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Remember this when you set up your logistics for cross-border trading

Busy commercial harbour with logistics for cross-border trading

By: Pawel Bobinski

Trading cross-border is a not only a commercial challenge, but it’s also a huge operational one.

There are, however, some basic steps that you can take to give yourself the best chance of running your operations smoothly.

This article will offer some tips and things to remember when setting up and running your logistics for cross-border online retail.

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The fact that turnover from online sales has been growing, and will continue to grow, is hardly news anymore. What is interesting to see, however, is where this future growth will be coming from – while the growth curve for domestic online sales will flatten out at one point, it is cross-border sales that will become the driving force in online retail.

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.

Thanks to an ongoing digitalisation of traditional industries as well as increasing accessibility to the internet, buying online has become a habit for many internet users in countries all over the world – and the number of online shoppers is growing.

Falling trade barriers and innovative supply chain concepts make it easier and more attractive for consumers to purchase that special piece that they were just not able to get from their local merchants.

For online retailers, these international clients can be part of the next big growth wave if they are willing to face the logistical challenges that come with cross-border selling. For some, high logistics costs, outdated (or non-existent) returns solutions, and the ever-so-high expectations towards delivery still seem like problems that are too risky to tackle.

However, options are abundant, and with a little effort and know-how, online retailers will be able to take advantage of these growth opportunities and become masters of cross-border ecommerce.

Be independent and flexible

When it comes to cross-border shipping, you have a choice between your national postal services or different local European Last Mile Carriers (“LMCs”). Thus, you do not need to lock down all of your shipment volumes with one (national) service provider, but instead, you should carefully choose who you want to work with when expanding into other countries.

A multi-carrier approach will also allow you to compare the performance of different carriers and give you the flexibility to shift volumes from one service provider to another at very short notice. During peak season or in case of a strike, relying on one single carrier appears to be very risky.

With the multi-carrier approach implemented, you will be able to fall back on a stable alternative delivery and return solution. It is critical to choose your partners with care which leads us to the next point: know the strengths of your partners.

Know the strengths of your partners and adapt your carrier-choice to the product you sell

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Analysing the LMCs' strengths and potential weaknesses will help you find the best partners to deliver your shipments to your customers. Consider choosing your LMC based on the parcels’ dimension, weight, the lead-time goal as well as service expectations – for example:

  • If you sell clothes or other small items and use flexible packaging such as plastic mailing bags, then you may want to improve your chances for a successful first delivery attempt (FDA) by choosing a partner that delivers directly into the letterbox. The Austrian Post or the Polish Poczta Polska, for example, offer special rates for small shipments that will fit into a mailbox. In France, on the other hand, it is common to have a mailbox which can be opened by a master key. Only a few carriers (e.g. Colissimo and Colis Privé) are allowed to use this master key, but choosing one of them might dramatically increase your success rate for the first delivery attempt.
  • If you sell jewellery or high-value goods, then you would probably be best served by a partner that guarantees proof of delivery, with the option of upgrading to an ID-Control while carrying out the delivery. Also, be sure to check insurance conditions as these can vary substantially from carrier to carrier.
  • When shipping heavier parcels which tend to be more expensive, it may be best to decide for the Pick-Up Drop-Off (PUDO) option which is usually a cheaper option. However, remember to check the size restrictions to ensure the eligibility of your shipment.

Once you have decided on a partner for your cross-border shipments, you have the choice of either dealing with the service provider directly or using services that can act as intermediaries between your firm and the last mile carriers. Keep in mind that you should be able to communicate with, and understand your carriers who will be carrying your shipments with care.

Create transparency

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You did your due diligence, found the right partner and created transparency for yourself – now it is important to also create transparency for your clients. Connected consumers expect to be regularly updated on the delivery status of their order.

Around 88% of shoppers confirm they use tools such as SMS messaging, email, and online self-service apps to receive their updates. And more than 50% confess to checking the status of their order at least twice. With international shipments, there can to be longer lead times (compared to domestic shipments) so it is crucial to keep your customers informed about the whereabouts of their order and their shipment.

When using single national carriers, accurate tracking can be limited to domestic borders, after which you are more or less blind to the whereabouts of your parcel. When working with local LMCs, you have the advantage that you will not lose visibility after the parcel has crossed the border.

Use local know-how

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You can gain specialised local knowledge by reading market studies, attending conferences as well as following governmental guidelines which will help you find your target group, the right positioning and the appropriate branding for your products.

By doing this, you can soon develop the right marketing plan, pricing strategy, and tools to build a locally-adapted website. Local knowledge will be vital in designing your delivery options as you do not want to simply replicate your domestic offerings.

If you decide to work with a local LMC, you will have an excellent source of local know-how by your side. A local partner can help you improve your market entry; give you direct access to a broad range of data sources which will improve the quality of data and communication, as well as enhance your delivery chain management.

Once technically integrated, you will have access to real-life logistics data which will help you communicate faster with your customers and therefore provide fantastic customer service to conclude the ideal shopping experience.

Adapt your delivery services to the market habits

Consumer preferences are influenced by the online retail market maturity in each country you sell to. Savvy online retailers need to adapt their delivery services to meet these local market habits. It is important to analyse local habits regarding delivery place, service as well as payment methods so that you do not miss out on sales opportunities when selling cross-border.

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. For example, online shoppers from countries like France, Spain or 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.

It is also important to remember that online shoppers have different habits relating to domestic payment methods. Online retailers should take into account the numerous local specificities as they are not only relevant to the checkout process but for delivery process as well.

Especially in Italy and central-eastern Europe, cash-on-delivery is a very common payment method. However, fees and transfer times for collected funds can vary among different LMCs, therefore paying close attention to these details when comparing different offers will both drive up sales and reduce costs of delivery.

Attract and bind your consumers while proposing good services and fair prices

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In a time of almost limitless choice, potential customers will not hesitate to buy in the next online shop that they find on Google. Therefore, it is more important than ever before to create an amazing experience for your customers.

Taking a proactive approach is key — even when complications arise in the delivery process, your customers will appreciate being informed about the status of their order in a timely manner. By using push-notifications, for example, you can even automate that process and get ahead of the game before your clients become irritated and start calling customer service.

This way, you create transparency, take the initiative in shaping a positive customer experience and potentially reduce unwanted customer service inquiries.

The price of delivery trumps all other considerations when it comes to influencing consumers’ online shopping behaviours – and free delivery is the main concern for 59% of shoppers about most of their online shopping.

Comparing offers from your domestic providers and local European LMCs will certainly help with lowering your cost of delivery – especially if you use a multi-carrier strategy.

In an analysis of France’s top 100 online retail shops (2016), we found that French online shoppers were offered an average choice of 2.5 LMCs to carry out their delivery. Some combinations are more common than others as they often lead to cost-savings of more than 5% for online retailers.

Conclusion

As the internet continues to become the shopping platform of choice for consumers, retailers, cannot afford to become complacent about the role delivery management plays in their competitive strategies.

Despite the prospect of cross-border delivery being daunting to many, the opportunities are also huge and potentially lucrative for your business. So hopefully the advice above will have motivated you to confront the challenge of mastering cross-border online retail, and taking your business to the next level.

 

By: Pawel Bobinski, Head of New Markets, Seven Senders

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