Getting your products from A to B
A guide to international fulfillment and logistics
Overview
The challenge
You’ve completed your market research and pinpointed the potential market abroad which is right for your products. The next step is to think about how your products are going to get from A to B? It is a key challenge to plan an overall international logistics and fulfilment strategy to ensure a continual, reliable supply of your products to your new market.
Your aim
To have an international fulfilment and logistics strategy which will ensure that your orders are delivered to your export market on time and on budget.
Your decision to expand your product into a potential market abroad is part of a rising trend. Cross-border international trade is increasing 28% every year according to a 2015 Accenture and AliResearch report.1: Fulfilment houses, transport networks, and compliance companies are growing in number and expertise to meet this increased demand.
How to go about it
Depending on your business strategy, you may want to consider either a cross border model or an entity within a region e.g. a warehouse in-region and local fulfillment.
For example, if your supply base is in Asia and many of your customers are in the UK, you can evaluate consolidating at a specific location in Asia and shipping directly into the UK, either to your customer or an in-region center that will fulfill your customer needs.
Fulfill your export needs
For any e-commerce business, your logistics and fulfillment strategy will depend on a combination of factors which include:
- Where your products are shipping from
- Where your products are shipping to
- Your average basket size or order value
- Company brand and product margin
- Product's weight
- Preferences for tracking and insurance
- Carrier preferences
- Customer delivery preferences
- Product costs
- Product restrictions and regulations
- Customs and duties.
Here are some pointers to help you form the right fulfillment, transport and compliance strategies.
Assess the type of fulfillment model that your business needs
Are you delivering cross-border or region to region? Are you entering into another customs zone? How you ship your products depends upon the country that you are exporting them to.
Suppose that your market is local but covers a large geographical area, The United States, for example.
You could consider fulfilling your orders yourself, or partnering with a third party fulfillment house based in a centralized area. A third party fulfillment house will ensure that your product is delivered in a timely way. It will know which products are banned in different markets, and have access to a network of reliable carriers.
There are many benefits to using a third-party logistics company:
- You don’t have to do the logistics yourself
- You will save on overhead costs and the cost of hiring staff
- They will pass on economies with their buying power on postage and packing costs
- If you have seasonal or cyclical sales, or don’t have infrastructure in place, using a third party will help you scale up quickly
If your product is entering a new customs area, consider using a third-party fulfillment partner, they will:
- Understand the import and export regulations of your new market
- Ensure that your product is delivered in a timely way
- Know which products are banned in different export markets
- Have access to reliable couriers to deliver your products on time and undamaged
Decide on who you want as your fulfillment partner
Do you need a third-party logistics provider, or an owned fulfillment center?
You may have already started shipping your products to your potential market abroad. But if you want to significantly increase your international sales, you could save time and money by using an existing logistics and fulfillment service. These are set up to remove the many complexities around international shipments.
A fulfillment partner can:
- Sort out all the import and export regulations for your product
- Ensure timely shipment of your product
- Automate all your orders
- Select trusted couriers to deliver your products
- Reduce the cost of shipments
- Streamline the entire shipping process for you
Your fulfillment partner can be based in the same country as you, or be based abroad, or both. Your choice will largely depend on the goals of your potential new market.
By outsourcing to a fulfillment center based in the country of your potential market abroad, you can extend your product’s global reach quickly and seamlessly. These fulfillment centers will store and deliver your products to your customers much more efficiently than you will be able to.
Decide on the number of fulfillment centers based on the demand for your products, end-to-end cost and customer experience
The number of your fulfillment centers will depend on where your export market is located, your anticipated customer demand for your products and how much you can afford.
You may want just one, large, centrally based fulfillment center to manage the delivery of your products, or choose to have several smaller ones which could give you greater flexibility in your day to day dealings with them.
Ask the fulfillment center what type of channels it services
Some centers like Amazon just focus on e-commerce. Others may fulfill retail orders and e-commerce.
Transportation matters
Your overall international logistics and fulfilment strategy should involve planning your transportation and compliance strategy together. Your decisions on compliance will affect your transportation strategy, and vice versa. You should also make sure your delivery providers know the range of products that they are shipping. Be sure that you know the cost and delivery experience of your transportation provider.
Assess and understand the local customer expectations on delivery speed, options and experience
Over 50% of calls and emails export businesses receive are related to transportation issues. It’s understandable that customers want to know where their parcel is. Keep your customers happy by having a trained customer service operator who is able to handle the calls and track their goods.
If you are fulfilling your orders yourself, make sure that you research the couriers who will be delivering your products in your new export market. Why not ask your customers what their ideal delivery method would be using Google Surveys?
Determine the local transportation landscape
This could be fragmented, mature or dominated by a few players.
A fulfillment house center will, of course, know the best carriers for you to use in your new export market.
If you are fulfilling your orders yourself, research the local transport carriers in your export market thoroughly, from the reputation and reach of long-standing courier firms to smaller firms who may give you more flexibility.
Analyse the right provider strategy
Make the most of your third party relationships. They may be able to offer more savings than transportation partners.
Ask your fulfillment provider what their transportation strategy is. Many international fulfillment companies are expert in keeping delivery costs down.
They do this by using government carriers which don’t charge customs brokerage fees like private carriers do. They can also use local global warehouses to reduce delivery costs, and carry out bulk shipping from your office to their warehouses.
This has the happy effect of lowering the delivery costs your new market customers have to pay, giving them even more reasons to choose your products.
Analyse your last-mile strategy
You can use a combination of postal and courier options, depending on your product’s value and the speed that it needs to be delivered.
Make sure that you procure your courier in advance. This is most needed during the last three months of the year, when shipments get congested across the world. This is caused by seasonal gift purchasing, retail end of year promotions and other industries completing end of year sales. Prepare to increase your delivery lead times during this busy period.
Determine your first mile strategy
You can build your own first mile strategy by using the established transportation providers of your choosing to distribute your products.
Stay compliant
Assess the import and export flows from your suppliers to you, and from you to your new export market
Shipping cross-border e-commerce goods is the same process as international shipments and export shipments.
When an order is made on your website, your fulfillment service provider will either pick up the product from your business or will have it already stored in its warehouse.
From there, the fulfillment service provider will then pack, complete shipping paperwork, and will work with the shipping provider to deliver it to your customer.
Understanding the correct shipping terms for international clients is key to understanding additional costs and shipping items due to the cross-border nature of the transaction International Commercial Terms (Incoterms).
Incoterms are the same for traditional exporting as they are for cross-border e-commerce.
You will need to know who is responsible for all the costs and risks associated with a sales contract between you and your potential market abroad. Knowing the delivery terms in your worldwide sales contracts will reduce any uncertainties and misunderstandings for both you and the buyers of your products.
Analyse entity structures against tax liability
Check whether you need to create an entity in a region and conduct imports yourself, or whether you need to use a third party to buy your products and import your products, without creating an entity.
Map tariff and tax implications of key import product categories
See how these relate to your chosen export country.
Plan against cost-prohibitive import and tariff barriers
Do this by using available trade tools. These could include free trade agreements, or bonded facilities.
By spending time planning your fulfillment and logistics strategy, you can make sure your products get into your customers’ hands efficiently and cost-effectively, no matter where they are.
