The importance of proactive delivery for cross-border businesses
- Sep 28, 2020 | James Hayes
Cross-border ecommerce has exploded in recent years, with the past few months seeing yet more growth as consumers switch their shopping habits from real world to digital in the pandemic.
According to UK ecommerce trade body IMRG, with a projected 17% growth rate between 2017 and 2022, cross-border purchases will continuously increase their share in overall B2C ecommerce, which is predicted to grow by around 12% in the same time period.
In fact a recent PayPal survey finds that 9% of Chinese consumers are actively buying UK goods online on a regular basis. Even 15% of Germans are buying British, the study also shows.
However, managing the delivery of these goods comes with challenges. Getting the goods from A to B is just part of it; there is also a long list of customs, taxes, tariffs and regulations that govern import and export that need to be met.
Whether it is from a retail website or a marketplace, these factors have to be taken into account for each and every market that you sell into. It shouldn’t stop you doing it, but it does need to be addressed.
And that is where proactive delivery comes into play. From the moment a shopper in another country clicks to investigate your goods, understanding where those items are, where they have to go, how they are going to get there and what that is going to cost becomes crucial.
Costs and hidden costs
The first thing that impacts the purchase from another country is the cost – and with cross-border there can be many factors that change the price to the consumer based on where they are.
Take, for example, a pair of vintage Nike Daybreak trainers for sale. The on-site price may well say $50, which any aficionado will know is a very good price. However, to import those trainers from a US vendor to, say, the UK will incur delivery costs, it may well also incur customs costs and other tariffs.
All this means that, while they look like they are $50, at checkout the shopper may well be charged $80 or more. Not such a bargain.
Worse, a shopper in say Germany where online goods are often paid for on delivery may have bought them to find that when they arrive, they are shelling out almost twice what they thought they were going to pay.
In fact, according to a study by Whistl, 13% of cross-border purchasing customers had additional customs and/or import costs to pay, more than half of which paid these additional costs at the point of purchase. However, only two-thirds of consumers were aware of these additional costs at the point of purchase.
Understanding all these costs at the point of sale is vital. Using software systems that can calculate the tax and tariffs for goods based on where they are going can smooth this process, offering the shopper the actual price they will pay when they look at the goods.
The same applies to delivery charges, as we shall see.
In the new ecommerce era – domestic and cross-border – competitive retailers stand or fall on delivery options. Free delivery is increasingly becoming the norm for many deliveries.
However, delivering cross-border is usually costlier than doing it domestically. Domestically, the retailer can to some extent rely on economies of scale to get a good deal on delivery. With a more scattered, international, cross-border operation, it is harder to build in your own economies of scale to offer free delivery.
For this there are two options. The first is to rethink delivery options. While free is a key driver for many purchase decisions, speed of fulfilment and delivery is also crucial. People will pay for speed and a retailer can often both differentiate themselves from the competition and cover the costs of international delivery by offering speed at a premium price.
The second option is to look at delivery management firms such as Parcelhub, that can aggregate deliveries for many retailers all going to the same place, creating the economies of scale needed to create a delivery cost, cross-border, that can facilitate free delivery to the shopper.
The advantage of this second approach is that is also allows for the creation of many other delivery options, including speedy ones, so that not only can you offer free or low-cost delivery to all your customers, but you can also offer a range of delivery options for them too.
Proactive tracking support
With a growing number of overseas customers, customer service around delivery of items can also become a challenge for any retailer.
Delivering within one country always generates a raft of customer queries: ‘where is my order’, ‘when will it arrive’ and ‘can I change my delivery date/time/location’ are common.
There are also the invariable items that may go awry in transit. Knowing exactly where the goods are at any point in their (often long) journey is crucial. Proactively tracking goods as they progress across world is the only way to keep pace with this.
Again, handing over to a third-party delivery management company can also help here too. Getting scanned goods to raise a ‘ticket’ at key parts of their journey – indicating events such as ‘picked and packed’, ‘shipped’, ‘at customs’, ‘cleared customs’, ‘crossing from France into Germany’, ‘delivered’ can help keep tabs on the goods as they move.
This means that, should a customer enquire then you can tell them with some degree of accuracy what is happening.
Now, you can do this yourself, but it requires a dedicated team of people to do it. Third-party delivery management can effectively have this built into what they offer and handle it for you.
It can also be used to proactively inform the customer as to where the items are – via text or email – giving them confidence that all is well and offering that extra bit of customer service that could well see them buy from you again.
Meeting marketplace demands for delivery
Selling through online marketplaces is an essential component of ecommerce. More than half of global ecommerce is handled through them – and it is rising.
For anyone looking to sell cross-border, distribution through a marketplace is the most uncomplicated path to internationalise your business and offer products to a much larger number of customers.
However, marketplace shoppers require transparency of both cost and delivery and getting it right is just as crucial here as it is when selling cross-border from your own site.
According to Händlerbund, more than 54% of customers who order from overseas retailers stated that they had had problems with their order. Making sure you avoid the most common mistakes – goods not arriving on time, damaged items, technical issues, problems with warranties and simple lack of proactive delivery information – is clearly vital.
Fast, traceable delivery and simple returns are what customers want from marketplace purchases and again it starts and ends with delivery. According to UPS, 41% of the factors that are decisive for purchasing online are the four factors delivery time, returns solution, pick-up/drop-off (PUDO) and the number of delivery options. Tracking is also becoming an increasingly important factor around marketplace delivery as much as it is on own-site ecommerce.
In fact, some 80% of buyers use the tracking link provided by the shop or delivery agent. The marketplaces react to the increasing demands of their customers with strict requirements.
When selling on eBay, for example, merchants must deliver at least 91% of the items on time, otherwise, products may fall down the search field, or your shop may even be blocked. If you sell through Zalando, you must adhere to the 100-day return policy and the precisely defined delivery times.
According to Seven Senders, marketplace requirements are often difficult to meet even for dealers who only sell nationally— with Europe-wide shipping, the challenges become even more complex, especially on the last mile.
Many marketplaces already run their own logistics services and this can be a boon to cross-border startups. They handle the warehousing, delivery – including any customs and taxes – as well as returns and to some degree customer service. However, it is costly and may not always be the best option.
Managing it yourself through a third-party delivery specialist can give you a more cost-effective approach to servicing marketplace customers, bring all the advantages we have already outlined to bear here too.
At the start, we touched on the complexity of customers’ clearance, tax, and customs when it comes to selling – and shipping – cross-border. But that is just the start of it.
Along with this there are a range of commodity codes, that specify what goods actually are and ergo what tariffs they may be subjected to, EORI numbers, which you need if shipping from the UK to non-EU countries and more.
Understanding customs, taxes and tariffs – not to mention prohibited goods and parties – is a very complex issue. Getting the right EORI numbers and commodity codes from the get-go on your goods will help for those goods to be sold overseas.
If they don’t, for instance, meet the standards of a particular country, a third-party delivery firm’s systems can prevent you from selling those goods in that country and other companies can help manage the process of labelling the goods in the right way and advising on tax and tariffs.
More prosaically, having the right commodity codes and EORI numbers will merely mean that goods, firstly, pay the right customs charges at the point of sale, and secondly, can clear customs expediently and arrive at the customer on time.
Again, proactive tracking can also indicate that goods have been held up, so that customers wondering where their goods are can be given a definitive answer – even if it isn't the news they want to hear, at least they know what’s happening.
Selling cross-border is going to be an essential growth vector for many retailers and merchants in the UK. Shoppers all over the world are turning to the web to shop and the web is, to all intents and purposes, borderless.
However, in the physical world of goods and shipping, the world is still very much full of borders – the crossing of which involves a range of rules, regulations, customs, tariffs and taxes.
Understanding all these is vital as it dictates how much items can be sold for in each country, how long they will take to arrive and how much that ecommerce delivery will cost.
Working with third-party experts in taxes and tariffs, product commodity codes and, perhaps most of all, shipping is now vital to creating an effective cross-border retail operation.