Global E-Commerce: Unique Capabilities Required
Shipping, duties and fees can add up quickly -- and some product managers will jump to the conclusion that these add-ons will make the total cost too high. Don't be so quick to judge. In many cases, your goods will still be price competitive -- and often less expensive than any alternatives. Currency exchange rates, product availability and competition will vary greatly in each market, so what you see as expensive may actually be a bargain!
May 19, 2012 5:00 AM PT
Over the next few years, the growth in online retail sales in markets such as Western Europe, Asia Pacific and Latin America is expected to outpace U.S. growth. Given this increase in cross-border e-commerce, many retailers are rushing to reach new markets.
However, the unique circumstances of international shipping call for unique systems and process capabilities. Cross-border shipping is more complex than domestic package handling, and international buyers do not like surprises.
Organizations that fail to address complexities up front end up with a poor customer experience, low sales revenue and higher-than-expected costs. In order to avoid these problems, it is important to understand the seven factors that make international e-commerce distinct from your domestic operations. By building these capabilities into your user experience up front, you can satisfy customers, enhance your reputation and more effectively increase sales.
Calculations of Duties, Taxes and Brokerage Fees
Domestic shippers know how to manage tax rates across multiple states and jurisdictions. When it comes to international e-commerce, these challenges are multiplied. Organizations need to know the appropriate rates for taxes and duties by country, then calculate, collect, remit and manage these funds.
Adding to the complexity, regulations and fees are often based not on the location of your company or warehouse, but on the locale of the original manufacturer. If you sell goods that were produced in countries around the world, you need to capture that information as part of your shipping documentation. Most importantly, consumers expect all of these costs to be included in their shopping cart experience so there are no hidden charges later on.
Maintaining an Up-to-Date List of Restricted Products by Country
Every country has its own import and export laws. International shippers need to know in advance whether they can legally ship their goods to a customer in another country. While some items are prohibited nearly everywhere -- such as currency and livestock -- each country has its own long list of restricted items.
For example, Argentina prohibits furs, radios, televisions, phonographs and ready-made clothes, while China's list includes walkie-talkies, wrist watches, cameras, bicycles and sewing machines. The best online shopping experiences will recognize where the consumer lives up front, so your customer won't get all the way to checkout before finding out you can't sell the products they've already selected.
Pricing Based on Local Market Conditions and Competition
Not surprisingly, shipping, duties and fees can add up quickly -- and some product managers will jump to the conclusion that these add-ons will make the total cost too high.
Don't be so quick to judge. In many cases, your goods will still be price competitive -- and often less expensive than any alternatives available to the consumer. Currency exchange rates, product availability and competition will vary greatly in each market, so what you see as expensive may actually be a bargain!
Enhanced Package Tracking
Retailers rarely have to worry too much about package tracking in the United States. Most packages are delivered within a couple of days, so few people ever need to track -- and if they do, the major carriers all offer robust tracking capabilities.
If you provide the low-cost shipping options international consumers expect, however, tracking capabilities may become more important. If, for instance, the preferred shipping option involves multiple carriers, or if the final mile is handled by a local postal administration, it will be essential for you to have visibility into the process so you can provide your customers with timely information.
Providing Delivery Options That Match Customer Preferences
In the United States, speedy delivery can be a deal breaker. That is not necessarily true in other markets, where shoppers often expect that delivery may take one or two weeks.
If you try to simplify shipping by engaging a single high-cost carrier that provides expedited door-to-door service, you will miss out on the many shoppers who value savings over speed.
Instead, you can integrate your shopping cart experience with a third-party provider that offers multiple international shipping solutions. This allows you to fulfill orders by shipping goods to a centralized facility in the United States, while your customers will be able to take advantage of a broader range of options, including proprietary networks and local posts.
Customs Forms and Documentation
For your domestic business, you can simply drop your package in the mail. When it comes to cross-border commerce, proper documentation can mean the difference between speedy delivery and major delays.
Documentation such as customs forms and commercial invoices can be complex, so many retailers engage third-party specialists to ensure everything is handled correctly. For example, shipments must be coded using a HS (Harmonized System) number. These classification numbers are assigned to individual products and are used by customs authorities around the world for the application of duties and taxes.
Accurate Addresses to Help Minimize Undeliverable Packages
Local postal administrators establish rules in each country that impact how shipments are addressed and prepared -- and many do not follow the U.S. standard of street address, city, state and ZIP. Proper addressing helps ensure that your packages reach the intended recipient, but it also sends a message that you understand and value customers' business.
While there are unique capabilities required to expand your business internationally, the prospects for growth are significant. In a recent global survey we conducted with ORC International in 10 countries, 93 percent of international consumers reported they shopped online.
However, many organizations fail to take into consideration the unique requirements of international e-commerce until it is too late -- and in today's socially connected world, news of poor shopping experiences can quickly spread.
While it may not be feasible for you to build these all of these capabilities or expertise in-house, you can still provide a winning customer experience by working with experts in international e-commerce and cross-border shipping.