Experts had expected international e-commerce to grow in 2021 and the coming years even before the pandemic. However, this global event has prompted even greater growth.
In March of 2020, Research and Markets reported cross-border online shopper penetration had reached 50 percent, and it was highest in countries such as Australia, China, Canada, and Mexico. Despite the slowdown in world economic growth, cross-border e-commerce is expected to rise “at a considerable rate during the forecast period, by 2024,” according to the Global Cross-Border E-Commerce Market Report 2020.
If you are a business that is beginning to craft international e-commerce, you’ll quickly discover that handling international logistics and shipping is a critical piece that can be challenging to manage.
However, there are several best practices and strategies that can help overcome these and get your business shipping goods to global customers in any market.
What You Should Expect in a Constantly Changing Cross-border Market
1. Changing customer expectations when it comes to shipping
Cross-border e-commerce is evolving quickly, so international shipping strategies must evolve just as fast.
Consumer expectations change right along with the e-commerce world – the National Retail Federation reported last year that many U.S. consumers now consider shipping costs even before getting to the checkout page.
Around 65 percent search for free shipping purchase thresholds before they add items to their carts. In addition, 39 percent expect two-day shipping to be free, and 29 percent have changed their minds about a purchase because two-day free shipping was not even available.
Businesses should expect to balance their shipping strategy with customer expectations – finding ways to meet evolving customer needs while still making a profit, but it will require thought as you approach different markets.
For example, are there certain markets where you can subsidize shipping by being flexible with the product price? Are there some markets where there is a higher tolerance for the cost of shipping so that you can subsidize shipping costs in other markets?
These are important questions to ask and key decisions to make, and finding the right solution may involve some testing to land at that sweet spot where the unit economics work for your business while still meeting most customer expectations.
2. The need for mobile-first
Smartphones have become the most popular devices for online shopping, according to some reports. With smartphone user penetration on the rise every year, cross-border sellers must always prioritize a mobile-first strategy.
Brands should expect that users will be mostly using mobile devices as their primary method for online shopping. Sellers should keep this trend in mind when crafting a shipping strategy because they will need to ensure their websites make shipping options and selection clear for users on mobile devices and not just desktop users.
Brands should also consider launching SMS programs to reach users on mobile devices regarding the status of their shipments to manage expectations around delivery windows.
How to Find a Cost-Effective Method to Deliver Goods in a Timely Fashion
1. Be aware of international shipping surcharges
Shipping carriers will sometimes tack on additional fees to international deliveries, producing charges retailers don’t expect. It is difficult to know when these will apply, how to plan for them, and when to know which locations will incur these fees.
Surcharges can make it difficult to manage margins and pricing, but e-retailers can keep a few points in mind to stay cost-effective:
a). It is important to keep fluctuations in fuel prices in mind as your brand establishes a shipping strategy that can work for your business.
Looking at the overall landed cost of your goods, which includes shipping costs, and making adjustments to accommodate these potential surcharges is an important part of developing your international shipping approach.
b). Certain carriers may apply remote area fees that arise when they require additional resources to get to hard-to-reach destinations.
Keep these nuances in the location in mind. These fees may not be applied to every country or even every part of a country, so make sure to do a little research to understand where these surcharges might come into play.
c). Carriers may charge disbursement fees for paying duty and tax upfront when clearing customs.
The shipper then has to pay the cost of duty and tax in addition to a service fee. These disbursement charges act as a flat fee across all markets.
However, these can vary by the shipping carrier and normally comes out to 2 percent to 4 percent of the duty and tax paid on a shipment. Many brands do not pass this charge to the customer but, and it does have an impact on cost modeling for an international shipping strategy.
2. Leverage the power of technology
Software solutions have emerged that are hugely beneficial for businesses entering the international retail market.
As you navigate the ins and outs of cross-border shipping, software solutions can help you know what requirements exist for each country as well as automating management and taking care of all the operational headaches involved in international selling and shipping.
The software can also help you create shipping lanes between countries, set up shipping tiers, smooth out any bumps in the last mile of the shipping journey, and give you visibility and control over this part of the customer experience with your brand.
Leveraging a powerful platform, you’ll be able to offer customers the shipping method they prefer within the time frame they expect and stay profitable while minimizing stress.
3. Look to the experts
The right software solution is developed by experts in the cross-border arena. The right partner will be able to help you manage relationships with shipping carriers.
Bring a solutions partner in to support your international shipping execution so you can easily launch, manage and streamline the shipments of goods to customers in all your international markets. A partner will support all the aspects of your international shipping needs and integrate your warehouse management system with their software solution.
This integration ensures that shipping labels are printed directly at your distribution center for direct shipping, avoiding the need for a cross-dock.
The Questions to Ask Around Cross-border Shipping Strategies
Always look at your model from the perspective of the customer. Do your options cater to your target buyers in certain regions?
Have you considered the shipping preferences of certain buyers? Have you looked into all the rules and regulations that could become obstacles for you?
Other questions you should ask include:
- How do your international buyers’ expectations differ from those of your domestic buyers when it comes to shipping?
- Can you conduct any A/B tests on shipping tiers to see what resonates best with your target customers by the market?
- If you plan to offer free shipping to certain regions, how will you protect your margins in those markets?
- What expectations do your customers have in your target regions for same-day or two-day shipping?
- What strategies should you explore so that you can get products to consumers the fastest way while minimizing cost to them as well?
How to Establish Your Brand Reputation With Global Customers
1. Offer options that present flexibility to the customer
Retailers should aim to provide customers with flexibility when it comes to shipping methods. You can create this personalized experience with shipping.
Present more than one cross-border shipping option for consumers with a range of speed and pricing. You can also offer a mixture of ground, air, one-day, two-day, and a variety of carriers to make the customer feel as though they have the freedom to choose.
You should also consider A/B testing different shipping options for various markets so you can learn more about your target buyers’ shipping preferences.
2. Look to technological innovation for help
Cementing a positive experience with your customers in international markets can be stress-free and easy with the help of software.
As previously mentioned, software solutions can help you streamline actual shipping journeys, but they can also enable you to create personalized experiences for customers throughout their interaction with your brand.
The right platform will make it easy to give your customers the best shopping experience all the way through order delivery so that they become customers for life.
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Juliana Pereira is VP Marketing at Flow Commerce, a next-generation cross-border e-commerce solution helping brands and retailers sell products to global customers.