Cross-border ecommerce has been growing steadily as global internet penetration increases. But the COVID-19 pandemic has kicked this activity into a new gear.
In the first quarter of 2020, consumers were forced to migrate online to fulfill their needs. Ecommerce sales in large, growing markets including Brazil, India, and Mexico surged by as much as two-thirds during 2020. In 2022, cross-border ecommerce activity is forecast to account for almost a quarter of global ecommerce shipments.
The significance of this isn’t merely higher sales. The pandemic led many to shop online for the first time - setting the scene for a long-term shift in consumer habits.
As new consumer segments grow used to the convenience and ready availability of online shopping, this creates huge potential for brands to expand their cross-border activities.
But cross-border fulfillment is much easier said than done; it’s one of the trickiest areas of ecommerce, involving complex and often costly barriers to seamless shopping experiences. In this guide, we’re covering the five areas you need to focus on for a streamlined cross-border ecommerce fulfillment strategy:
Cross-border ecommerce is when a company sells its goods internationally to other markets. This can take place in both a B2C and B2B context. Typically, a consumer will visit a brand’s online store and place an order for local delivery.
Cross-border ecommerce fulfillment refers to the processes required to fulfill international orders. This includes warehousing, picking/packing, shipping, and handling the logistics of cross-border commerce activities. Items will be stored and fulfilled either locally or across borders, depending on cost and the level of demand.
Merchants can manage cross-border ecommerce fulfillment via self-fulfillment, or choose to outsource to a 3PL provider.
The web has allowed brands to achieve unprecedented visibility outside of domestic markets. With the power of social media and influencer marketing, brands can foster awareness without the high overheads required by brick and mortar retail.
Today, merchants can dip their toe in the water of emerging markets - testing products and mapping out competition with minimal risk.
But while marketing is borderless, the nitty-gritty of cross-border fulfillment certainly isn’t.
Despite globalization, cross-border fulfillment remains challenging for businesses to navigate. Each market requires a tailored approach to meet regulations for licensing, shipping, customs, and duties.
This is why it’s essential to understand how to avoid the pitfalls of cross-border ecommerce fulfillment - and how to capitalize on growing markets.
If you’re considering cross-border fulfillment, then you’ve likely seen enough interest from other markets to make this viable. However, you still need to do plenty of research to explore whether this is enough to actually turn a profit.
When analyzing markets, you need to take a long-term perspective. Will this expansion generate enough revenue? It's tempting if you have a sizeable segment of prospective customers. But if it's a small market, saturation will be reached quickly, and this could result in an overall loss.
Unless you're planning to fulfill orders locally, you also need to factor in cross-border costs. Navigating some markets will entail less bureaucracy (and cost) than others, which is an important consideration for cross-border fulfillment.
For example, Brexit has led to a massive shake-up for brands wanting to sell to U.K consumers. Merchants are now responsible for collecting VAT (Value-Added Tax) at the point of sale in addition to customs duties. This makes the U.K a more complex market to navigate - and may no longer be cost-effective for some merchants.
Handling fulfillment and shipping independently in cross-border ecommerce is a mammoth task to take on, especially if you have limited internal expertise in this area. For this reason, it’s highly recommended to outsource your cross-border ecommerce fulfillment activities.
By partnering with a 3PL, you’ll be working with a team who is experienced at cross-border logistics management. Moreover, they will have superior staffing and infrastructure to support storing SKUs and fulfilling orders within a faster timeframe than merchants can typically achieve on their own.
Shipping is at the heart of cross-border ecommerce fulfillment. It's also the biggest expense merchants face when building an international customer base.
If you don’t get your strategy right from the outset, you’ll end up paying far more for shipping and freight than necessary.
Your biggest consideration is whether you’re going to fulfill and ship orders from within countries or across borders. Having fulfillment locations within overseas markets allows you to achieve faster transit times, and avoid customer orders being tied up at customs.
However, this depends on your order volumes and growth forecasts for that market. If you only have a small number of international orders, cross-border shipping is more cost-effective.
You also need to factor in the duties and taxes that international shipping entails. Are you going to pass these costs onto your end customer?
Growing consumer expectations for fast and free shipping complicate this question. The so-called ‘Prime effect’ has made consumers resistant to paying extra fees - even for international orders. Saddling customers with paying for duties adds friction to the shopping experience and could result in customer churn.
This is where working with a fulfillment provider can make all the difference. They can negotiate favorable carrier rates and calculate the most cost-effective shipping strategy for your needs, including adjustments for periods of high demand.
Localization is a critical part of cross-border ecommerce. Why? Because it has a big impact on the customer experience.
For example, if you’re a U.S. brand shipping to Europe, European consumers aren't going to want product prices in USD. The same also applies to language; relying on Google translations could communicate inaccurate product information.
These kinds of missteps can put a lot of pressure on your customer service teams, which can be easily avoided through localization.
Furthermore, localizing site content shows international customers that you're invested in their market, rather just than tacking on shipping capabilities to boost revenue.
Your online store localization should focus on the following areas:
In ecommerce, convenience is king. It can take a lot of effort to persuade international consumers to shop with your brand over local alternatives. According to Invespcro, consumers’ biggest concerns about cross-border ecommerce are shipping costs (51%) and long delivery timeframes (47%).
To put it bluntly, you need to show customers why you are worth putting up with longer, more costly delivery timeframes.
Online consumers expect seamless shopping experiences and minimal disruption. If you’re going to garner repeat business, your standard of service needs to set you apart from competitors.
Remove any sources of friction. It only takes some minor annoyances to turn a shopping experience into a negative one. On the flipside, just a few tweaks can make it much more enjoyable. Features such as live chat and personal ‘wish lists’ will make brand interactions feel much more personalized.
Post-purchase communications. It’s never good form to abandon your customer once a sale has taken place. Especially when international shipments are likely to provoke higher levels of delivery anxiety. It’s important to create touchpoints that show ongoing customer care, such as shipping confirmation emails and real-time order tracking.
Branded delivery experiences. The lag between purchasing and receiving items is often viewed as a downside in ecommerce - but you can turn this into an advantage. By leveraging your customers’ anticipation, you can turn the moment of delivery into the ultimate touchpoint.
Unboxing experiences are memorable because they are a novelty amongst the ubiquity of Amazon boxes. Custom-branded packaging, branded inserts, and product placement leave your customer with a powerful impression.
Many businesses avoid cross-border ecommerce fulfillment due to its complexities. However, this also means missing out on some lucrative sales opportunities. By following the advice above, you can build a strong cross-border ecommerce strategy that expands your customer base and strengthens your bottom line.