Expectations for cross-border e-commerce are high as research companies such as Forrester predict a compound annual growth rate of 17% between 2017 and 2022 as compared with 12% growth for overall B2C e-commerce. Forrester further predicts that cross-border purchases will comprise 20% of all worldwide e-commerce in 2022, with sales of $627 billion and China will lead the way with more than half of all such purchases.
As with any online transaction, local or international, customers expect a seamless, transparent experience from searching for an item to accurate product description and final checkout with full knowledge of cost and expected delivery period.
Meanwhile, behind the scenes, retailers need to be able to make any such promises a reality and that means a reliable logistics network – local and international. Logistics networks can present many challenges but international, or rather cross-border, present a variety of considerations many retailers have not thought of including language translations of website, currency exchanges, payment options and more.
A host of companies offer services to assist retailers with these considerations and more including 3PLs and freight forwarders, integrators, post-offices, niche technology providers and online marketplaces such as Amazon and Alibaba’s Tmall. Which type of company is best depends on the individual retailer’s requirements and pocketbook.
As such, in our latest social media survey, we asked, “What do shippers really want from an e-commerce cross-border solution?”
The top two desires, lowest transport rate and customs brokerage, would seem to be bonus points to the logistics providers. Skilled and knowledgeable concerning customs brokerage, these providers also often have enough pull to garner the best rates for customers. Integrators, DHL, FedEx and UPS, are asset-based and offer networks specifically focused on small parcels (the majority of e-commerce packages). Air cargo providers as well as integrators have all made note of increased international volumes in earnings calls and attribute much of it to e-commerce.
16% of respondents indicated payment management as being the most wanted from a cross-border e-commerce solution. Alternative payment options have blossomed as the global population gains connectivity. These options such as Alibaba’s Alipay were created for consumers that typically pay by cash versus credit card or cash on delivery (COD). Alipay is the largest such payment option in China with over 40% of the market share. These alternative payment solutions are expected to account for over 50% of global e-commerce sales by 2019 led by emerging markets.
For retailers, FedEx, for example, has partnered with BlueSnap which connects to more than 20 global acquiring banks and supports payment types, including popular mobile wallets like ApplePay, PayPal, Visa Checkout, MasterPass and Alipay, and over 100 different currencies in the U.S., Canada, Europe, Asia, Latin America, and Australia. Solutions such as this help to avoid unexpected currency conversions, cross-border bank fees and potential fraud.
Only 6% of survey respondents indicated warehousing. E-commerce requirements have resulted in a transformation in warehousing. As a result, 3PLs and freight forwarders such as SEKO Logistics (as does DHL e-Commerce/DHL Supply Chain) offer specialized warehousing for e-commerce packages. These facilities are typically highly automated to speed the process from fulfillment to shipping in order to get the package in the hands of the consumer in the shortest amount of time possible. Not to be out done, Amazon’s fulfillment facilities are also highly automated while Alibaba’s logistics subsidiary, Cainiao, has just recently opened a “smart warehouse” which employs more than a hundred robots equipped with advanced technologies to help warehouse clerks quickly locate items ordered through Alibaba’s e-commerce portal.
Lastly and somewhat of a surprise, only 3% of survey respondents noted returns management as what shippers want most from a cross-border e-commerce. According to an earlier FedEx annual report, cross-border returns make up an average of 8% of overall online sales. Typically instead of shipping the item back to the originating country and incurring additional shipping and customs fees, retailers will try to establish local partnerships with liquidators, consolidators or some other dealer to resale the items within the country, often at a reduced price.
As a retailer, selling international offers many benefits but the infrastructure needed to make it happen seamlessly and transparently needs to be studied with the upmost care. There are many options and each has their strengths as well as weaknesses. Be mindful of costs but at the same time, identify and prioritize the pain points that need to be addressed first and foremost.