The number of online stores is rapidly growing every year. Currently, according to various estimates, there are over 7 million eCommerce companies worldwide! Since online shopping is gaining immense popularity, and the Internet doesn’t limit our reach, we can buy and sell products and services globally. Somehow, however, foreign sales are not yet an industry-wide standard. The question arises–why?
When it comes to the eCommerce industry, online sales (via the Internet), no matter what the method of payment is, is called Cross-Border e-Commerce (CBEC) or e-exporting. We can state that the main obstacles that until recently blocked foreign expansion are now disappearing. Language, payments, and marketing restrictions are a thing of the past. So why do only 7% of EU entrepreneurs offer foreign sales, while in the United States it’s 14%?
What do sellers struggle with?
The survey made by MPiT called "Digital Export–Opportunities and Perspectives for the Polish Enterprises", conducted in 28 European countries, provides us with the answer. According to this report, 44% of surveyed companies have mentioned very specific obstacles preventing them from going global.
The vast majority of indicated reasons are strictly related to logistics.
The mentioned reasons are as follows:
- Delivery costs
- Delivery time
- Technical issues
- Damaged parcels
- No warranty information
- Complicated returns and complaints
As it happens, the answer to all these problems is the order fulfillment service. It’s a solution based on full logistics outsourcing to an external company (called an operator). When using such services, the store doesn’t need a warehouse (the inventory is stored in the operator's warehouse along with the wares of other eCommerce companies).
When the customer places an order, information about it is instantly sent to the operator's system. The operator completes, labels, and packs products according to the client's guidelines. Next, the goods are sent to the customers. The store owner can easily track the progress of fulfillment. The software, offered as part of the order fulfillment service, allows you to monitor the status of the parcels in real time.
Delivery costs–not necessarily scary!
Let’s say a successful online store sends several thousand parcels a month to the domestic market. What prevents it from going global? After all, all you have to do is translate the website and start promoting your company! As it turns out, when it comes to planning logistics details, the average cost of cross-border shipping, using the services of an international courier, ranges from 8 to 12 euros. The expenses are inadequate to the value of the shopping cart. Furthermore, running the warehouse and employing people is another significant cost.
How can fulfillment be helpful here? First of all, the operator can save money thanks to the extensive network of subcontractors (the courier companies) and a large number of parcels sent every day. Scale, which significantly reduces the price of a single shipment to a given country, is the key factor here. Moreover, the costs of such a service are flexible, which means that in months when there are fewer shipments, the fee for the fulfillment services is lower.
In addition, the company doesn’t have to explore the line haul (courier line transport) and the last mile delivery (the last part of the journey that the goods travel on their way to the customer). In the courier transport, the last mile stage is usually the most expensive one, and direct shipments are by no means the cheapest option. Most smaller shipping companies cannot negotiate such good rates that large-scale shipping companies can.
Omnipack uses this solution, among others, for brands such as Wish and Muscat. In a cross-border service, the local company Packeta is used (also known as Łatkovnia). In practice, the Wish parcels are sent to Cieszyn, and from there to Spain and Italy. A similar method of delivery is executed in the Czech Republic for the Muscat brand.
The taxes, duties, and accounting–not necessarily complicated!
When selling abroad, you have to take the financial issues into account–different VAT rates, other taxes or duties. Order fulfillment is also a convenient solution in this case. The operator is integrated with foreign payment platforms and marketplaces, which significantly facilitates expansion. Moreover, the operator has extensive knowledge of accounting that can help expand sales.
A logistics partner is not only a support in vital questions. At Omnipack, we have devised a full eCommerce solution service that allows us to fully represent our clients on the global market. We provide them not only with full-stack fulfillment but also with our own technology that allows them to control the logistics processes and use our eCommerce platform.
As part of this service, we process orders, carry out domestic and international settlements, and take responsibility for the pricing policy. We use the foreign carriers’ platforms and systems designed for international settlements.
Delivery time–crucial for the end customer
This is another vital question. Our guaranteed delivery time for international shipping within Europe via road transport is 7 business days. In countries outside the European Union and Scandinavian countries, the guaranteed time is 14 business days.
Consumer research shows that long delivery times are one of the key barriers in the global eCommerce industry. Again, the logistics outsourcing service is a solution. The order fulfillment operator usually has a warehouse located near transport hubs, airports, and most importantly, close to the border. Usually, the operators have warehouses in various countries, which gives the possibility of reloading. Poland's geolocation is excellent in this respect! Apart from being in the very center of Europe, Poland is also an unloading point for rail transport coming from Asia.
The number of returns in every fourth quarter of the year (when sales are usually the highest) can reach up to 50%.
Therefore, dealing with returns is becoming a standard required by most customers. This forces stores to do additional work, i.a. browsing received goods and assessing their quality (and if it is poor, additional service or renewal is necessary). This often requires seasonal employment of temporary employees, and foreign returns can be even trickier! Yet again, an external operator, who oversees the entire, complex process and settlement with the client comes to the rescue.
To sum up, the most frequently indicated impediments to expanding sales to foreign markets are:
- High delivery costs
- Additional taxes and duties
- Warehouse location
- Delivery time
- Contracts with the courier companies
- Dealing with returns
Outsourcing of the logistics services is the answer. To meet the considerable expectations of the consumers, including foreign ones, stores should invest in the distribution centers and technologically optimize their logistics solutions, while focusing on product sales and marketing.