There are several questions to answer in determining how you will prepare to manage cross-border e-commerce fulfillment. Some of the major ones are as follows:
Can All Your Products be Legally Imported Into Your Target Market?
For example, perhaps you have an online store in the United Arab Emirates that sells plastic Christmas trees and decorations. If so, don’t even think about expanding into Saudi Arabia. Christmas tree imports are prohibited there, so you’re unlikely to find many takers for your products.
Hopefully, of course, you would have established that fact through market research, but treat this cautionary Christmas tale as a simplified example. Your products might be in demand in your target country, but there might also be strict rules about their importation. It would be most unfortunate to take even a single order without knowing about those rules.
How Will You Help Customers Assess Their Landed Costs?
When you conduct e-commerce across borders, there will be, in many cases, a range of extra costs in addition to the purchase price of your products. You might choose to absorb those expenses by factoring them into your purchase prices and offer delivery duty paid (DDP) for your customers. However, you will need to decide if this will harm your competitive ability by generating an excessively high price point.
You could sell under Delivery at Place or Delivered Duty Unpaid terms, which will leave your customers with the obligation to pay import duties and taxes. If you choose this option, though, you’ll need to think about how you will calculate the extra costs and flag them to the customer in advance.
Absent such a mechanism, your customers are likely to be surprised by unexpected fees at the point of delivery. That, in turn, might give your products the qualities of a boomerang, resulting in many of them coming back. That’s not good for business—even if you are selling boomerangs.
How Will You Deliver Your Cross-Border Orders?
Unless you are selling elephants or SUVs online, you will probably wish to use an international courier company to deliver your customers’ purchases.
Not only are courier services faster than any other cross-border shipping option, but they also minimize the effort required by your business to manage transportation. That said, all couriers are not created equal. Depending on your goods’ origin and your target market, you might find some variations in the routes they use and the delivery lead times they can offer.
As part of your preparations for international e-commerce, therefore, you’ll need to get to know your courier options, and perhaps build up a shortlist of those with the best lead times and rates.
It will also make sense to look favorably on any courier that can help you by providing an integrated tool for calculating landed costs.
How Will You Manage Returns?
Now, about those boomerangs. Product returns and rejections are the banes of every e-commerce operation, but they are a fact of life in the industry. Moreover, in markets where cash-on-delivery is prevalent, returns are more common in online shopping than in the high street.
Establishing a sound returns policy and identifying how you will manage it is a critical part of cross-border e-commerce preparation. Factors to consider for returns planning include:
Legal obligations – For example, if you operate out of the European Union, you’re obligated to accept a product’s return unconditionally, provided it takes place within 14 days of purchase. Other nations may have similar laws, so it’s a vital planning step to research the legal element of returns in your particular country.
Reverse logistics – The reverse supply chain is never easy to manage, especially when the returning product must cross international borders. How will your company minimize the number of journeys and deliveries executed in the reverse supply chain? You might, for example, wish to partner with a logistics provider in your target market that can consolidate your returns and ship them back to you in bulk every so often.
Visibility in the reverse supply chain – Whether you manage returns individually or route them to a consolidation partner, you’ll want to think about how you keep track of them. Visibility is essential as they make their way from the customer, through customs in the market-country and at the border of your home country, and back to your fulfillment center. It can be beneficial to work with a carrier offering a comprehensive tracking solution, especially as the return supply chain is less predictable and more fragmented than the outbound.
Alternative return strategies – You might even think about whether it will be worth bringing returned products back into your inventory. Depending on their value and the nature of the trade lanes you use, you might prefer to have returns consolidated for sale in secondary markets in your target region. In some cases, it may even be more cost-effective to write an item off, rather than returning it, and send a replacement to the customer free of charge.
How Will You Handle Cash-on-Delivery?
Yes, it’s time to return to that thorny issue of cash payment, and more specifically, how you will prepare your business to accept cash at the point of delivery.
The preference for cash payment in emerging markets is persistent. So much so that even large global carriers are beginning to take what might once have been considered a backward step by introducing cash collection services. However, such services are still limited in coverage.
For example, one worldwide courier has introduced cash-on-delivery fulfillment services, but only for merchants in China and Australia delivering to consumers in Southeast Asia.
If your target market is in the Middle East, you might not have such an option with the global carriers, so how will you collect cash from your customers? The answer will probably lie with one of the regional delivery companies in your target market.
COD in the GCC
If you’re selling to (or within) the GCC, for example, Shipa Delivery offers the facility to collect cash and card payment on delivery. We remit all accumulated sums to our business customers weekly and invoice monthly for our delivery services.
This commercial model helps to maintain cash flow, which can sometimes be an issue for smaller businesses when cash-payments take too long to flow back into their accounts.
If your business base is outside of the GCC, of course, you will need to plan for shipping your customers’ orders over much greater international distances. In this case, if you want to benefit from the ability to offer COD terms, your packages may need to arrive at the warehouse of a regional service provider for the last-mile delivery leg. If so, your preparations should include choosing a provider for shipping into the target country or region, along with a suitable domestic last-mile delivery service, with COD facilities.