone. But it hasn’t all been smooth sailing. In spring, consumers advised to stay at home took to online shopping in droves, clearing virtual shelves of everything from canned goods to office chairs. The unanticipated spike in sales caused stocking problems and shipping delays on leading ecommerce sites, inspiring consumers to explore new sellers — including those based in other countries.

Ecommerce sales during the 2020–2021 holiday season are expected to grow by 25% to 35% year over year, according to Deloitte’s annual holiday retail forecast. To get a piece of that growth, cross-border retailers must be able to provide a seamless shopping experience and speedy delivery. That requires negotiating the complex world of international shipping.

Supply chain and logistics professionals can offer an invaluable service to ecommerce retailers by helping them:

  • Navigate tariff codes
  • Streamline shipping
  • Understand risk

Navigate tariffs codes

To minimize delays at customs, especially during the critical holiday season, many ecommerce sellers shipping goods into the United States will want to use the expedited Section 321 Type 86 clearance. Freight forwarders and carriers can help facilitate Type 86 clearance for clients through HS code classification. Once ecommerce merchants realize how long it can take to match each product to the proper Harmonized System (HS) code, they’ll likely look to offload that task to a trusted partner.

Avalara Item Classification speeds up the process, allowing you to increase efficiencies in your own business while streamlining international operations for clients. By relying on machine learning to identify and produce HS codes, it eliminates the need to manually search through clients’ product catalogs.

Streamline shipping

Another way for ecommerce merchants to avoid unnecessary shipping delays is to ship Delivery Duty Paid (DDP). This entails collecting customs duties and import taxes from customers up front, ideally at checkout. In addition to eliminating surprise (i.e., unwanted) costs for customers upon delivery, it allows packages from international sellers to be left on doorsteps like domestic packages.

Carriers able to help merchants assess the correct customs duty and collect it up front will stand above those that cannot.

Understand risk

Shipping products internationally tends to be riskier than shipping products domestically, in part because global trade depends on political and trade agreements.

Because of Brexit, for example, the process for importing and exporting goods to and from the U.K. will change effective January 1, 2021. Shipments that once flowed freely will now face higher tariffs and tightened controls, likely leading to reduced margins and delays. Retailers will need to work with their logistics partners to ensure the accuracy of their HS codes and keep goods moving with minimal interruptions.

Prepare to problem solve

People are eager to return to brick-and-mortar stores. Yet the convenience of ecommerce will inevitably persuade consumers to continue to shop online even when face masks have been relegated to dark corners in storage closets (a day that must surely come). Salesforce predicts close to 30% of global retail sales this holiday season will occur online. This will likely stress the supply chain, as happened this past spring. Virtual shelves could be emptied, making fulfillment a challenge. Last-mile delivery systems could be overwhelmed.

Supply chain professionals can help global ecommerce businesses navigate these challenges successfully. Learn how in this Reuters report.  

Recent posts

The 2021 sales tax changes report: midyear update

Your guide to navigating the complicated world of tax compliance and preparing for the future 

The 2021 sales tax changes report: midyear update
2021 MIDYEAR SALES TAX CHANGES

Hear tax and industry experts break down the latest legislative updates and industry trends in our upcoming virtual event.

Stay up to date

Sign up for our free newsletter and stay up to date with the latest tax news.