Helping to overcome some of the hurdles when selling and shipping your products to other countries.
Multiple parties have to work seamlessly as an extension of your business to ensure you have a smooth path into cross-border ecommerce. The issues arise from the fact that each of these parties may have a different level of understanding, motivation, and sense of urgency. This is where consistency of communication, clearly defined briefings and benchmarking should be in your armoury.
It is possible to prepare for and overcome many challenges once you understand them. Most hurdles can be divided into the following major categories: Regulatory, Payment, logistics & returns, business readiness.
Here we cover payments, logistics and business readiness.
Payment Methods and Processing
A robust payment processing system is absolutely vital for ecommerce. Preferred payment mechanisms vary across the world, so research your potential market before you make assumptions about your payment system. In Japan, Konbini, a local payment method, accounts for a sixth of ecommerce payments. While close to 100% of ecommerce payments in Spain are by Visa, MasterCard, and American Express, in France it is close to 60%, and in Germany it is only 30%. Interestingly, Germany has a well-developed ecommerce ecosystem without a high degree of credit card penetration. India and other Asian countries have shown a strong preference for cash on delivery. You will need to accept payment in the method that the customer prefers. Other than credit cards, presently there are no truly global payment methods.
If you are not able to provide payment solutions in-house, there are many global payment providers who will all be keen to secure your business, for a fee. They should integrate seamlessly with your e commerce platform and run quietly behind the scenes. Services vary considerably - so ask questions. You need to understand the effect these fees will have on your margins, and compare costs of outsourcing to the cost of resourcing this in-house. Consider fraudulent transactions, refunds, and above all consider cyber security, is PCIDSS in place and audited, data protection protocols followed, and what is their disaster recovery programme? When all these have been answered, finally consider cash flow - what delays can you expect with processed funds arriving in your bank account - can you manage this skilfully without it impacting on your P&L or your customers delivery expectations?
Logistics and Reverse Logistics
Unless you are exclusively selling digital downloads, you will have to develop a strong logistics process. Effective logistics has repeatedly proven to be a strong competitive advantage for online, as well as offline, retailers. The costs associated with cross-border logistics can be the tipping point for your ecommerce business. Choose a 3PL with that global reach, they can be inflexible and operationally very rigid, or choose smaller partners to give you the more personal service, these can be more time consuming and expensive; you may end up undertaking a fair share of managing all the partners. Visit a number of providers, large and small, don't be easily blinded by shiny floors, automation and nice lunches, look behind and into the technology, take references from existing clients, (do your due diligence) and finally does their culture reflect yours?
It is not just about the costs. It is also about reliability and predictability. We have come across several small ecommerce businesses that work on the premise that their role ends once they can prove that they handed over the goods to the logistics provider. But that is not how the customer thinks. Customers believe that you are responsible for ensuring their product reaches them, on time, undamaged, and its the product they ordered. Returns mean lost profits and lost customers, you can't avoid them, in bricks and mortar or e commerce, but continually work on reducing them. Scrutinise your returns reasons and your customer feedback, analyse it weekly, make changes, improve services, upgrade solutions - but do something. A happy customer will sell for you, an unhappy one....well we all know what they are capable of!
A word of caution, if your delivery logistics are complex, imagine the complexity of reverse logistics. Given the costs, customs duties, and documentation, many ecommerce players may not be able to provide reverse logistics in cross-border situations. If you retail on Amazon platforms, you will shortly have to offer returns in country, if not you must absorb the cost of the return yourself. Your returns process is equally important as your outbound, do not neglect it.
We will discuss returns and refurbishing logistics in another post; making your returns work harder for you by closing that revenue gap is a separate skill, but get it right you could produce additional revenue streams whilst opening up whole new channels to market.
And finally, get your transport company on board, make them part of the team, after all, they are representing your brand to your customers at the point of delivery. This is the only face your customer gets to see - make sure they leave a good impression.
Organisational & Operational Readiness
Any discussion on the constraints to international ecommerce will be incomplete if we do not focus on the business’s own readiness for selling abroad. Prepare your people, your products and have a plan; Right from an appreciation of local tastes to sensitivity for cultural factors, you must develop a deep understanding of every market you intend to tap. As your supply chain grows, it becomes less flexible, problem solving becomes a mission, so do not underestimate the skill level of the people you need in your own business to manage it. Starting small may allow you to re-allocate existing resources, but plan to bring in experienced e commerce people, interim or full time, depends on the size of your budget and your growth plans but put it in your plan and your budget!
Despite these challenges, the opportunities are plentiful, cross-border ecommerce presents huge business potential in growing economies around the world. A judicious approach will help you reap the fruits of cross-border ecommerce.
The Fulfilment Partnership Ltd a cross borders consultancy dealing in excellence for our valuable customers.