Editor’s Note: This is a guest post written by Parcelhub.
The sight of a 1312-foot-long container ship wedged across the Suez Canal holding up a further £12bn of cargo that had to wait for a month to pass through the waterway shows just how international trade has become.
In the UK, this internationalization of commerce has been rammed home to retailers as they watch the efforts to dig the ship out of the canal at the same time as they try to dig out just where their first quarter of trading under the new rules introduced by Brexit leaves them.
While it is hard to get a clear view of what UK-EU trading now looks like since the pandemic has muddied the waters, what is clear is that there is still a thirst for cross-border trade among UK retailers, but that there is also some uncertainty as to what that may look like.
Pre-2020, a study by Parcelhub found online retailers who sell cross-border expected international sales to represent 30% of their turnover.
By March 2021, a study among UK and EU merchants found that 50% of them see managing international expansion was the most important element for trading online in 2021.
This second survey also found that over half of retailers are selling internationally already, with 22% selling across Europe as a whole, 20% selling across selected international borders and 14% selling globally.
What is interesting is that consumers are driving this trend. Shoppers across the world are increasingly looking to buy cross-border as they continue to embrace – and expand – their use of the internet, spurred on by the pandemic.
According to research from eShopWorld, which talked to more than 22,000 consumers from 11 countries, the cross-border shopping phenomenon is being driven by all age groups: Gen Z and millennials pioneered cross-border eCommerce in 2020, but today many so-called Baby Boomers – those aged 57-75 – are increasingly also embracing cross-border shopping.
All groups are looking at buying from overseas as it offers a range of advantages. For many it brings a degree of uniqueness and increased choice to what they can buy. For others there is a growing ability to buy things more cost effectively overseas.
Together – and despite the vagaries of Brexit – there is a growing cross-border eCommerce world developing. This was initially hit by the coronavirus pandemic, but by mid-2020 things were looking up. And, with global e-commerce sales projected to reach £1.8 trillion in 2020, the UK e-commerce market is expected to represent £200 billion in 2020.
That’s a predicted 11% of all global trade this year. So, it would be short-sighted for any ambitious online retailer to ignore the revenue opportunities that cross-border selling has to offer.
While price, uniqueness and even product quality are key drivers for shopping overseas, the key issue for consumers – and, as we shall come to, merchants – with this is delivery.
Research by Whistl in 2020 found that consumers had a number of concerns about cross-border shopping – and they all pretty much come down to delivery. 64% cited longer delivery times as a barrier to shopping overseas, while 51% were worried about the cost and complexity of returns, while a further 39% were concerned about higher delivery costs.
Analysis of six key markets – UK, Republic of Ireland, France, Germany, Australia and the USA – did find that on average, international items take 13 days to arrive across all the surveyed countries.
But the issues that are driving consumer choice – and adding to consumers’ concerns with cross-border shopping – also have a large impact on retailers and merchants.
There are huge opportunities in selling cross-border, but delivering the level of service, security and ease-of-use that increasingly eCommerce-savvy shoppers now demand is a weight on merchants’ shoulders too.
The cost of shipping is seen as a major drawback, and many merchants complain that projected delivery dates are a top reason for abandoned carts as long dispatch and arrival times puts consumers off from completing their orders.
Conversely, 43% said that unexpected or additional charges like delivery fees was the main reason for abandoned carts. For UK retailers, there is the added complexity of looking to markets further afield than Europe. Free-trade agreements with Japan, the US, Canada, Australia and New Zealand have all been put in place and servicing these markets is likely to be more challenging that shipping to Europe – the distance, and therefore the delivery time, for one thing is set to be a bigger issue.
However, logistics challenges alone should not be a reason to not look at cross-border eCommerce. In fact, rather than being a problem, delivery can become a key part of what makes cross-border eCommerce expansion actually grow a company.
As with domestic eCommerce, delivery can be a key selling point for one merchant over another in cross-border eCommerce – perhaps more so. The challenges that retailers cite and the reservations that consumers voice about what stops them buying from overseas sites can be turned from a barrier to an advantage.
Being able to offer fast delivery – even at a premium price – can help clinch the sale. Particularly for items that tick the uniqueness box for shoppers, cost of delivery can be less of a barrier to actually getting hold of the goods. Working this extra cost into the price of the goods is also perhaps easier to do with cross-border items as these buyers are more likely to be paying more anyway for the uniqueness of the items and the lure of goods from far-off lands.
Being able to offer more rapid delivery without having to ramp up costs is even more desirable and can be achieved if the scale is there – send enough items to a particular place and the cost per unit of transport drops.
Offering a range of delivery options based around time and cost can also help increase sales as the consumer can decide how rapidly they want the goods and pick a price-speed slot that works for them.
Similar ideas apply to that other bugbear; returns. Managing cross-border returns is a headache. How do you get all those goods back to, say, the UK from Australia without adding enormous, profit destroying costs?
Working locally and shipping at scale again can make this possible.
These delivery tropes that can create a differentiated offering that can not only overcome the demands of cross-border delivery, but also turn them into something that can make one merchant stand out from another, sound mutually exclusive, but they aren’t.
Working with a third-party delivery specialist can deliver all of this in spades. Just as it works as a model for offering a range of delivery options domestically, so too can it be made to work internationally. It also can help mitigate against sudden and surprise changes – such as a global pandemic, Brexit, or even the sub-par containership navigation.
Third-party delivery management companies can help merchants secure the best prices based on speed for delivery to anywhere in the world. And, even if a merchant is relatively small or niche, these third parties work with all the other small, niche merchants shipping to that region, so can deliver the economies of scale that makes this all so much more cost-effective.
Research by Parcelhub in early 2020 also showed that working with a 3PL specialist easily helped retailers mirror the delivery options and, more importantly, their costs of those local players. It also showed that by not putting all delivery options in the hands of one carrier, risk could also be mitigated.
Third parties can also help deliver the same with returns. Working with a local agent to act as a local point of return makes the consumer-facing part of the process simple for the shopper. Using a carrier management firm to then ship these returns back to the source can also make it cost effective – and again allow you to compete with local players.
In addition, they can also provide invaluable advice and help with all those tricky cross-border issues such as customers, taxes and local customs – both cultural and financial – that can make selling into other regions more complex than they first appear.
The opportunity for growth for eCommerce players in the UK by expanding cross-border is immense and growing. The growing love of eCommerce in all markets makes it particularly attractive.
However, delivery speed and costs have long been seen as a barrier to making it happen. The truth is very different. In fact, overcoming these perceived barriers can in fact be turned into a key brand differentiator that can help an overseas merchant compete with local players. If the product offering is right and there is a market, then working with an eCommerce delivery specialist that can offer the range of delivery options and the economies of scale needed to open up a market can make cross-border selling easier than it’s ever been.
And with an increasingly borderless consumer, this is now something that is a must have for any merchant, not something to dream about.
Parcelhub is a multi-carrier delivery management and proactive tracking support solution. Flexible and scalable, its portfolio of services integrates seamlessly with marketplaces, eCommerce platforms and order management systems, providing hundreds of multi-channel retailers, global brands and wholesalers with one access point to 20+ carriers and 600+ delivery options.