Industry facts, challenges and solutions for today’s international shipping strategies
The rise of online shopping has drastically changed the way that consumers interact with retailers, and even manufacturers. It’s forecasted that e-commerce will make up 15.5% of total worldwide retail sales by 2021, however the US is an over-saturated market. Cross-border e-commerce is lapping domestic as customers are no longer bound by brick and mortar stores and are starting to feel more comfortable purchasing from overseas. This makes it extremely important to establish your business on a global scale.
Today only one third of US businesses are selling across-borders, which by global standards is very low. Considering that many of those deliveries are only to Canada, that leaves a lot of room for potential growth. However, one-third of those who still sell only domestically intend to start selling cross-border within the next year.
There are many advantages in selling internationally; it aids in business growth, increases your margins by selling to other markets, creates demand from foreign customers and thins the domestic competition. For future growth and to combat the dominance of sellers such as Amazon, merchants should be looking at how they can capture new markets, new consumers and achieve growth of existing inventory without having to redesign aspects of their supply chain. In Europe alone there are over 700 million potential consumers in the market who are open to receiving American products and support our brands.
So you’ve decided to open up your borders and want to sell internationally. Where should you ship? The UK is a good bet, and here’s why: Not only is the UK the largest e-commerce market in the world, but they also have the highest internet penetration. They rank third in the world in overall e-commerce attractiveness and have a huge English-speaking market full of internet savvy customers. Choosing the right markets to open up e-commerce to is a huge step in becoming a successful global merchant.
However, as the number of international customers increases, there will still be many barriers that both retailers and manufacturers will need to overcome. The top four pain points that are particularly important to consumers:
1. International Shipping Costs: Expensive delivery costs often lead to cart abandonment – in fact when PayPal conducted a survey on cross-border shipping, more than one third of the answers indicated that this was a clear gap in the market that needed to be fixed.
2. Limited Tracking/Concern Package Won’t Be Received: Postal deliveries globally can solve the first issue of cost, however the level of tracking globally is just not at a standard that is conducive to a quality consumer experience with parcels only currently achieving a 40% success rate on final scans, even on trackable products.
3. Customs/Taxes Fees: These have long been killers for international growth for merchants, especially when trading into Europe with the thresholds only around the $20 USD market. Nothing will kill a repeat customer quicker than receiving notice they can’t get their package until they pay more. In fact, 55% of consumers stated that they would not consider buying from a merchant a second time if they were hit with unexpected fees at delivery.
4. Slow Delivery Time: The modern consumer is used to the quickness of two-day shipping, thanks to Amazon. But traditionally shipping has taken weeks for orders to make it to the doorsteps of international customers, and this has caused the popularity of cross-border shipping to weaken.
So what are companies doing to overcome these challenges and successfully sell and ship across-borders? Retailers and manufacturers are primarily using freight forwarders, but 58% of logistics providers with retail customers do not offer cross-border expertise. Others hire customer compliance specialists or full service cross-border e-commerce specialists to strategize international shipping methods. However, more and more businesses are looking to their shipping software for global shipping capabilities.
Once you’re cross-border enabled and your website allows for international sales, it is important to choose a cross-border shipping strategy, specifically how you will get your parcels delivered to your customers. The best bet is to offer your customers a range of choices. Then determine if your shipping solutions will offer features such as tracking, insurance, and proof of delivery – this will help to establish trust in the shipping process. Next, determine if you will collect taxes on the front or the back end. Finally, if you do anticipate returned or refused parcels, be sure to have a viable reverse logistics method to get the parcel back to your home base. This can all be done with global multi-carrier shipping software.
As a business who provides the most flexible and well-built shipping software in the market, we have taken the approach of advising merchants to provide consumer choice as the remedy for poor customer experience. This comes through the enablement of the supply chain with technology that will provide more visibility and allow the cost of cross-border shipping to be reduced. If you set up a well-rounded and supported cross-border shipping model, you are sure to quickly reap the benefits of business growth, increased margin, demand from foreign territories, and most importantly – happy customers all around the world.