by Michelle Mondonedo
Avoid A Global Logistics Nightmare With These 4 Steps
Your eCommerce website is finally ready. These past few months have been crazy. You’ve read about conversion, SEO, and PPC, and even feel comfortable holding a conversation about these topics. You also have a solid business plan and you know customers will love your product. Launch day has arrived and your website is now live!
Hours later, the first orders are coming in… you’ve received money in your PayPal account… the excitement is real. Your customer is not even from your home country, which means you are now a real international business!
But wait! The order is from a remote city in Central America. Did you charge the proper shipping fees? What happens if the goods get damaged? What if there is a delay and the customer leaves some negative feedback?
Global logistics issues are not sexy. It’s like accounting – complicated and boring. But bad cross-border eCommerce management can mean the end of your business, so you need to pay attention. Why do you think free shipping and overnight delivery are such an obsession at Amazon? The equation for your customer is simple: Low shipping costs + fast delivery = more purchases.
But things are more complicated as a seller. Your shipping costs will be affected by several variables and the faster the delivery, the more expensive it will be… at least on your side. These costs have the power to dramatically lower your profit margin but at the same time, bring you more business.
To ship globally means you’ll have access to the biggest customer base – the world is your oyster! Though each business is different, global logistics issues can be solved if you properly understand them and plan in advance.
Understanding your operations
As a newcomer, learning to do things yourself can be beneficial in the beginning. There are two simple reasons for that: cost and knowledge. The first is obvious: you want to remain asset light and flexible. You don’t want be stuck in various contracts because at this point you have no idea what your sales volume will be and who your main customer base is.
The second reason is knowledge. By being hands on at the beginning you will learn about your business from the inside. No matter what books you read, the courses you take, or the consultants you meet, in the end you want to be the person that knows what’s best about your business. When do your sales volumes spike? Can my local postal service handle this? Should I outsource packaging or use the money for marketing? In the long term, learning all of this will be the best way to make informed decisions.
There are so many variables such as your location, type of product sold, profit margin, and more that listing a global strategy that fits every type of eCommerce business is impossible. For example, the challenges are different for an eCommerce business that mainly sells to Europe versus an eCommerce business that mainly sells to North America.
If you’re ready to begin researching couriers, you can start by checking our courier page for an overview of what services and options they offer.
Additionally, if you’re looking for more information about taxes, duties, and customs for a particular country, our countries page has this detailed information along with rates and other useful country-specific tips.
Planning your cross-border eCommerce costs
Now that you have a good overall understanding of what’s possible and what’s not, it’s time to do your homework on the cost of cross-border eCommerce from your country. No matter what postal services offer, you must test and refine several cost structures. Shipping costs will vary depending on several factors such as service chosen (air or road), to the weight, size and insurance level. For starters, our rate calculator can get you instant rates and recommended couriers for your shipments.
As a business owner, it is your responsibility to choose the proper level of pricing. In other words, remember the customer equation and make sure you fulfil it. Customers want to pay the minimum amount possible to ship and to receive the parcel as fast as possible and in perfect condition. If you do not fulfil these desires, thunder may strike on you… in the form of bad reviews.
Understanding your cost structure means you can decide to share them properly between you and your customer. Again, your cross-border eCommerce costs must be balanced. How much is the customer willing to pay?
Managing the risks of shipping directly
Shipping direct has risks and you need proper insurance to manage it (and to sleep soundly at night.) Sending a 5k drone will not have the same risk as sending LED lights. Here’s a useful summary of your risks:
NATURE OF RISKS
|Deterioration risk||Non - delivery Risk|
|Destruction due to mishandling||Partial or total loss of goods due to errors or blockage in customs|
|Physical and chemical alteration due to humidity, temperature, light.||Theft from boxes opening to full container|
WHAT YOU NEED TO CONSIDER
|The nature of the good||Transport method||Bulk breaking|
|Is it fragile? Perishable? Dangerous? Takes a lot of space?||Understand that road transport in a country without quality roads is cheaper but riskier than air transport (but shipping direct is faster)||Anytime your goods remain at a port, you waste time, money, and the risk of theft increases|
You should also be familiar with the tax and duty situation of the countries you want to ship to before sending anything abroad. Here’s how to find this information on Easyship.
No one likes to deal with customs, but hey, someone has to control what comes into the country, right? Your best bet for a smooth global logistics operation is to make sure your shipments have all the proper customs forms.
Another important issue is country risk. Simply put, dealing with customs is easier when you sell to Europe than to war-torn countries where theft, bribes, and corruption are the norm. If you ship to Europe from a European country, the administrative part is painless and takes little time. The same is true for shipping between countries with trade agreements like Hong Kong and China or Canada/USA/Mexico.
Also worth noting is your customer may also have to pay extra duties when the goods are received. Make sure you include this information on your website to avoid any unexpected surprises to your customer.
This post covered the main issues about global logistics, but as you get your hands dirty you also must plan on how to pay VAT, packaging, shipment payment, and many other things. As with everything in business, it all comes down to proper planning and execution. You know that your customers want low shipping costs and fast delivery. It is now your challenge to find the right balance between cost, profit, risk, and delighting the customer whenever you ship globally. With time and experience, we know you will find the combination that works for you!