Cross-border sales is a very hot topic, which is a point of interest not only for large, global companies but also for small ecommerce entities, that want to scale their sales to new markets. What are cross-border sales? What challenges do online stores face at the very beginning of their path to international trade?
Ecommerce, that wants to sell, or is already selling on foreign markets, faces a dilemma: whether to ship from the current warehouse to foreign markets or to find a logistics operator to perform such tasks.
In other words, he may send goods by courier, paying a sufficiently high rate for transport by a courier company, or he may relocate part of the goods to a warehouse in another country at a slightly lower price.
Launching such a business, self-shipment of goods, inventory management - these aspects certainly give thrills to many ecommerce owners who want to start trading on foreign markets. Is it really difficult to coordinate an international sale?
This approach involves various aspects that e-commerce must face: it must know the specifics of a given market, find a trustworthy subcontractor, negotiate a service contract, invest in IT integration with an operator and marketplace, complete tax and legal formalities.
After going through these processes and challenges, new ones appear - those related to the daily running of business abroad, such as communication problems, the responsiveness of logistics operators, problems with reporting and accounting.
Sounds like a huge challenge and risk, is it a game worth playing? How to deal with challenges ecommerce faces?
It is good to mention the aspect of responsibility as well. Lengthy processes and the need to have extensive knowledge are not everything. For example, if we find the wrong business partner, we can get scammed, lose goods and lose money. It is therefore worth considering delegating responsibility to an entity that already has the experience, and we do not have to worry about the previously mentioned risks related to business security.
Here we come to the second option for international sales. What is the fulfillment network? What advantage does it bring?
There are many benefits, but let’s highlight two areas:
- one contract, one integration, one invoice. International invoices are often complex, may contain additional charges, and are in multiple currencies. Here we get one document specified in the contract and we do not have to worry about any surprises.
- When outsourcing the service, ecommerce gets one contact person from the fulfillment supplier, which in turn brings savings, and no need to expand internal structures. In addition, such a person knows the company, products, processes, so when entering new markets, this process is much simpler and smooth.
By entering the network, we have limited decision-making as to the choice of entities, such as warehouses, suppliers. Should we be concerned that our sales will suffer from our lack of control over the quality of partners?
Warehouses that cooperate in the fulfillment network must maintain the same standard and quality, regardless of the country. Such standardization facilitates cooperation, prevents surprises, and allows easier control of the business regardless of the market. In terms of the level of service, we can confidently talk about the highest level, because this structure includes companies with the largest scale in the markets under consideration and the quality of services provided, normally available only for large e-commerce.
The fulfillment service is considered to be an opportunity that was offered only by some marketplaces, for example, Amazon (sales + service). We can see that more and more marketplaces are trying to copy these solutions in Europe and beyond.
The use of an alternative form of fulfillment service, independent of a given marketplace, gives flexibility and better management of sales channels, without the need to adapt to very restrictive requirements.
So, let’s summarize a bit. Why is cross-border ecommerce so important? How to launch successful cross-border sales?
It’s becoming critical in some industries to be able to deliver globally. Sooner or later our local market will be not enough to keep the growth of our business. Therefore, it’s a great idea to expand, but it requires a good logistic/fulfillment partner, that will make all the operations and processes easy.
It may look complicated to adapt everything to a new model (website, user experience, payments, processes, systems), but with the right support and expertise, it’s easier than you think.