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3 Steps to Cross-Border Trading into Europe

By Pawel Bobinski

The crucial role of delivery in an excellent customer journey

The global nature of the modern economy is never more evident than in online trade. With a majority of customers now shopping cross-border, now is the time to swing wide the doors to foreign lands, or risk being left in the dust.

Fortunately, there are three steps to take that make trading into Europe a relatively straightforward proposition.

Read on to learn how to conduct effective cross-border ecommerce to the continent.

Introduction

The growing trend towards globalisation has arrived at the online shopper: 57% said they have recently conducted cross-border shopping online. According to Accenture, cross-border online shopping is supposed to grow by 29.3% annually and its share of total global ecommerce is estimated to reach 29.2% in 2020. In Europe, the focus is on a small number of high yielding countries; the UK, Germany, and France are responsible for 60% of European ecommerce revenues.

Europe can be seen as an internal market. Nevertheless, local conditions and customer preferences need to be taken into account to be competitive in the respective countries. As a result, content, language, local payment methods, and delivery options need to be adapted to local demands. To sum up, in order to be successful in a market, the customer journey has to be tailored to the market conditions.

The importance of the customer journey is already present in many companies: 75% of all companies consider the improvement of the customer experience their top priority in 2018. The ongoing commoditisation of products through the excess supply created by the internet prevents many shops from positioning their brand in the market. Consequently, the customer journey is seen as the competitive differentiator that allows online shops to stand out from their competitors.

Sounds reasonable – but what exactly does that mean for the highly competitive ecommerce sector? How can online shops leverage the customer experience, especially with regard to future market developments?

Pay attention to all three steps of your customer's journey

When shopping online, the customer’s journey is split into three steps: shop, payment, delivery (including returns). These touchpoints offer the possibility to engage proactively with the customer and consequently increase sales and customer retention while simultaneously decreasing basket abandonment.

Step 1: Convenient shopping experience

Two major building blocks characterise online shopping: a) a potential customer needs to be directed to the shop and b) has to be converted into a client. However, what exactly is necessary to keep costs for the customer acquisition low, while simultaneously keeping customer retention high in cross-border markets?

Nowadays, online shopping is increasingly characterised by big marketplaces like Amazon and Zalando, which dominate the online sphere and provide customers with total comfort.

These marketplaces offer the opportunity to expand quickly into foreign markets because the online shop’s products can be transferred to an existing and familiar shopping environment. Platforms provide ‘smart shoppers’ with a broad product selection, which creates room for extensive price and product comparison as well as a high level of comfort.

81% of online merchants make more than 41% of their revenue through digital marketplaces. Whether an online merchant sells products via a digital platform in the target market or whether the in-house development of a local online shop is advantageous depends on the individual case.

Step 2: Local payment preferences

Providing local payment methods offers the possibility to increase customer satisfaction, and consequently, the likelihood of a purchase. Digital payment systems, such as PayPal, prevail in Western Europe, followed by credit and debit cards. In Germany, the classic invoice still has a high market share, whereas in Italy and Poland, cash-on-delivery plays a significant role.

Unlike an individual payment solution in an online shop, so-called PSPs (Payment Service Provider) offer a localised checkout in which currency, language, and preferred payment methods can be adapted to the respective market. Especially when it comes to cross-border online shopping, those local payment preferences (and therefore PSPs) gain importance: this year they are supposed to conduct 59% of all global payments in ecommerce.

Ultimately, online merchants need to decide whether they want to collaborate with external service providers, which optimise shopping and payment processes in a localised manner, or whether an individual solution might be the preferable choice.

Step 3: Delivery as a key component of the customer experience

The above-mentioned factors of shopping experience and payment method have an important impact on the customer journey, and together contribute to 59% of the purchasing decision according to a study by UPS.

Nevertheless, what about the remaining 41% that are significant for almost half of all online purchases? This 41% relates to the service after checkout (that is, after the order has already been placed). These touchpoints, namely delivery and returns, are the last steps to complete the customer journey.

They are the last link between the customers and their purchase, which means they can either be your last touchpoint or the start of a long-lasting relationship. As an online shop, it is therefore of utmost importance to close the customer experience gap through a seamless customer journey.

The 41% consist of four factors: delivery time, returns solution, pick-up/drop-off points, and the amount of delivery options. Coined by local preferences, those factors have a crucial impact on the purchasing decision and should play a key role in the customer journey.

Delivery time

Whereas a few years ago you were lucky to receive your parcel within one week, timing expectations nowadays have changed drastically. Deloitte states that 90% of shoppers considered same-day, next-day or two-day delivery to be ‘fast’, but only 63% thought three-to-four-day delivery was ‘fast’. The fact that 25% of customers are willing to pay a significant premium for faster delivery underlines the importance of a short delivery window.

While the delivery in France takes 46.5 hours from the first hub-scan to the first delivery attempt, the same process only takes 21.1 hours in Switzerland, which underlines the discrepancies across countries. Additionally, the importance of a flexible delivery date becomes more and more important – customers from Poland, Spain, and Italy particularly value this option.

Returns

As mentioned earlier, more and more online shoppers will purchase from an overseas website by 2020 (UPS, 2016) – and possibly send some parcels back to the shop. However, many domestic online shops miss their opportunity for growth, and the chance to participate in the growth of global ecommerce, because they neglect a cross-border return solution.

Nevertheless, online merchants should not shy away from this difficulty, but rather work towards the implementation of an uncomplicated return solution. The return process plays a major role for European online shoppers: more than half of the respondents of the leading European ecommerce market rate returns as ‘very important’. Furthermore, the basket value increases with an easy return solution as it minimises the perceived purchase risk.

Implementing an international return solution is worth the effort, so as not to lose customers due to unmet expectations, but rather to closely connect them to the shop and increase customer loyalty.

PUDO

While delivery to the customer's home address is a popular option across most countries, Pick-up/Drop-off (PUDOs) points are becoming increasingly important in some. The demand for this service varies considerably across countries. Whereas parcel delivery services in France provide their customers with a network of 0.85 parcel shops per 10,000 inhabitants, the density of Pick-up/Drop-off points is only 0.3 parcel shops per 10,000 inhabitants in Italy (Seven Senders GmbH, 2017).

E-shoppers from countries like France, Spain, Poland, and the Czech Republic often like to choose this delivery option as an alternative – so when you ship to these countries, make sure to work with a service provider that has an extensive network of PUDO points and can give you a fair deal for this shipping option.

Amount of delivery options

The customer is spoilt for choice: delivery location, as well as delivery timing, can be selected online – and customers expect this. The possibility to adjust the delivery according to individual preferences and needs is playing a decisive role nowadays. 50% of online customers abandon their cart as soon as they consider delivery options to be unsuitable.

In order to avoid this worst-case scenario, online merchants need to offer a broad selection of carriers, delivery periods, and locations, and therefore transfer the decision-making authority to the customer.

From single touchpoints to a seamless customer journey

Nevertheless, the customer journey is not only dependent on delivery time, return solution, and PUDO possibility – a positive experience will only be achieved through combining these with optimal customer communication.

During the delivery process, the customer has an enormous need for information. Where is my parcel? When will it arrive? Is my shipment okay? These questions provide new areas for touchpoints with the customers to update them about the delivery status, and proactively inform them in case of problems.

Tracking updates and notifications via SMS, e-mail, or an app, serve as communication channels. 88% of customers use these notifications in order to receive updates about their parcel. As a matter of fact, 50% confirm that they check the status of their parcel more than two times. Moreover, 80% of online shoppers consider proactive notifications about the delivery status to be ‘very useful’ or at least ‘useful’.

Big brands, such as Amazon and Zalando, have already recognized this opportunity: after checkout, they redirect their customers directly back to their shop via their own tracking page, or they keep them updated about the delivery status by using notifications in their corporate design. Ultimately, this increases customer retention after checkout and the touchpoints can be used to push the upselling potential to the next level. Using this strategy, online merchants can transform a happy customer into a loyal one.  

Conclusion

Think global – act local

Nowadays, online merchants need to align their shop’s offers with global markets, in order to keep up with their competitors in international, cross-border ecommerce. However, they should avoid providing one universal solution for all customers, as customer expectations and needs differ substantially across countries.

That is why, when facing the international expansion of your online shop, it is essential to create local relevance for the respective customer in the target market. The design of a customer-specific customer journey – from shop design to returns solution – is crucial for that.

Create an exceptional customer experience for each market and prioritise individual customer preference. A seamless customer experience is not a coincidence: rather, it is a mixture of thought leadership and continuous improvements. Get started today.

Pawel Bobinski, Head of New Markets, Seven Senders GmbH

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