Cross-border online trade in Europe has become increasingly important in recent years. Of the 268 million European online shoppers, 200 million have already ordered goods abroad at least once. Studies also show that the importance of cross-border ecommerce will continue to grow since the Internet also enables smaller merchants to expand and enter new markets. However, some important factors must be taken into account that determine whether it will be a success or not. These range from marketing and the legal situation to shipping. In this article we focus on logistics, which is one of the most important success factors in online trading. The importance of ecommerce fulfillment is also highlighted in an analysis by eMarketer on the subject of cross-border commerce. In the course of the study, 27% of the retailers surveyed stated that the delivery of the goods to the end customer represented the greatest challenge.
Cross-border warehousing in ecommerce
When expanding into other countries, many online merchants encounter difficulties in shipping their products across borders. The biggest challenges are the longer delivery times to the end customer and the correspondingly increased shipping costs. These obvious disadvantages, which are due to the longer distance from the warehouse to the recipient, are particularly problematic with regard to local competition, which can offer better shipping conditions. As a consequence, in order to remain competitive, e-commerce companies need a clever strategy for their fulfillment.
A popular solution is the decentralized storage of goods in various fulfillment centers. It is no coincidence that online merchants with a strong logistics network are among the most successful companies in e-commerce. Amazon, Zalando & Co have realized early on that shipping to the end customer can be a competitive advantage and therefore they invest millions each year in the expansion of their logistics networks.
Nowadays, online merchants have the possibility to store their goods across borders and optimize their fulfillment – without having to invest millions in logistics – more about that later. In this way, online orders can be sent from the fulfillment center in the respective destination country by maximizing the proximity to the end customer. This provides two decisive advantages: Reduction of shipping costs and delivery times. The following section explains why this is so important and what you have to pay attention to when internationalizing your logistics.
Optimize shipping costs and delivery times through international warehousing
Today, shipping costs have almost become a no-go for web shoppers. A study by PayPal shows that 25% of Internet shoppers are deterred from ordering abroad by high shipping costs. In addition, the increased delivery time of the package also has a negative impact on the conversion rate of an online shop. This means that as an online retailer you are more or less forced to carry the shipping costs for the buyer and therefore have to include them in the product price.
However, at the same time you don’t want to discourage potential customers with high prices and have to look for ways to minimize shipping costs. By storing the goods in a fulfillment center in the destination country, you can achieve exactly that and reduce the delivery time as well.